MUSIC INDUSTRY
Oligopoly – the Big 4UniversalSony BMGWarnerEMI Economies of scale Both vertical & horizontal integration
MARKET SHAREUniversal (Vivendi) 31.7%Sony BMG 25.6%Independents 18.3%Warner 15.0%EMI 9.5%
Music Sales TrendsU.S Music Sales (1/3 of worldwide sales) 2007 $10.4bn (down 9%) 2006 $11.5bn Down from $12.3bn in 200...
MUSIC REVENUE TRENDSSales of CDs are falling steadilySales of digital tracks are risingPiracy / CD burning represents annu...
Who’s Buying?1. 45+ 26%2. 15–19 13%3. 25–29 13%
What Are We Buying?1. Rock 34.0%2. Country 13.0%3. Rap/Hip-hop 11.4%4. R&B/Urban 11.0%
SOURCES OF COMPETITION Piracy of CDs and Cassettes. In No.2 market, Japan, 236m CD-Rs wereburned in 2002, while legitima...
Promotion Promotion as important as production Single largest expense Includes attempts to influence positionson music ...
Conglomeration Synergies through ties to filmstudios, TV networks, publishing,etc. film scores developed fromcorporate-o...
Industry Strategies commonly 5 renewable 1-album contracts, royalty system pays the artist 7-15%payable after costs are ...
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Music Industry Analysis

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Music Industry Analysis

  1. 1. MUSIC INDUSTRY
  2. 2. Oligopoly – the Big 4UniversalSony BMGWarnerEMI Economies of scale Both vertical & horizontal integration
  3. 3. MARKET SHAREUniversal (Vivendi) 31.7%Sony BMG 25.6%Independents 18.3%Warner 15.0%EMI 9.5%
  4. 4. Music Sales TrendsU.S Music Sales (1/3 of worldwide sales) 2007 $10.4bn (down 9%) 2006 $11.5bn Down from $12.3bn in 2005 Down from $14.5bn in 1999
  5. 5. MUSIC REVENUE TRENDSSales of CDs are falling steadilySales of digital tracks are risingPiracy / CD burning represents annuallost revenue of $4bn+
  6. 6. Who’s Buying?1. 45+ 26%2. 15–19 13%3. 25–29 13%
  7. 7. What Are We Buying?1. Rock 34.0%2. Country 13.0%3. Rap/Hip-hop 11.4%4. R&B/Urban 11.0%
  8. 8. SOURCES OF COMPETITION Piracy of CDs and Cassettes. In No.2 market, Japan, 236m CD-Rs wereburned in 2002, while legitimate CD saleswere 229m. In Spain, two out of five records were pirated. MP3 file swapping Competition from new forms of entertainmentincluding video games and DVD films
  9. 9. Promotion Promotion as important as production Single largest expense Includes attempts to influence positionson music charts, radio play time(“payola”), tours
  10. 10. Conglomeration Synergies through ties to filmstudios, TV networks, publishing,etc. film scores developed fromcorporate-owned library music video channels promote ownartists artists appear on talk shows magazine articles
  11. 11. Industry Strategies commonly 5 renewable 1-album contracts, royalty system pays the artist 7-15%payable after costs are met (plussongwriter publishing royalties), Decisions according to track records andreputations: celebrity power Pre-selection systems: selecting thatwhich is most likely to succeed in light ofrecent successes

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