The Music Industry Case Analysis
The global industry for the recorded music has over the recent past been undergoing numerous changes that are mostly attributed to the technological advancements that have been experienced within the same period of time. For instance, the recorded music sales in the conventional formats have been experiencing a tremendous decline as consumers shifts to buying music if other new formats that are available throughout varied channels (Wells & Raabe, 2007). Thus, the new music formats characterized by digital music purchases such as subscriptions, single and album downloads, music videos as well as mobile phone ringtones seems to have pushed the CD sales to the wall resulting to the decreased revenues from them.
Therefore, the recorded music industry is nowadays characterized by numerous characteristics the main one been an overall shift from the conventional music formats to full embracing of the digital music formats that are envisaged to account for the larger portion of the recorded music industry revenues in the near future. It is also apparent that the big box retailers such as the Best Buy, Wal-Mart and other online stores are significantly becoming increasingly crucial recorded music purveyors (Wells & Raabe, 2007). Hence, this changes in the music industry are resulting to a stiff competition to the music specialty retailers thereby making their market base to shrink. This has even resulted to some of them who were not capable of adjusting themselves been pushed out of the market, for instance, the Tower Records which in 2006 filed for bankruptcy.
However, the change trend which the music industry is taking has resulted to the revitalizing of the single markets such as the single track releases as well as music videos. This has been overwhelmingly embraced by most artists who usually releases single hits that are then mostly distributed through the digital markets a popular characteristics of today’s music industry.
Issues and Problems faced by the recorded music industry
As majority of people consider digital music the future of the music business the formats of the digital music poses both the opportunities as well as challenges that the industry must overcome if it has to go far. However, the recorded music industry poses several issues that usually define it for what it is today where the majors in the industry have been struggling for superiority resulting to mergers and acquisitions among the leaders in the industry in order to ensure their continued supremacy. For instance, the Sony Music merger with BMG led to a 50-50 joint venture known as Sony BMG Music Entertainments which became the second largest global music company after the leaders Universal Music Group which had acquired PolyGram to attain the top slot in the industry (Wells & Raabe, 2007).
Moreover, the industry is also experiencing the issues of changes of music formats from CDs into digital music formats such as album downloads, subscriptions, mobile phone downloads as well as legitimate peer to peer and file sharing services. This is a change that is rapidly taking place hence should be strategically managed in order to the music industry into the next level. This has also presented the issues of the ever increasing electronic music retailers offering numerous music products digitally. These includes the Apple iTunes music store, eMusic.com, Rhapsody, Napster, Zune Marketplace and Yahoo! Music unlimited all of which have been engaged in a the digital music sales. However, some of the have come up with portable digital and compatible music players such as the Zune and iPods devices that have greatly changed the music industry (Wells & Raabe, 2007).
In addition, there are numerous problems that are facing the recorded music industry. The main problem is usually the increased facilitation of the rampant piracy as music changes to digital formats that can be easily pirated. This problem of music piracy is resulting to the industry losing a lot of revenues on annual basis. The music pirates are however using varied means such as conducting illegal downloads of music from online sources as well as illegal file sharing and illegitimate peer to peer services. However, in order for the big box retailers to successfully thrive in the ever changing market conditions they requires a robust population of artists who they record, promote and distribute their music, but they are facing the problem of building these large base of artists which would be responsible for the generation of numerous hit album releases capable of keeping the companies’ profitability achievable. This is mainly because the higher the number of artists then it means there will be numerous hits throughout the year which will ensure that these companies run smoothly (Wells & Raabe, 2007).
The other greatest problem faced by these companies is undoubtedly the issue of rapid technological advancements which is taking place within a very short period of time. Therefore, the companies are ending up making huge losses due to the stocks that remains unsold. For instance, the shift from CD music to digital music was such rapid to an extent that most companies had not sold most of their stocks. Hence, the accompanying decline in sales threatens the survival of such businesses (Wells & Raabe, 2007). In addition, all the companies in the recorded music industry are facing the challenge of swiftly adapting to the newest technology in the market which is incurring them huge amounts of money hence the need for an amicable transition between technologies has arisen.
Possible solutions to the identified problems
As indicated in the previous section the greatest problem the music industry is currently facing is the issue of piracy. However, there are several solutions to the problem that has been very daunting to both the artists as well as the entire music industry. For instance, the governments and the internet service providers (ISPs) are supposed to put in place strict rules and regulations that are aimed at discouraging the operations of illegal online music distributors. However, there is also the need to crackdown all the illegitimate peer to peer operators and file sharing which has been a common channel through which pirate music is shared among various people and different destinations (Wells & Raabe, 2007). In addition, there will also be the need for digital right management systems that will be responsible of ensuring that the protection of the copyrighted music is adhered to.
Moreover, increasing the artists base which has also been a challenge to several music companies requires them to be in a position of offering better offers which will end up attracting more artists thereby resulting to a constant hit album releases. This will be very crucial in ensuring that the sales of these companies does not go down. However, on the issue of technological challenges these companies needs to put in place strategic management for enabling smooth transition from one technology is smooth as well as ensuring there is an amicable embracing of the new technologies. This will be very critical in making sure that there is a swift adoption of the new technologies among these companies which will go a long way in ensuring a continued profitability.
The recorded music industry is undoubtedly one of the rapidly growing industry despite the challenges that are facing it. Meaning that if amicable solutions to these problems are attained then the industry would result to an exemplary performance. Therefore, in order for this success to be achieved several recommendations have to be considered such as:
Collaboration between the governments, internet service providers (ISPs) and the music industry stakeholders will of critical significance if the fight against piracy is to be won. Therefore, these main groups needs to put in place collaborative interventions and efforts to ensure that the pirating of music is dismantled. This will very crucial in overcoming the greatest and dreadful all time problem that is currently facing the music industry (Wells & Raabe, 2007). In addition, strict rules and regulations needs to be put in place in order to discourage any potential music pirates.
Measures to promote the legitimate peer to peer services and file sharing while at the same time protecting them from the illegitimate ones will play a great role in ensuring increased legitimate sharing of music online. Moreover, the record companies needs to embark on establishing legitimate links with the social networking sites that are popular such as the YouTube and MySpace to sell single tracks, albums as well as music videos.
Wells, J. R. & Raabe, E. A. (2007). Update: The music industry in 2008. Boston, MA: Harvard Business School Publishing.