Colorado Creative Music STEP-analysis aims to analyze the factors makraekalagichnyh music business, which deals with the company. These factors fall into the political, economic, social and technological groups (Pearce, Robinson, 2000).
Political factors affecting music business in general and the CCM, in particular: strong political stability in the United States; regulatory and legal issues related to the music business, including copyright laws on copyright protection on the writing and recording music, legislation on copyright, the problem affects the promotion and distribution of virtual internet, such as the Law on the recording of home recording (1992) without electronic theft (NET Act) (1997), "The law of digital designs on sound recordings (DPRSRA) 1995 Copyright Act in the digital millennium", "Law on law: the competition Act to the music on the Internet andLaw on Protection of Consumer Broadband and Digital Television "(CBDTPA)" and other environmental standards and job requirements do not affect the business, which deals with CCM. As regards fiscal policies, while in 2000 out of a total income of $ 216 614.05 the company must had to pay $ 4 744.97 tax that is not a & # 39 is a high rate and accounts for nearly 2% of total revenue. In general, it should be noted that political factors are favorable for the music industry and especially for the CCM.
Economic factors include macroeconomic indices, which may affect the music recording industry. It is also for SCM favorable macroeconomic factors such as economic growth, interest rates and inflation. Thus, the US economy has been increasing since 1995. True Orthodox supplies in 1997, 1998 The unemployment rate increased gradually from 1995 to 2000.
Social factors that cover demographic and cultural aspects of the environment associated with the music recording industry – this population growth, age distribution, and related to the media. Population growth in the US is stable, and the age distribution also contributes to the recording industry. It should be noted that for the music industry in general, teenagers and 20-year-olds – the main customer segments, but CCM aims to attract people of the age range of 40-60 years. Thus, a large proportion of the American population corresponds to this target market.
Technological advances in recording, promotion and distribution of music has several effects on the recording. One aspect of the problem is that musicians are no longer dependent on major labels that create or distribute their products. (Viljoen & Dann, 2000) Alternative software in the MP3 format has become increasingly popular since 1998. In conventional audio space can accommodate 12 to 15 recordings; Software MP3 can store about 150 music tracks. "The transition to MP3, as the new format, which replaces the CD-ROM, as well as the CD replaced vinyl albums, was accelerated by the influx of new portable MP3-players in the market – some less than conventional Sony Discmans." (Viljoen & Dann 2000, p. 173). On the other hand, new digital technologies that with & # 39 appeared in the late 20th century, not only facilitate the process of recording music, but much cheaper, allowing many businesses with limited resources to enter the market. So, if in 1980 a professional recording studio with all the recording equipment, which worked on vinyl or tape recorders, worth several million dollars and, thus, was the domain of 5 or 6 major record companies in 2000, assembly of professional recording studio could It is carried out free of charge only 5000 dollars. All equipment and facilities, thanks to the world's progress in technology for ordinary artist or a businessman is much more accessible.
* Favorable costs with new technology that is the result of the digital revolution. Cheaper not only build the studio with all the necessary equipment, but also the copying of CDs, storage and shipping. Low production cost, duplication (duplication of 500 CDs ranges from 1.90 to 3.63 dollar, duplication 2000 CD costs about a dollar per CD), shipping and storage makes the final product less expensive and more accessible to customers, thereby extending the range and scope of use of the target market.
* Positioning of CCM in a distinctive niche. CCM – a company that specializes in classical and traditional instrumental music.
* There is a growing customer base and customer loyalty within the target group. The growth of the customer base through expansion of product lines (4 already, each year out 2 new lines) and geographic coverage of listeners.
* Good customer service shown through direct contact between Darrenam and his supporters.
* There is a clear strategic vision: CCM needs a long-term vision that includes all areas of business, from marketing and management to distribution and human resources. At present the company is in a dilemma further strategic development that will focus either on the rise or development of a record company or a more active promotion and distribution of products through the ability of other companies (the company is now regarded her leadership as the potential of the & # 39; object of acquisition or investments)
* Competitive disadvantages: CCM can not enter the retail market in relation to its current level of sales. Rivals such as major labels have the advantage because they have more market power and influence. Such firms may clarify when their music should be played on the radio, and negotiate contracts with large dystryb & # 39; Yutariya and retail outlets, thus giving a more broad appeal.
* Limited distribution channels: the company now largely relies on such sources allocation as direct sales, which include sales at the concert, distribution of shopping centers and sales in the rear (800 rooms, processing orders online and mail). These channels & # 39 are the main sources of income for the company. However, to expand its customer base, the company must purchase official distribution channels, such as sales through traditional music distribution networks and others.
* CCM is not enough financial resources to find new opportunities. The income is small, that is, new features may not be available, and long-term improvement may not be available due to the initial cost. To conclude a contract with the major labels, which would provide the company access to the traditional distribution of products, the company needs to sell at least 15,000 copies of its products each year. On the other hand, high sales figures can not be obtained without a good traditional distribution channels.
