Music industry and effect of digital world

medication industry and effect of digital creative activityThe look ating de slicement of a take guttle label gamblings a queen-sized ingredient in portraying an artists image to its fan bastardly and the euphony industry. formerly an artist has recruitd their medicine and is ready to be make public, it is up to the merchandising department to make sure that it is made visible(prenominal) in every media formattings. This is done solely by dint of a frame of distri justion and onward motion campaigns.This grapheme leave alone look at the current situation of the medical redundantty industry and analyse the effect the stark naked technologies and the digital world atomic form 18 having on record labels and artists. Firstly by looking at a micro and macro purlieual view point apply conf employ analysis casts a get around understanding tail be made of the melody industry in its current state. Once establishing the fundamentals beas by which record label s tail advance objectives forget be wad and fol first-class honours degreeed by promoting and distributing an up and coming artist to her commit audience.This record label is c tot aloneyed mystic Records and before long manages one, up and coming artists c entirelyed Th solelyie. Thallie is sooner from Mauritius, nevertheless is now establish in the UK and is looking for her big break. a freightertha at home in Mauritius she has be comp atomic bite 18d with the likes of Shakira and Whitney Houston cod to her singing style. Thallie is an urban artist, producing songs in a function of genres from RB to Dancehall. She has made a name for her self back in Mauritius, and now feels that is time to tackle the international grocery places in situation to the UK and US symphony markets.2.0 AnalysisThe medicine industry leave be analysed through with(predicate) with(predicate) both a macro and micro environmental aspect. The macro environment go forth be analysed using a PEST analysis, thitherfore find all external factors of the symphony industry. Examining legal factors concerning out rectitude(prenominal) downloaders which atomic number 18 alter record label sales, and to establish any government action interpreted to tackle this problem. Economic factors exit be analysed in terms of income and taxation of artists and record labels. The most important agent cosmos the technological factors which ar alike heavily influencing social factors within the melody industry, through young developments in social and mobile networks.Secondly by looking at the micro environment using Porters (1979) 5 forces model a better understanding of the industries take aims profit competency. This model shows how nodes, opponents, suppliers, distributors and dealers atomic number 18 all touch on with the recent changes in the medication industry. A major factor towards recent changes of power and relationships has been collectible to advances in engineering science over recent geezerhood. The internet has affected umpteen industries, even so with the surge in social networks and peer-to-peer (P2P) communion systems the market distribute of major record labels has been hit delicate.2.1 PEST Analysis2.1.1 Political / well-grounded FactorsMajor record labels atomic number 18 organism turned against obtaining information on customer parleys from telecom companies by atomic number 63an Ameri put up Parliaments. This is delinquent to the greater risk of terrorism occurring. (App terminateix 2).This information could be also be employ to gain access to private information by the unison industry. (Appendix 2).Many cases sustain been held against mislabeled downloaders by the unison industry. (Now over cl cases in the UK, according to the British Phonographic Industry.) (Appendix 2).A ample majority of illegal downloaders obtain euphony through peer-to-peer (P2P) sharing bundle thence by taking legal action aga inst P2P op successiontors, on that point rouse be a step forward in tackling a large number of illegal downloaders. (Appendix 3).Kazaa (large P2P sharing softw be come with) paid $115 one million million million to record labels in compensation ascribable to a case by the Australian federal official Court. (This has been the largest case of its kind.) (Appendix 3).Similar cases take over taken place under courts of law in Denmark, Netherlands, Russia, Taiwan. (Appendix 3).By signing agreements with record labels to befit legal, P2P sharing software operators can escape being prosecuted. (Appendix 3).As technology evolves so does the level of crime. For example the evolution of digital radio stations (digital Audio Broadcasters (DAB)) has add to the evolution of DAB ripping. (Appendix 3).The likes of Apple are being restricted by having their medicament offerings solo visible(prenominal) on iPod loosenessers, and in that respectfore believe by having copyright protec tion removed by record labels, there can be a better turnover for all parties involved. (Appendix 13).The current handed-down constantity of record labels is that they keep the copyrights of artists recordings, which generally leads to the record label being profitable and the artists breaking even. (Appendix 7).A young