Analysis of the Music Industry: Describes in detail how the music industry has changed its methods of distribution, promotion and manufacturing.

Essay by mwbuckUniversity, Bachelor'sA-, November 2002

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In the recent years there has been a change in the structure of the Music industry and the paths that have been used for creating, promoting and distributing music. Most of these changes have been a result from the advancements in technology, which affected both economical and technological structures of the industry. To understand better how these changes have affected the industry and their possible future impact, we need to clearly understand the current structure.

The value chain of the present music market is pretty simple. We have four main players - Artists, Music Agents (intermediates), Distributors and Consumers. The way that the product, in our case a musical CD or just music, reaches its final destination is most of the times well defined. There are a few exceptions that I will discuss later.

Musicians come to the record company or music producer with a sample of their music. Than if these so called "gate keepers" decide that it is worthy to publish and the music is promising they sign a contract with the musician.

Copies of albums are recorded and than the product is promoted and distributed on the market, as the specifics of the different kind of music are taken in mind. The interesting thing with the music industry is that we do not have one ultimate consumer but diverse audience because each product is specific and has a specific niche in the market. Companies are optimizing their profits by selling the particular product to the group which demand is the greatest. Financial means and industry contacts are used by music publishers and record companies to attract attention to new releases and create demand.

At present there are 5 major companies dominating the music market - EMI - (Thorn), Warner - (Time Warner), BMG - (Bertelsmann), Polygram -...