* CCM is losing ground to large firms because of limited exposure. Currently, CCM is not covered by global or national audience, as independent labels and major. CCM needs to expand its reach and customer base expansion.
* Service of additional customer groups by expanding collaboration with other artists and expanding akustyterapii and other product lines with new marketing strategies.
* Internet through increased e-commerce and production of MP3-files.
* Expansion of sales in the whole country.
* The acquisition of traditional distribution channels to reach a wider customer exposure
* Development of new technologies to cope with the driving forces of the industry.
* The release compilations with other artists proved popular. One strategy could be the assembly of songs (eg, Accoustictherapy) in the studio and sale of the finished disc at a discount price back to artists who live in their home cities. This method will cover the upfront cost and will allow players a financial incentive to promote the product.
* Push sales in non-traditional areas such as weddings, music shopping center, etc.
* A large number of new entrants and the growth of other smaller labels thanks to the digital revolution. In addition, major brands and independent brands may decide to enter the domestic market of CCM and to try to oust the smaller labels from the market.
* Loss on sale of replacement products, such as mp3 or download online
* Vulnerability industry driving forces of the weak position of CCM in its field, taking into account the fact that the company takes mikrobki segment of the market and make a profit is primarily due to the low cost of digital recording.
Model competition five forces
Model of competition Michael Porter (Porter, 1980), when it is applied to the music industry coding, comprises the following components: The rivalry among sellers of recorded music (competition for a better market position and competitive advantage); performers and other music providers manufacturer or seller of recorded music; dystryb & # 39; Yutariya, retailers and individual customers of music; competitive pressure from substitutes recorded music before the customer-winners; and the threat of new entrants in the industry of recorded music.
Perhaps the most powerful competitive force belongs to such factors as competition among producers and sellers of musical products. Music recording industry has 4 clearly identifying segments: major recording studios, independent labels, mityketki and bustle.
The main companies of the first level are a large number of artists under contracts, which reach 100, specialize in various types of music – rock, country, jazz, classical, traditional and others, and also have formal and reliable national and international distribution channels. Examples of such companies are the & # 39 Columbia, Sony Music, EMI, GMG, Warner Brothers, Atlantic Records, and others. In fact, these companies are not many, and equipment for recording relatively expensive and is at least a couple of million dollars, as these studios to record music from analog rather than digital equipment, so as to obtain three-dimensional, saturated, rich sound, instead of the correct but a simple digital audio.
Independent labels 10-100 artists under contract, focusing on the recording of one or two main styles of music and are either national or most of the regional distribution channels. Examples of independent representatives, "higher octave", "Metal Blade", "Rhino Records", "War", "Uindhan Hill", "Sandentsyi planet." These companies are more numerous than the first tier, and may use analog equipment as well as digital. Typically, independent labels tend to escalate into major, but for this they need to invest a lot of money in the reclamation of their equipment.
Micro-labels have less than 10 artists under contract and highly targeted for a certain style of music. They are characterized by a small staff and a supervisor who acts as a lead artist studio. Mikraetyketki rarely formal distribution system and to a greater extent rely on direct sales to fans and wholesale club and special retailers. In the US market presented mityketki Etherian, Evol Egg Nart, Cuneiform Records, CCM and many others. Typically, these companies are experiencing competition from the low cost of digital recording.
Labels – it is the fourth, the last and most specialized segment of the music industry. They are based independent artists for recording and selling their products. Examples of vanity labels & # 39 are Bob Kalbertsan, Watson and Company, Lao teaser, Esteban Ramirez and many others. (Darren and Wing, 2003). Currently, CCM – it mitkalyagichnaya brand, which aims to transform into an independent label.
In the first place, contest among rivals is based on the popularity of the artist and songs recorded by their companies. Recording studios intensely struggling to attract top performers looking to their contracts. If the song or artist are very popular, the price to & # 39 is a secondary factor that may affect competition. However, if the contractor less known or recorded songs are not very popular, the price plays the role of competition and strategy. In the process of spreading the competition emphasizes access to traditional music distribution channels, such as retail music stores, large chain stores, independent record stores and internet-dystryb & # 39, Yutariya such as Amazon.com. These tools are very important for sales performers disks, in addition to direct sales on their performances. In addition, another factor that greatly affects the sale of CD – this is advertising of songs and radio promotion and transfer.
For PFC rivalry, of course, with the & # 39 is the most important source of competitive pressure. Strong competition from rival producers and sellers of music can be explained by the fact that CCM artists are not known to the general public compared to the first level artists and independent labels.
