SBCROX_iitkgp

8/7/2019 SBCROX_iitkgp

1/22

Audio and Music Sector

Team SBC-Shilpa Gautam (09BM8085)

-Sujit Singh (09BM8054)


2/22

From Phonographs to Mp3

Until the 90s the development of music industry and itsinnovation was guided by the industry itself.

In 1935 magnetic tape started to be used for recording ,while in 1963 Philips introduced the first music cassette andstandardized the first 8 tracks music players

1983 Sony and Philips joined forces and created theCompact Disk( CD ) Player , which became the standard forphysical music storage


3/22

From Phonographs to Mp3

The release of the first sound cards for the consumermarket in 1991 , changed the attitude of people towardsthe use of computers to listen to music.

The commercialization of the internet was becomingmore and more evident at this time.

In 1996 was the official release of the first popularcompressed format MP3. That was the turning point of

the music industry , which took it to the new age ofdigital distribution of music.


4/22

Old Music Industry Model Digital Music IndustryModel

Old Vs Digital Music Industry Model


5/22

The Industry in Numbers Global digital music trade revenues reach US$4.6 billion, up 9.5% in 2010 with 400

services licensed worldwide by music companies with ISPs, mobile and other partners.

Digital music, as defined by the Recording Industry Association of America (RIAA),includes mostly music downloaded over the Internet for a fee, music downloaded fromsubscription sites, and music downloaded to cellular phones and

other mobile devices.

There is almost 33 % decline in the profits of the record studios , while online distributionchannels have a growth of more than 1000% in 2004-10


6/22

The Industry in Numbers 95% of the music downloaded online is not legally obtained.

The digital supply chain for music Is becoming dominant in the music industry. Sales of music downloads, the dominant revenue stream in digital music, are seeing steady

growth. Single track download sales increased by an estimated 10%, while digital albums rosean estimated 20% in 2009

The report shows that, while the music industry has increased its digital revenues by 940%since 2004, piracy has been the major factor behind the overall global market decline ofaround 30% in the same period

Source: IFPI publishes Digital Music Report 2010


7/22

What has changed in music

industry in recent years?

Bu

sin

esspro

fil

e

0

2000

4000

6000

8000

10000

12000

14000

16000

19 97 199 8 1 99 9 2 000 2 00 1 2 00 2 20 03 20 04 2 005 2006 2007

phys

digit

total

Revenue in music industry in mln USD


8/22


9/22

Big Players


10/22

Types of Online Music business

Subscription services (Rhapsody, Online Radios)

Ad-Revenue (Grooveshark)

Pay-per-song (ITunes)

Streaming services with application

on mobile

Artist Communities Online (MySpace)

Music Tax (ISP taxing)


11/22

About Players

Apple iTunes biggest selection of music tracks on the planet

over 6 million collections available

biggest downside is that the vast majority of the music is in the .MP4/.AAC format, and thatmeans it will only play on the provided digital player or an iPod

Prices: $0.99/track, ~$9.99/album

Napster become one of the powerhouse download destinations.

download individual tracks and entire albums from the service at $0.99 and $9.99, respectively

once your subscription lapses, theyll no longer play on computer

$0.99/track, $9.99/album, Subscriptions: $9.99 and $14.95.


12/22

About Players

Rhapsody currently has the second-largest catalogue of any download service, with around

four million tracks.

the application includes an excellent search facility

program also allows you to listen to a number of songs completely for free

$12.99 and $14.99, respectively. With the former, you can only play tracks on yourcomputer, but the latter allows you to transfer them to your portable player

$0.99/track, ~$9.99/album. Subscription rates are $12.99 and $14.99

Amazon.com Music Amazons a late entrant to the music download market

Downloads are simple too

Allows dumping to and playing it on compatible devices like the iPod

$0.89/$0.99/track, albums from $4.95


13/22

About Players

eMusic Catalogue now approaching three million track

Everything is in MP3 format, with no copy restrictions

If your subscription lapses the tracks youve already bought remain yours

$9.99/month for 30 songs

Yahoo Music Unlimited

The service is doing a lot of things right and trying hard Downloads in WMA format, which means iPod wont handle them

To listen subscriptions are dirt at $5.99 a month

The subscription lapse, you cant listen to them anymore

$0.99/track, albums $8.00 and up. Subscriptions cost $5.99/month, which allowsusers to download tracks for $0.79/tune.