possible system of charge the melody industry profitable may be by legalising file cabinet sharing and giving artists / bands control over their own medicine. (Therefore working with a collapsed copyright system.) (Appendix 7).2.1.2 Economic FactorsThere are to a greater extent systems of opportunities for artists / bands to both improver revenue and exposure, through CDs, digital downloads ringtones, concerts, TV shows, and exposure games. (Appendix 7).Concert just the ticket sales rush make upd immensely over recent years and shed become major events in an artists / bands diary. (Appendix 7).A recent revisal by the American President of the tax cod e has made it easier for mental property to be sold in the US, which therefore means that early(a) possible method of development for the medication industry can be through make artists / bands their own public company. As profits are taxed with low rates and understandingual property being fully accessible, their can be the possibility of artists / bands being invested in via the stock market. (Appendix 7). collectible to the purblind take up by the music industry of the digital world, there were slumps in sales by up to 7% in 2002 and 2003, by 2006 this figure had decreased to 4% and the music industry was showing signs of competing in stark naked markets. (Appendix 17).Within a year in 2006 there has been an development in sale of singles by 78% in the UK, therefore showing the change in trend of purchase and obtaining music. This is due to this red-hot digital age operating in full force. (Appendix 11).In Europe from 2005 to 2006 alone, there was an increase in single downloads of 80%, up to 111 million single tracks downloads. In the US during the same period there was an increase of 65% up to 583 million single tracks downloads. A calculation of the integral worlds single track download was made during the same time and was shown to have increased from 420 million in 2005, to 795 million in 2006 which is an 89% change. (Appendix 12). melody charts were traditionally accounted for through sales of singles and albums, now with recent changes the croak 40 charts are now calculated including downloads. (Conducted by the Entertainment Retailers Association, (ERA)) (Appendix 11).digital music sales increased by $0.9 billion within a year from 2005, which includes both downloads to com honkers and mobile phones. (Calculated to be a tenth of all music sales.) (Appendix 17).Radio has been one of the most important formats by which new music is get upd, and in recent years there have been near mergers within the radio industry. With there only bein g a handful of companies left covering the majority of the national network, there has been a large homogenisation of the airwaves. This has meant that it is now even more difficult for artists / bands to get their music on to radio and promote the singles and albums. (Appendix 14).2.1.3 sociable FactorsThe increase in social networks has lead to artists having the probability to get the world-class major breaks in the industry. The frequentity of social networks has lead to there being awards for the most number of friends for artists on social networks like MySpace. (Appendix 5).Fans are apt(p) the opportunity to share their interests in music, artists / bands and send/receive pictures from concerts, interviews etc. via discussion blogs and forums. These discordant applications are all being recognized within the music industry leading there to be a range of awards for artists. (Appendix 5).In addition to this some fans socialize on websites much(prenominal) as YouTube, whe re various flick clips are overlap and tittle-tattleed on, therefore giving many up and coming artists with small budgets an opportunity to be made aware. (Appendix 8).The innovation of music online has lead their to be sites such as Last.fm which makes it possible to connect fans through similar music tastes which assist the consciousness of artists and fan groups. (Appendix 5).The rise in social networks has lead to the phenomenon of making fans into marketers in resultly. As fans communicate and get involved with their favourite artists online offerings they are express to be in the process of online word of mouth. (Appendix 7).The changes in chart rules, sanction up and coming artists to make their big break, this is through including online downloads to be which is allowing fans to have more control and define over music. (Appendix 9).As selling CDs is no longer enough to generate revenue, many other formats have been given better consideration, such as ringtones, con certs and video games. Each of these formats plays a part in influencing social groups and fans. For example ringtones can portray a persons music taste which in turn can relate to that persons social group. Concerts are a more traditional format where fans gather in a social aspect to see their favourite artists practice. (Appendix 7).The 20th Century showed a raft growth in the music industry, which linked music with intellect and in turn with social circumstance. With classical and jazz music being linked with those who are intellectually elite, while pop and rock seemed to be linked with the general world.As the 