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Business Strategy of Record Music Industry : Report

   

Added on  2020-07-22

6 Pages1423 Words54 Views
Business Strategy

Table of ContentsBusiness aspects of Record Music Industry....................................................................................1Positioning of Spotify in music industry.........................................................................................2REFERENCES................................................................................................................................4

Business aspects of Record Music Industry Emergence of live streaming of music has affected the record music industry where it hasbeen seen that revenue is constantly reducing since 2006. The advent presence of digitaldistribution of music have strongly affected the market of recorded music. Artists come under acontract under a certain label to get their albums released (Klettner, Clarke and Boersma, 2014).When a record company sign an artist, it is usually done on contractual basis for certain numberof years. The company then pay a specific amount in lieu of the same. The music ismanufactured, distributed and promoted under the same label. In return of the efforts made bythe artist, he / she is able to get certain percentage of the sales in the form of royalty (Buckley,Burton and Mirza, 2016). To analyse the record music industry, Porter’s five forces model can beapplied in the following manner:Bargaining power of buyers: Presence of market giant companies who have createdmonopoly in the market makes it difficult to offer similar prices for Spotify. In that case,company has to offer slightly lower prices to capture the market. Hence, in this case, thechances and risk of bargaining power of buyers is higher. Bargaining power of suppliers: There is a presence of various suppliers in the market in theform of music directors, artists, CD and cassette suppliers etc. Hence, the risk of bargainingpower of suppliers is low in case of music record industry. Threat of new entrants: Entry of new players in the market is limited hence, less companiestend to enter in this market. In this scenario the threat of new entry for Spotify is low. Threat of substitute: there are various market giants present in the market which makes itdifficult for Spotify to survive in the market. Hence, threat of substitution is higher. Industry Rivalry: There are various competitors that are available in record music industrywhich makes it difficult for Spotify to maintain its brand image and enhance its sales.Moreover, the product differentiation in music industry is also low. Hence, adequate amountof differentiation can help in receiving competitive advantage in the market. However, the record industry has now been taken over by digital downloads of music. Othercommon methods used by people in this area include, streaming where people can listen to thetracks before taking ownership of the audio files (Johnson, 2016). Other video sites such as,YouTube and Vevo have also become music video giants in the music industry. 1

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