music business
DESCRIPTION
Course project presentation (Warwick IB9U4 Business Strategy) 2009-2010TRANSCRIPT
The Music Business
Ankita Chitlangia, Dawei Li, Diaz Baseitov, Hasifah Tengah Jean-Luc Sequeira, Luke McDermott, Rahul Dhoka, Varun Venta
OutlineOutline
Introduction: The Music Business
Background
Issues
New Business Models
Future
Conclusion
The Record Industry
Four major labels dominate: Sony Music Entertainment Universal Music Group Warner Music Group EMI
Issues: Trend: Decrease in Sales $21.1b (2005) to $15b (2007) Due to rise of digital music:A. Legal, i.e. iTunesB. illegal, i.e. LimeWire
Year
2003 2004 2005 2006
Decrease in Sales Volume (UK)
Sony BMG
Universal
Warner
EMI
Other Labels
Major Players
CD Units Sold/
Million
Year
Music downloaded over the internet for a fee - convenient
Major players: Apple&eMusic Trend: Increase in sales
2008 – 42% increaseIssues:• Sales not enough to recover
lost business from CD sales• Decline in physical revenue is
bigger than the digital uptake • 95% of downloads are still
illegal
The Digital Industry
Increase in Sales (UK)
Year
Sales/$ billion
Rise of illegal downloads
Napster - started in 1999 and was shut down in 2001Paved the way for new file sharing software, such as Kazaa, BitTorrentCreates image that recorded music is now a free commodity, it no longer has monetary value
Attempts To Stop Piracy?
The industry has tried to stop piracy in vain for many years nowCase in point has been the inability to shutdown Pirate Bay and the various clones of NapsterSony BMG’s root kit debacle was the most infamous antipiracy botch upCompanies have started using such DRM technology but are no where near controlling piracy
DRM
Strengths & Weaknesses
Overall trend in the business….
RecordDecline of the
record industry
DigitalRise of Digital Music.
However, still insufficient to cover loss by the record industry
Need for a new
Business Model?
Online PiracyRise of illegal downloads
with failed attempts to stop it
2001 2002 2003 2004 2005 2006 2007 2008
“The recording business as we all know is dying, but
why is the music business exploding?”
So, where is the $$$ coming from? Why is Robbie
Williams rich?
Free Music
Music License
Subscription
Mobile
Touring & Merchandise
Pay Per Song/Track
The Record industr
y
Direct Sales
Subscription Services
What is it?Pay a certain amount per month in exchange for songsUsually different price for a certain amount of bandwidthExamples include Spotify, RhapsodyNow Napster and Kazaa
Pros & Cons
Access to all songs, anywhereOn laptop, mobileDifferent countriesUse of log-ins
One-off payment per monthRhapsody - $10 per month
Readiness of people to ‘rent’ their music?
Ubiquity of internet access?
Multiple sharing of log-in codes?
Benefits Issues
Concerts: Tour & Merchandise
If people refuse to pay for the music, give them something extra to pay forMajor players include Live Nation, AEG and Academy Music GroupYou cannot download the experience of seeing your favourite band live2009 – UK Sales of music DVDs rose from 16.1% to £33.1.
Live NationMajor artists make 75% of their earnings from touringLive Nation is the world’s largest promoterOne-stop shop: making albums, selling merchandise, operating tours, running the website, producing videos and creating new products, such as Guitar HeroMadonna, Jay-Z, U2
Increase in number of people attending concerts, current trends & forecast
E.g. Iron MaidenCustomised their own plane for world tour, enabling them fit in countries that were previously too difficult to visitGenerated plenty of media coverageReleased a documentary film following the tourDVD went straight to number 1 in music DVD charts in 22 countries
Strengths & Weaknesses
Future thoughts?
There are still people willing to pay for hard copies of music, but they are becoming a minorityWhich effective new strategy gona work better? ArgueOpportunities to make record business better? Make the CD more special?Does illegal downloading really hit the industry that hard? Might it be good?People will never buy as much music as is available online, therefore subscription services like Spotify are a good idea for the future.People take it because it is free. Might not pay for it otherwise.Legislation + Govt policies – towards piracy
Conclusion
Any questions?