A Research Project: Internet's Impact on Sony Music's Sales Decline

This research project, conducted by a student, investigates the decline in sales experienced by Sony Music Entertainment. The study aims to identify the impact of the internet on this decline and provide recommendations for improvement. The research includes a literature review exploring the influence of internet technologies, piracy, and consumer behavior on music sales. A survey-based research design is proposed, targeting internet users in Brisbane, Australia, to gather data on music download habits, preferences for legal versus illegal music sources, and perceptions of the music industry. The research employs a mixed-methods approach, incorporating structured questionnaires and semi-structured interviews. Ethical considerations are addressed, ensuring voluntary participation and confidentiality. The project seeks to understand how the shift to digital music, streaming services, and piracy have affected Sony Music's revenue, ultimately aiming to offer actionable insights to help the company increase sales in the evolving music market. The research also includes a detailed questionnaire for data collection and analysis.

Music Sales Decline in Sony
Music Entertainment
Student Name
Student Number

Industry Partner
• Sony Music is one of the largest music records in American
and is owned by Sony Inc.
• Sony Music operates in Europe, Asia, Australia, and America.
• The company operates in music industry as the record label
for musicians.
• It employs more than 8,200 people in its music sections
around the world.
• The turnover for the company has been on the decline since
the emergence digital music and as at March 2019 it was $3.8
billion. The revenue represents an 8.6 percent drop year-over-
year (Sanchez, 2019, par. 1).
• I work as sales representative in Brisbane, Australia.

Research Problem
• The music market has been growing over decades
with better technologies of music production and
distribution.
• According to IFPI Global Music Report (2019), music
revenues of $19.1 billion represent a growth by 9.7
percent.
• More than 34.0 percent growth is contributed by
development in internet streaming.
• The growth in music is largely attributed by the digital
music streaming and downloads.

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• A report by Forbes written by Rosenblatt (2019, par. 1), show
that music industry has been growing since 2016 after over a
decade decline in sales.
• The increase in revenues is contributed by interactive streaming
services offered by YouTube, Spotify, Apple Music and Amazon.
The services represent 63 percent of the total music revenues.
• The shift in the market has contributed to relegation of CDs and
drop in music downloads in paid channels such as iTunes.
Rosenblatt (2019, par. 3) observed that CD sales has dropped
below $1 billion in 2017 and with revenues falling to $708
million in 2018.

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• However, there is observed decline in music subscription and
streaming.
• Similar drop in revenue regardless of increase and streaming since
2016 is observed in Sony Music Entertainment.
• The market shifts and drops in sales over decades prompted me to
conduct as research on the cause of sales decline and hence be able to
offer recommendations.
• The turnover for the company has been on the decline and as at
March 2019 it was $3.8 billion. The revenue represents an 8.6 percent
drop year-over-year (Sanchez, 2019, par. 1).
• A research is critical to establish the cause especially the extent digital
music has impacted on the sales and approaches to increase sales.

Research Aim
To identify the potential impact of internet on
declining sales in Sony Music and make
appropriate recommendations that will help the
company increase sales.

Literature review
Internet factor
• Internet technologies have been implicated as the main
cause of revenue fall in music industry despite increase in
live streams of music (Barker, 2018). Digitization of music
has created larger market and ease of access to digital
music.
• However, instead of reducing the value gap, digitization of
music has widened it. Before digitization of music in 1973 to
1999, the revenues for record companies were high (2018).
• When the internet grew from 1999, the music sales
revenues have declined by about 28 percent if the trend
before digitization and economic growth since 1999 is
considered (2018).

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Effect on sales
• Technologies like Napster and AudioGalaxy allow user to
share music files without cost (Morris, 2014, par. 2). They
are threat to the music industry especially record labels.
• Reason being, music will always be demanded as
musicians are promoted in the internet and hence getting
shows and direct sales from funs (par. 3).
• It leaves the record label at the middle with no work to do
and carrying the burden of low sales and lack of relevance
(par. 3).

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• Weijters, Goedertier and Verstreken (2013, 537-550)
carried out a research to establish consumer behavior
theory of music consumption.
• They observed that young people prefer free-illegal
platforms to source their music.
• Majority of music consumers are less ethical and law
abiding (p. 540). Furthermore, they established that paid-
legal channels are not preferred for economic reasons.
• Therefore, they recommended the segmentation of
online music to fit consumer preferences (p. 545).

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• However, article by BBC show reports that European
Commission Joint Research Centre found that internet
piracy has no impact on legal music sales (BBC, 2013, par.
6).
• The report established that free streaming channels like
Pandora and Spotify provide boost to the legal music (par.
8). In one way they act a marketing factors to the music
industry.
• The critical question that not been answered is how
internet generally has impacted on the sales of record
labels like Sony Music.

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Internet
Independent
variable
Marketing
Independent
variable
Piracy
Independent
variable
Sales Revenue
Dependent variable

Research Questions
1. How internet growth affect sales in Sony
Music?
2. How do consumers perceive unlicensed
music download being the alternative to the
licensed purchase of the online music?
3. What can the management of Sony Music do
to increase sales?