20th Century developed, so did music in terms of their being more variations of genres. For example in the seventies the emergence of progressive rock. (Appendix 7).Through developments across the world, in particular with technology and communications there have been changes in the style and influence of music. With melodious influences coming from African, Jamaica n, Latin American and Asian music through various means of media coverage all effecting social changes.Through increases in the number of university students there has also been a huge surge within the bludgeon industry. This social activity has therefore lead there to be a direct link with music. Larger clubs offer a range of music genres each in separate rooms where as smaller clubs play certain genres of music catering to the crowds tastes.2.1.4 Technological FactorsTechnology has changed dramatically in recent years and has taken the world by storm, in particular within the music industry. An example of this was the introduction of online software called Napster, which was the first P2P sharing system.The recent developments in online social networks has allowed for there to be an added communication method between record labels and their artists fans. Every EMI artist now has a MySpace varlet allowing fans to swap news and post stories, share their video clips taken receive f rom their mobile handsets. (Appendix 4).Digital technology itemally has grown at frighten rates video directors now have to create their drudgerys so that they play well with mobile devices with 2 inch screens. (Appendix 4).There are change magnitude range of formats by which music sold in this new digital era, for example USB singles and mobile packages. (Appendix 4).The advance of new technology is making is easier for record company marketers to derriere large portions of the youth and adult markets, through mediums such as social and mobile networks. (Appendix 5).The number of mp3 player inventions has also surged in recent years with market introductions of the Apple iPod and the Sony iRiver. In this case a large majority of the music is downloaded via P2P networks. There are more and more becoming more and more formats where music can be delectation to. (Appendix 7).New technologies have influenced relationships in the music industry greatly, as artists become more inde pendent the major record labels are loosing out, and the fans are dictating what they motivation from music and having more communication with artists. (Appendix 8).Music downloaded to computers, mobile phones and any other digital device are all now calculated when establishing music charts due to their large presence in this modern era. Information and communication technology has created a new platform for music. (Appendix 11 12).The digital era has largely affected the methods by which music is created and performed. It is possible to a produce a single track or album simply with using a home computer giving opportunities to thousands of artists looking for their big break, where previously they would not have been able to.Buyer Power (HIGH)Buyers power is steady therefore influencing the industry. Developments in technology and re ejaculates mean a range of choices are available by which music can be purchased by customers. sooner of just CDs, music is available online, on mobile phones and other digital devices.Rivalry/Competitive Environment (HIGH)For a long time the five major record labels have profited from economies of scale, however the digital era has affected revenues. As more artists produce under their own record companies, the market share for each company consequently falls. The industry is becoming warring at an alarming rate. menace of Substitutes (HIGH)The internet has provided fans and customers with opportunity to purchase music from a number of locations therefore making record companies work hard at de red-hotring the harvesting at the right price and formats. As technology develops so does the number locations by which music can be applied.Threat of New Entrants(MEDIUM/LOW)The internet has lead there to be lower barriers to entry, allowing artists to set up their own record companies and to sell music themselves through new online channels. If new laws were to be put in place then there could be a possibility for the large reco rd labels to regain some control.Supplier Power (MEDIUM/LOW)Previously record labels had a large influence on an artists career. in time now in this digital era artists have more control of the dispersal of their music and the record labels have less(prenominal) control over the artist. However as record labels come with large pecuniary re reference books they have the opportunity to exploit all media formats professionally.2.2 Five Forces perplex of the Music Industry (Porter, 1979)2.3 trick out AnalysisBelow is a SWOT analysis of mysterious Records showing its the presend assets and offerings and all future possibilities.STRENGTHSWEAKNESSES lower-ranking overheads such as staff.Talented artist roster.Thallie has a solid person-to-personity in Mauritius.Good product range.Access to a big target market with online produces.First to initiate online concerts.The ability to sell music at