Bmg Case Analysis

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Case Summary #3: BMG Entertainment 2008310606 Ji Min Lee 1. Why have a handful of major record companies dominated the music industry through most of the last century? The world market of record music in 1990s was dominated by only five big corporations: BMG Entertainment, EMI, Sony Music Entertainment, Warner Music Group and Universal Music Group. The majors could maintain their status thanks to patents and agreements, technological improvements and M&As. The majors had the complete control of patents and music rights from the artists. Even though the artists tried to directly contact to the customers, they could not afford the attempt. Thus, they relied on the professional signers and on the publishing company. The…show more content…
To be more specific, although it hurt the retailers, for the record companies the Internet is not necessarily threat in terms of cost structure. Manufacturing of CD and Manufacturing of CD booklet will be significantly reduced and distribution and sales, along with overhead and mailing costs will also decrease. Looking at the actions taken by the major record companies, some may survive and some may decline. BMG and Sony are the first movers to make vigorous efforts for the online market. BMG had invested $1 mill per year in to the World Wide Web by creating various websites even before the beginning of the online sales. With this BMG could attract the online customers beforehand. Also, Sony with its competitive downloadable music prices, digital kiosks and memory stick has been active to cope with the change occurred by the Internet. They signed agreements with other competition (BMG & Universal, Sony & Warner) and technology firms like Apple and Microsoft for more aggressive approach. Compared to these first movers, EMI was slow in reacting to the change. 3. Does BMG's approach to the Internet make sense? BMG was the first major company to settle the online website and attract many Internet users. However, it missed the golden opportunity to sell music to customers earlier. It focused on promotion at first. Still, through the collaboration with America On Line (AOL) was a unique strategy that

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