On the contrary, the competitive threat of new entry – it is certainly a weak competitive strength, located between weak and moderate. For new producers of recorded music bar & # 39; EASURES for entry are not high, especially those which focus on a limited segment of the market and use cheap digital recording technology. SCM can serve as striking example of such entry. This cheap digital recording technology now can be collected not more than $ 5,000. However, expensive analog technologies continue to be worth hundreds of thousands or even millions. The technology used by the firm, it automatically determines the resources and takes place in the recording industry. In addition to the cost of equipment, the main subject of the competition for new members will be clear and the market share of & # 39; sales. Significant about the & # 39; the volume of sales, in turn, depends on the ability of new entrants to attract famous, popular and well-known artists and singers, whose songs are able to climb to the top of the popularity charts. Given the fact that almost all the popular artists have already signed contracts with major record labels, this is a significant barrier to new entrants. Another important bar & # 39; Jeremiah c & # 39 is to obtain a significant distribution channel. Typically, large shopping centers and retailers of music CDs are interested in selling music artists known and do not want to take the products with respect to unknown artists. not very strong for CCM threat of new entry, as the company is focused on a relatively narrow segment of the market. Although, if the new entrant uses the same recording technology, distribution channels and focuses on the same niche in the market, this fact can be a problem suras & # 39; oznaga values.
Competition replacement products can be considered as moderately competitive force in the music industry. Such goods, substitutions are shown in the form of providing consumers with the opportunity to listen to the music CD to other means such as radio, cable TV music channels, live concerts in local bars or nightclubs with live performances or recorded music and the Internet. The Internet has become by far the most important and powerful replacement for the traditional buying CDs as the music presented on the Internet, often cheaper or completely free and does not significantly inferior in quality than .wma CD format. Thus, for a certain number of people, these funds serve as an effective substitute, but the acquisition of the official CD-ROM is necessary for music fans. As for Colorado Creative Music, people can enjoy live performances of these artists and decide not to buy their CDs. Thus, from the perspective of CCM, it can be considered a fairly significant competitive force.
A situation that remained – a victorious power of suppliers and the bargaining power of buyers and cooperative relationship with the seller buyers that with & # 39 are both strong competitive force.
Firstly, the profitable power of suppliers depends on the popularity and reputation of the artists. Those who are popular and whose records sell well, have strong negotiation, can choose among numerous recording studios. CCM specializes on recordings by notorious artists, so he uses the weak negotiations, as performers, who are engaged in CCM, do not have many alternatives for studio recordings and CD distribution.
Negotiating ability of buyers and collaborative buyer-seller relationship – a very strong competitive force. Main dystryb & # 39; Yutariya recorded music CDs are marketed to leading music stores and other retailers of music, these leading dystryb & # 39; Yutariya make up about 40 000 copies of CDs and run on 60-90 work schedule, while maintaining full return on investment privilege for unsold copies . Так званыя "ўсе прыпынкі" – гэта дыстрыб'ютары, якія прадастаўляюць прадукцыю для незалежных крам музыкі ў меншай колькасці і вельмі часта з абмежаваным спектрам тыпаў музыкі. Звычайна такія дыстрыб'ютары аддаюць перавагу апрацоўваць кампакт-дыскі вельмі папулярных выканаўцаў альбо, прынамсі, вядомых выканаўцаў, і часцяком яны не зацікаўлены ў распаўсюдзе кампакт-дыскаў невядомых выканаўцаў. Такім чынам, CCM сутыкаецца з вялікімі цяжкасцямі ў атрыманні прыстойнага і афіцыйнага распаўсюджвання, асабліва ў прадастаўленні сваёй прадукцыі ў такіх музычных крамах, як Сэм Гудзі, Tower Records, Border Books and Music, а таксама Barnes and Noble.
Акрамя таго, вялікую ролю ў працэсе распаўсюджвання адыгрывае тое, што людзі слухаюць музыку, каб яны маглі больш ахвотна купляць дыскі. Сюды ўваходзіць прайграванне музыкі на радыёстанцыях, на тэлеканалах музыкі і ўключэнне саўндтрэкаў у фільмы. Пакуль выканаўцы і артысты CCM не становяцца настолькі вядомымі, што іх просяць у рознічных музычных крамах, у кампаніі мала шанцаў атрымаць значнае прадстаўніцтва буйных дыстрыб'ютараў CD. Дырэктар кампаніі, Дарэн Скансан, звязаўся з некаторымі рознічнымі прадаўцамі і высветліў, што гэта вельмі працаёмкая і цяжкая задача, каб распаўсюджваць дыскі, якія распаўсюджваюцца рознічнымі гандлярамі ў яго мясцовым рэгіёне. Людзей, якіх ён наняў для вырашэння праблемы, таксама не пашанцавала. CCM меў пэўны вопыт продажу дыскаў праз аднабаковы дыстрыб'ютар, але гэта было не вельмі паспяхова з-за высокай разметкі, накладзенай дыстрыб'ютарам на кампакт-дыскі CCM. У канчатковым рахунку, Дарэн плануе зрабіць свае лінейкі прадуктаў, такія як Даррэн Керціс Скансан, "Музыка для свечак" і іншых выканаўцаў, досыць папулярны, каб іх CD распаўсюджваўся па буйных музычных крамах. Але на сённяшні дзень пераважная частка продажаў CCM звязана з прамымі продажамі, такімі як продажы на канцэрце, распаўсюджванне гандлёвых цэнтраў і Інтэрнэт, пошты і тэлефонныя заказы музыкаў & # 39; Дыскі.