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Soundbuzz’s Music Strategy for Asia-Pacific

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Soundbuzz’s Music Strategy for Asia-Pacific …

Soundbuzz’s Music Strategy for Asia-Pacific
Laudon/Laudon MIS 12/e: pages 148-149

1. Analyze Soundbuzz and its business strategy. What strategies did it develop for dealing with the competition?
2. What are the critical elements for an online music service? Using the value chain model, analyze Soundbuzz’s business processes.
3. Why did Motorola acquire Soundbuzz? What synergies will be created through this partnership?
4. What else could Soundbuzz do to improve its business model? What can it learn from iTunes?

Made and presented for the course Management Information Systems at the Viadrina University, winter term 2012/2013.

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  • “ Hello! We are going to talk about the company Soundbuzz, the first digital music retailer in the Asia-Pacific region in 2000. Unfortunately, this company doesn’t exist anymore since 2009 and during the presentation we will realize why it is so.”
  • “ Moreover, we will answer some questions dealing with Soundbuzz’s business strategy and the critical elements of an online music service.”
  • “ First of all let’s consider the Porter’s competitive forces model and discuss Soundbuzz’s strategies for dealing with them.”
  • “ New market entrants. The main barrier for entering the market legally is licensing deals with music publishers and record companies, which are always not so easy to do. The next step is launching an online music store. However this is not a big problem nowadays. Soundbuzz applied the following strategies for better performance in comparison with possible new market entrants: In 2000 Soundbuzz signed a digital music deal with the Internet portal Lycos Asia to distribute music on its networks They signed many licensing agreements with famous record companies (we will see them on the following slides) In 2001 it launched a Business To Business model. “
  • “ Substitute products. These include: Music files provided illegally Freely shared files in local networks Digital music based on a monthly fee Music compact disks Television and music channels, radio For competing with these substitutes Soundbuzz was maintaining and updating a big mediabase and creating partnerships with mp3 player manufacturers for delivering music to customers through their devices. “
  • “ The customers of the company are individuals, mp3 player manufactures and from 2001 other music portals such as Hewlett-Packard’s digital music service. The strategies for attracting and retaining customers were: The Business To Customer model: selling the music directly to the customers through their own website Diversification in the range of products (including digital services for mobile devices, video music etc.) Partnerships with payment provider Trivnet and Internet Service Providers (ISPs) for convenient multiple billing channels Partnerships with mp3 player manufacturer, such as Creative Technology and Reigncom.”
  • “ The suppliers of Soundbuzz are record companies, independent record labels and unsigned artist as well. Soundbuzz created partnerships with all major labels – Sony, BMG, Warner Music, EMI and Universal – provided Digital rights management technology and even an Artist-upload interface for new unknown musicians.“
  • “ Soundbuzz made some important steps to become a strong competitor in the digital music market. As we ’ ve already told there were partnerships with Lycos Asia, major record companies, mp3 player manufacturers, maintenance of big data and mediabase, implementing both B2C and B2B models and more. But still such strong competitors as Nokia and Sony Ericsson music stores threatened the success of Soundbuzz which was comparatively smaller and was only accessible via the Internet Explorer browser. “
  • “ So, as we can see Soundbuzz applied three main strategies: product differentiation, focus on market niche and customer and supplier intimacy.”
  • The online music market is still growing. In the past few years however, there were great changes in the business models and type of distribution, new market entrances are usual and a lot of services are shut down as fast as the are coming. So let us have a look at the critical elements for an online music service. Due to the growing mobile platform, the music must be in a universal format for different devices, there should be a large database and different payment models. Especially the last point is open for discussion because some people don’t want to pay so much for music. Streaming is becoming more popular.
  • Soundbuzz made an effort to meet the critical elements of an online music service. We can see that in the value chain model. Their primary activies were: Building a large database with major record labels and independent artist Process and distribute music and ringtones on different devices Making partnerships and offering different payment systems To do these supporting activities they operated web and media servers and secured the files via DRM. By selling the music to their customers they generated their revenue.
  • It complemented the objectives of the Soundbuzz in expansion of music offerings.”
  • “ In 2008 Motorola signed the agreement to acquire Soundbuzz. The main aim was to to expand thei music service Motomusic beyond China into India, Southeast Asia, Australia and New Zealand. ”
  • Although Soundbuzz made such an effort to stay on top of the market, the competitors eventually became too successful. Even Motorola could not rescue them. This was because of different reasons. Illegal shared files are still popular. Their business model was old - Customers wanted more than just music. The competitors attracted their customers with a broader offering. Moreover Motorola also struggled because of the smartphone market, especially the big competition of Apples iPhone.
  • Soundbuzz could or should have made some improvements. Especially iTunes is a good example. There you can get more media, like videos, tv shows, ITunesU, books, apps, podacasts. There is one ID for purchasing everything and the platform can be used to organize and play the media as well. It works perfectly with all iDevices and even Windows. With the new iCloud service, music is accessible from everywhere. Also streaming services becomes more and more popular. Listening to music for a monthly or (quarterly fee) Online playlists and social media sharing options.
  • Thank you for listening. Any questions?
  • Transcript