14/22

Digital rights management (DRM)

DRM, often referred to as copy protection, limits what functions a user mayperform with digital media.

It provides a way to control if and how many times a digital music file can becopied.

Apple, for example, reserves the right to change at any time what you can dowith the music you purchase at the iTunes Music Store. For instance, in April2004, Apple decided to modify the DRM so people could burn the sameplaylist only 7 times, down from 10.

Microsoft, similarly, utilizes Microsoft's Windows Media Audio (WMA) DRM.

The future: Sony has announced that it plans on shipping CDs with DRM

built-in.

DRM has become and will continue to be an essential element to controlaccess of downloadable music.

Store Selection Geographic Platform DRM Preview Trial


15/22

Store Selection(approximately)

Geographicrestrictions

Platform DRM Preview Trial

7digital 11,000,000songs

Some Platform Independent forMP3 songs

No 30 seconds None

Amazon MP3 14,815,786songs

US, UK, andGermany only

Platform independent forindividual tracks andbrowsing the store,Amazon MP3 Downloaderis required fordownloading albums(Windows 98 or later,Mac OS X or Linux)7

No 30 seconds None

BuyMusic 1,000,000 songs United States Windows 98 or above, IE5.01 or above10

Yes,PlaysForSure

Unknown None

eMusic 6,000,000 songs,100,000 artists,

200,000 albums,40,000 labels

Varies by track Windows 98 orlater;Linux; Mac OS 9/X11

No 30 seconds 25 downloads

iTunes Store 14,000,000songs

Some Mac OS X 10.4.11 orlater; Windows XPService Pack 2 or later.

No 90 seconds None

Rhapsody 10,000,000songs

United States Windows 98 or later, MacOS X, Linux30

Partial, RealDNA31, hasDRM-free MP3s

30 seconds 14 days

almart Music 1,000,000 songs United States Windows 98 or above No, since Feb.2008

30 seconds None

Napster 12,000,000songs

United States,Canada,Germany, orUnited Kingdom

Napster Web application(Windows/Mac/Linux),Internet Explorer 7.x(Recommended),

Purchase: no(DRM-free MP3in somegeographicalareas);

Subscription:Yes,PlaysForSure.20

Napstersubscription-Entire song,unlimited; FreeNapster-Entire

song; NapsterMP3 Store-30seconds.

7 days


16/22

Market share

iTunes, is the largest revenue source in theonline sector and has more than 100 millionaccounts across 23 countries.

Apple has greater than 85% of the market shareof downloadable music, according to NielsenSoundScan.


17/22

Subscription Cost Subscription base music downloading model for

various companys.


18/22

Porters 5 Forces Analysis

Rivalry High

Numerous services arepopping up Partnerships andshakeouts are prevalent


19/22

PESTEL Analysis

Political Some countries and locations may not offer ways to expose yourmusic.

Possibility of rejection due to copyright law.

Economic

There should be enough disposable income with the people to usesuch services.

Useful to new entrants to the sector, as very low initial investmentis required.

Social Industry is very dynamic, demand will change with changing

consumer patterns and music formats. The demographics, particularly age of the target segment is very

limited. Action, Opinion and Interest of People are shifting towards online

form of music.


20/22

PESTEL Analysis

Technology

Penetration of Internet in percentage terms is still very low.

Technology is changing continuously.

Environmental

Moving towards online form of music from physical form positively affect theenvironment.

Legal

Piracy issues digital piracy is choking revenuesthe net effect of illegal file-sharing is reduced purchasing of music, Overall music sales fell by

around 30 per cent between2004 and 2009.


21/22

To Tap new market

In order to take the business to the next level and capture the enormouspotential thats still untapped, we need new services to truly break throughto the mass market. To do that, an attractive user interface, a strongvalue proposition and a clear marketing message are essential, as is aneffective way of curbing piracy.

Consumer education has a vital role to play, and the music industry iscurrently involved in more than 70 awareness programmes across theworld.

A graduated response model is used involving escalating warnings toinfringers culminating, as a last resort for those who refuse to stop, in he

sanction of temporary account suspension.


22/22

Thank You !!

SBCROX_iitkgp

Documents

Transcript of SBCROX_iitkgp