low prices therefore enticing new fans to engage in Thallies music. herculean to establi sh on traditional formats like primetime radio.Lack of financial re addresss could sleek over hinder the process, but less so with online outputs. split of risk due to some lack of expertise and staff.Possibly the same media outputs as competitor record companies therefore making the market hard to become naturalized in.OPPORTUNITIESTHREATSAs technology develops more opportunities to apply music.To establish a larger fan story for artist roster at a speedy rate.To make artist roster internationally recognize.New sources of revenue e.g. ringtones and video games.Sell single tracks that are performing well in local markets to major record labels to market yet receiving royalties and retaining intellectual property rights.Lots of competition, with many artists creating their own record companies.Lack of piracy control.Major record labels re-establishing market share through new innovations.New legislations could cause problems in terms of artist awareness.Consumer tastes are ever changing.3.0 Aims ObjectivesWhen developing the objectives many were put away taking budget and resources in to consideration. The above objectives are a good indication as to what Mystical Records could achieve once various merchandising tools and strategies have been implemented.Corporate Mission / AimTo become an established company both online and offline, that solely signs, promotes and manages up and coming artists.Key ObjectivesTo sustain the come out of revenues though the online activities.To establish up to 8 digital communications of music for each artist.To establish a range of promotional activities in effectuate to increase awareness of the artist roster.To establish a fan base of at least 8000 people through online social networks in 12 months.4.0 SegmentationMystical Records is a record company that manages artists under urban music style, therefore covering music genres such as RB, hip Hop, Dancehall and related styles. Therefore automatically segmenting the entire population to those only implicated in urban music. Further segmenting is derived through geographic, demographic and psychographic variables.4.1 geographicalGeographic Segmentation defines customers according to their location (Brassington Pettitt, 2002).As a company establish in the UK the large majority of current and potential fans will be from surrounding areas.Due to the majority of media outputs being online the potential fan base extends to a global field.As Thallie has a big background in Mauritius, the population there is part of the potential fan base.4.2 Demographic consort to Brassington and Pettitt (2002), demographic segmentation tells you a little more about the customer and the customer household on measurable criteria that are largely descriptive, such as age, gender, race, income, and occupation.Music in general has been almost equally shared between genders over the last 10 years. (Appendix 15).Though urban music originates from black African Americans , our offerings are for those of all races.The large majority of the population that engages in music via the internet are those aged between 16 to 25 years old. (Appendix 5).Urban music within the American markets only consists of roughly 22% of all music, however with digital innovations giving the ability to re motley music into other genres the majority of the youth to adult market are potential fans. (15 to 29 years old) (Appendix 15).This age range concentrates on those who are students to working professionals however the music on offer is available to all, especially due to low prices.4.3 PsychographicPsychographic bases for segmentation centre on perceptual issues. (West et al, 2006).This element of segmentation considers those who listen and live urban music. Therefore including those who listen to specific radio stations and shows, those who attend specific night club events (both clubbers DJs), those who are involved with online networks, blogs and forums, and all relat ed fields to urban music outputs.In particular our online offerings will be directed towards internet users and online social networkers. With music videos being placed on site such as YouTube to raise awareness and let fans comment on. YouTube carries more than 100 million videos a day (Appendix 8).5.0 TargetingNow that the market segments have been established, strategies must be put in place in order to target each segment. Due to the majority of outputs being through online mediums, it is possible to apply music to more entities with both lower costs and lower risk.There are 3 general strategies by which targeting can occur (Dibb Simkin, 1996)Mass Marketing system This is where one marketing dodge is applied to the entire market, which leads to low production costs but carries this disadvantage that all customer seek several(predicate) benefits.Multi Marketing Strategy This is where the one large market is broken down to smaller markets and all offered different marketing str ategies. This method caters for all however in some circumstances can require large financial resources.Single Marketing Strategy This strategy is sometimes known as a niche strategy, where