Understanding the environment

Researching Music Markets In marketing, change is constant. Consumers, competitors and societies are fluid. Music entrepreneurs must watch for emerging trends. Failure to do so is a major cause of failure. Successful marketers: recognise change adapt to change respond to emerging threats see change not as a problem, but as an opportunity for growth outlive competitors who would rather ignore change create a dynamic, adaptable businesses that welcome change.

PESTEL Political Economic Social Technological Environmental Legal

Researching Music Markets

Trends & Trend Spotting Music entrepreneurs & record labels: Rely on trend spotting marketing intelligence street crew or fan club interaction Artist & Repertoire – Record labels rely on A&R (Artist & Repertoire) Managers to do exploratory market research: – listening to demo tapes – checking out bands at the local pub – monitoring the charts and music press –observing sociocultural trends

Porter’s 5 Forces Model

SWOT Analysis

Intellectual Property Trends Copyright Disrespect –while the success of Apple iTunes and the iPod has driven legitimate revenues via online mp3 sales, there is a prevailing view that downloading is a victimless crime. Copyright law enforcement –western governments, rights holders and rights holder organisations continue to pursue copyright infringers via the courts. Alternative copyright systems –new forms of copyright licensing are emerging such as the Creative Commons concept. Compilation marketing opportunities –will emerge as many classic rock and pop recordings enter the public domain upon the expiration of their copyrights. Peer-to-peer (P2P) in decline or on the rise

Major trends in the industry Indie artist topping the album and single charts As major record labels remain focused on the forced restructuring of the industry due to the digital music revolution, they will look increasingly to independent labels to act as their ‘quasi’ A&R departments. Indies will find and develop the talent; majors will press and distribute. Look to fewer and fewer direct signings by majors. Live music Opportunities in live music will continue to expand as music consumers of all ages flock to more outdoor music/cultural events. Faster business cycles The life cycle of the typical artist will shorten. As in the film industry, the shelf life of a new music ‘product’ will be measured in months, rather than years, forcing labels constantly to seek out new artists.

Major trends in the industry Recording technology Over coming years see continued rationalisation in the recording and recording studio market as the value/cost of high-end recording technology completes its invasion of the home and ‘pro-sumer’ market. The home studio will no longer be an exception, but the rule for aspiring musicians. Approaches to recording Artists today can be recorded and released far quicker than in the past. Inaugural Australian Idol winner, Guy Sebastian, exemplifies this. His first album was recorded in a matter of weeks, taking advantage of market momentum following his victory. The industry is also experiencing massive increases in DVD sales, driven by the widespread take-up of home cinema/audio entertainment. Look for increasing numbers of albums mixed in surround sound and super audio formats.

Major trends in the industry The retail environment Record labels will abandon their traditional role as wholesalers. Music retailers will respond by increasing their range of DVD audio, DVD video and DVD music video, and entertainment lifestyle products such as the iPod. Eventually the CD format will become obsolete. More telecommunication carriers will enter the digital music market, treating music as mere ‘bait’ to sign consumers up to phone and internet contracts. Media convergence Digital consumer products will act as the centre of a consumer’s entertainment lifestyle. Consider the evolution of mobile communications technology. Mobile phone, PDAs, mp3 player, digital camera, watch, video game and laptop computer will merge to become one device, posing significant challenges and opportunities for the industry.

Major trends in the industry The multimedia artist Will rise to meet the challenges of media convergence. No longer just singers, songwriters and recording artists, they must become stars of all entertainment media. Compilation marketing opportunities nThese will increase as classic rock and pop recordings enter the public domain when their copyright expires. nExpect to see further manipulation of the copyright laws in the United States as the entertainment industry attempts to stop their recordings, movies etc falling into public hands, ala the Sonny Bono Copyright Extension Act 1998

Secondary Data