    • 1. Soundbuzz’s Music Strategy for Asia-Pacific Management Information Systems 05.11.2012
    • 2. Outline 1. Analyze Soundbuzz and its business strategy. What strategies did it develop for dealing with the competition? 2. What are the critical elements for an online music service? Using the value chain model, analyze Soundbuzz’s business processes. 3. Why did Motorola acquire Soundbuzz? What synergies will be created through this partnership? 4. What else could Soundbuzz do to improve its business model? What can it learn from iTunes?
    • 3. Porter’s competitive forces model New market entrants Substitute products Soundbuzz Competitors Customers Suppliers
    • 4. New market entrants Licensing deals Launch of an online music storeStrategiesLycos AsiaLicensing agreements with record labelsB2B model
    • 5. Substitute products Music files provided illegally Freely shared files Digital music for a monthly fee CDs TV and radioStrategies Big database/ mediabase Partnerships with mp3 player manufacturers
    • 6. Customers Individuals Mp3 player manufacturers Music portalsStrategies B2C model Diversification Partnerships with Trivnet and ISPs Partnerships with mp3 player manufacturers
    • 7. Suppliers Record companies Independent labels Unsigned artistsStrategies Partnerships with recording companies Digital rights management technology Artist-upload interface
    • 8. Competitors Nokia music store Sony Ericsson music store Companies with a monthly fee (e.g. Spotify) Possible: iTunes and Amazon.comStrategies Partnerships Big database/mediabase B2C and B2B models
    • 9. Main strategies Product differentiation  B2B and B2C models  Wireless and device areas Focus on market niche  Asia-Pacific region  Lycos Asia promotion Customer and supplier intimacy  Partnerships  Web-site  Multiple-billing channels
    • 10. Critical elements  Big and up-to-date database  High quality files  Easy to use, convenient, good- looking website  Various and fast access to the music (different platforms)  Different payment systems, affordable prices  Safety and security of the content (licenses/copyrights)  Forming distribution partnerships
    • 11. Value chain model Ac usic Infrastructure and Management M ce ssSUPPORT Forming Distribution to M ACTIVI- Partnerships ar gi TIES Digital Rights Management Technology n Servers (Web, Database, Licenses, Media) Music Process Distributi Payment Security, s ent ic on via Systems Maintenance, s Data- files for vi fer u n de dif us M Web, & Customer gi base & different ar Licenses channels Apps, Advertis Service M on rio Devices ement ce Va PRIMARY ACTIVITIES
    • 12. Motorola & Soundbuzz “With the resources of Motorola, we are now able to immediately expand the digital music offerings available to our customers – and Motorola’s rapidly growing installed base of handsets throughout the region.” Sudhanshu Sarronwala, CEO of Soundbuzz http://mediacenter.motorola.com Has: Wants:  Customer database Expansion of music  Music database offerings  Widespread in Asia-Pacific
    • 13. Motorola & Soundbuzz“Music is the heart and soul of the mobile entertainment experience,and with Soundbuzz as a part of our family, Motorola has the biggest heart and the most soul in mobile music in Asia.” Ian Chapman-Banks, Vice-President of Mobile Devices Marketing for Motorola Asia-Pacific. http://mediacenter.motorola.com Has: Wants:  Brand Expansion of Motomusic  Handsets beyond China
    • 14. Success? They do not operate anymore - shut down in 2009! Motorola effected by the rapidly growth of the smartphone market Changing market situations, new competitors Different customer expectations
    • 15. Improvements and iTunes DRM free downloads possible Soundbuzz based on Windows Media Player, only accessible through the Internet explorer  not convenient Bundle: iTunes and iDevices Not only music but also other media Organizing and playing files Streaming and flexible prices more popular
    • 16. Thank you! Do you use an online music service? Which one and why?