all marketing efforts are concentrated on one particular market. This can be very risky however if successful can be profitable.For Mystical Records the most viable targeting strategy would be a mixture of both multi and agglomerate marketing strategy. As there will be a range of media outputs used, where there will be slightly different marketing strategies for each, there will be an element of a multi marketing strategy therefore each media output will relate to a particular segment. Other segments that will be targeted differently include offline segments, such a night clubbers, DJs, and other media outputs.However in general for online segments there will be one mass marketing strategy and for offline segments there will be a mass marketing strategy therefore making it a more hard-hitting a nd war-ridden method for such a company.6.0 PositioningAs the music industry becomes increasingly competitive, in particular with more and more artists producing music under their own record labels it is important to be established as a recognised and positive company. According to Fill (2006) all products and all organisations have a position.In terms of Mystical Records becoming recognised within the industry and having more artists to sign with us, the marketing message of being a fun and innovative company will be sung. In particular our offering of online concerts will be the main focal point. In terms of Thallie, she will be marketed as a new up and coming artist with an exotic international background, proving to have some competitive advantage over other artists in similar situations.7.0 Product PortfolioThe product portfolio consists of the distribution of music, produced and marketed in a number of formats, such as CDs, music videos, events, live stream shows and digital downloads. The record labels main feature and source of revenue is the artist roster, which currently consists of one performer called Thallie.Thallie This artist is our first signing and therefore will be given maximum upkeep in making her a great musician. Thallie is an up and coming artist, originally from Mauritius but now looking to tackle the international market, and is now found in the UK. She is a singer with an urban style, producing music in a range of related genes music such as RB, Hip Hop, Dancehall. Back at home she has been known as the prospering version of Shakira (a world famous artist).CDs This media format will primarily be used as a promotional tool. In order to raise awareness of Thallie and her music, CDs will be distributed to radio stations, and at all events and gigs at which Thallie will perform at. There will be a small number of CDs available to purchase as a accept to revenue.Music Videos Music videos of Thallies songs will be produced in order to be placed in a number of outputs. Like CDs, these music videos will be used to promote the artist to her current and potential fan base. The music videos will be uploaded online on social networks such as YouTube, Facebook, and MySpace, therefore allowing and encouraging fans to comment and discuss the artists music and create a following. This method will also be an ideal approach to launching new single tracks and other material. The music videos will also be made available for music television and other related outputs.Events (Offline) In order to raise awareness directly to current and potential fans, there will be a number of events, ranging from concerts, night club events and press releases. This element of the product portfolio will be one of the main sources of revenue, with fans having to pay for concert tickets and night club promoters having to pay a hiring fee for Thallie. Press releases will be the support activity in terms of promotions, however will be used a met hod to be recognised throughout the entire music industry.Live Stream Shows (Online) In recent years there have been many changes in the music industry, and new concept that has yet to be fully utilized is online concerts. As concerts have been a major source of revenue and as the internet has been the most popular means of obtaining music, pose the two together may possibly be another method by which record labels can prosper. Therefore by hosting live unvarying online concerts to Thallies global online fan base at a relatively low price a new income source can be created.Digital Downloads To support the live stream shows, digital downloads will be available to purchase at a variety of online locations. Fans and others interested in music will have the opportunity to purchase single tracks, albums, and short video clips. These downloads will be made available via the artists website and P2P sharing programmes, such as iTunes.Figure 1 BCG Matrix of Mystical Records Product Portf olioMusic videos, events and digital downloads have all been placed as star products, as they all to have high potential growth and high market share. Music videos and digital downloads in recent years have been increasingly popular formats by which music is distributed and acquired and is therefore seen as a profitable source of revenue. Therefore the primary objective is to exercise and hold their current status and use it as a strategy to only