Business growth and objectives Flashcards
(26 cards)
Growth Strategies
Digital transformation and platform expansion
Mergers and takeovers
Vertical integration and diversification
Niche market growth and localisation
Digital transformation and platform expansion (1)
UK retailers and distributors have increasingly
moved online to reach consumers through streaming, digital downloads and direct-to-consumer (D2C) platforms
Digital transformation and platform expansion (2)
HMV focuses on a
vinyl-heavy product mix and event-based experiences in its stores, promoted through HMV Live
Its website is the number one online vinyl retailer in the UK
Digital transformation and platform expansion (3)
Amazon.co.uk allows
customers to access purchased music on its Amazon Music subscription platform
Mergers and takeovers (1)
UK-based indie labels are often
acquired by larger distributors or labels
For example, Warner Music Group bought UK indie label 300 Entertainment and Universal Music Group regularly acquires rights to high-profile artist catalogues (e.g. Queen, Bob Dylan)
Mergers and takeovers (2)
Mergers and takeovers increase the
market share of record labels, strengthen their catalogues and give them more negotiating power with digital platforms such as Spotify
Vertical integration and diversification (1)
Record labels are increasingly
involved in areas such as merchandise, ticketing and social media content production
For example, Sony Music and Universal Music have launched their own in-house branding and creative services to support artists
Niche market growth and localisation (1)
Growth has also come from the
resurgence of niche products, especially vinyl.
Niche market growth and localisation (2)
The UK saw over
5.9 million vinyl records sold in 2023, the highest in 30 years
Key business objectives
Increase in market share
Profitability and sustainable revenue
Customer retention and brand loyalty
Artist development and catalogue expansion
Increase in market share (1)
For global platforms like Spotify,
growing the number of users (free and premium) is critical
In the UK, Spotify holds a leading share of the streaming market (around 58% in 2023)
Increase in market share (2)
Record labels aim to
expand shelf space in major retailers such as HMV or increase artist placements on streaming playlists
Profitability and sustainable revenue (1)
Streaming offers
recurring revenue through subscriptions but lower revenue per stream
Profitability and sustainable revenue (2)
Customer retention and brand loyalty (1)
Subscription models (e.g., Spotify Premium, Amazon Music) depend on
customer retention
They invest in user experience such as personalised playlists and artist exclusives
Independents focus on loyalty through community events, knowledgeable staff and strong branding (e.g. Banquet Records’ integration with local gigs)
Customer retention and brand loyalty (1)
Independents focus on
loyalty through community events, knowledgeable staff and strong branding (e.g. Banquet Records’ integration with local gigs)
Artist development and catalogue expansion (1)
Labels pursue
growth by signing emerging artists and acquiring back catalogues
This fuels long-term streaming revenue and licensing potential, such as Netflix/TV deals
For example, Beggars Group, a UK indie label collective, invests heavily in long-term artist development over short-term hits
Challenges to growth
Too many competitors (market saturation)
Changes in how music is consumed
Artists not being paid fairly (low royalties)
Illegal downloading and stream ripping
Harder for small shops to survive
Even though the music industry is
growing, especially with streaming, there are still many problems that can make it harder for music businesses to grow
Too many competitors (market saturation)
There are already lots of companies offering music in the UK, like Spotify, Apple Music, Amazon Music and YouTube Music
Most people who want to stream music already have an account, so companies are now fighting over the same customers
It’s harder for new businesses to enter the market or for small firms to grow
Spotify is the most used music app in the UK
Smaller streaming services like Deezer or Tidal struggle to compete
Changes in how music is consumed
People don’t buy CDs as much anymore and often listen to short clips on social media (like TikTok or Instagram Reels)
Younger listeners might hear just 15 seconds of a song before deciding if they like it
This means artists and music businesses must promote songs differently, and it’s harder to keep fans’ attention
The song “Old Town Road” by Lil Nas X became famous on TikTok before it was played on radio or sold in shops
Artists not being paid fairly (low royalties)
Musicians earn very little each time someone streams their song
Most of the money goes to the big platforms or record labels
This causes arguments in the industry, and some artists feel they are being treated unfairly
A UK campaign called Broken Record is asking for artists to be paid more fairly from streaming
In 2022, the UK’s Competition & Markets Authority announced a study into the structure of the music streaming market