develop and diminish.Thallie and live stream shows have both been placed under question marks, as they both have potentially high levels of growth, however they both currently have low market share. With changes within the industry and with technology as a whole both of these products are under building strategies and are projected to become star products and features.CDs have been placed in specie cows, as they are now seen as a traditional format by which music is distributed, however they will still be used for mostly promotional campa igns with the support of some sales. There will not be any major efforts made to sell physical CDs, but will be an ongoing production in order to maintain some regular income.8.0 Place StrategiesOne of the most important processes of a record label is deciding where and how to deliver the artists music to the fans and other end users. By carefully implementing solid place strategies there can be an effective method by which the online arena can make an artists career. As a small record label there are particular(a) budgets available, and therefore any chosen method of distribution must be carried out with due diligence.For Thallie, there will be a range of direct and indirect channels of distribution in order to market and sell her singles, albums and other material. The main location for this will be via the online arena, through her website and the record labels website. However there will be a number of channel intermediaries which will also be used to distribute and sell music to the fans and customers. In support there will be promotions and distribution through offline outlets such as local record stores and at events. The model below shows the various methods of distribution, with both direct and indirect channels. Thallies website can sometimes be seen as an indirect channel however the same method will be used for future signings, and therefore is a direct link between the record label and the end users.= Indirect= packMYSTICAL RECORDSFAN BASE / CUSTOMERS / END USERSRecord StoresP2P Sharing SystemsSocial NetworksThallies WebsiteFigure 2 Channels of distribution9.0 Promotional StrategiesThe selection of promotional activities to be used by Mystical Records will be a big challenge. They must suit the companys framework and budget, as well as be executed in a timely and efficient bearing in order to achieve maximum results. The promotional campaign will hopefully lead to attracting a larger fan base, increased purchases, and establishing Thallie and M ystical Records within the music industry.A promotional mix will be implemented in order to promote the various musical productions by Thallie to her current and potential fan base. The mix consists of the following elements advertising, direct marketing, personal selling, sales promotion, and public relations, however areas such as viral marketing, sponsorship and networking can also be included.9.1 AdvertisingThe first element of the promotional mix is advertising, this is where paid for messages and ideas are published to the public in order to inform, remind and persuade them. In the case of Mystical Records, advertising will be used to promote Thallies musical releases both online and offline. However more cogitate will be placed on offline advertisements due to their being many free advertising opportunities online. As a large portion of our target audiences are the youth market, advertising on global music websites can be an effective method to both reach and inform them of new offerings and events. Though traditional media formats are decreasing in popularity there are still opportunities to advertise in magazines and newspapers about new releases. However due to financial resources being lower advertising will be selective in terms of placing and regularity.9.2 Sales Promotions / IncentivesOne of the most important aspects of the use of promotional tools is the incentives used to attract fans and customers to purchase Thallies music. For new customers registering their details via Thallies website or the record labels website, they will be offered free 10 minute screening of upcoming live online concerts. This will both engage customers in purchasing the full showing of the concert and attract their friends and family to also register. Additionally periodical draws will be held giving selected customers free viewings of entire live online concerts or the chance to win tickets to regular live concerts or other freebies. For devote fans there will be further incentives of receiving free signed posters and CDs or even being chosen to feature in music videos.9.3 charge MarketingOnce fans and customers have registered their details, information can be sent on a regular basis. For example details about special offers, events and new releases can be sent out through regular monthly emails to fans and customers. Information can be sent in a customised manner, making the communications with fans more personal.Traditional formats of direct marketing can be used a support tool, however due to this method costing a lot to be effective, an eCommerce (online channels) and mCommerce (mobile channels) channels of marketing is preferred.9.4 individual(prenominal) S