The Music Industry

1. Terms of reference

This is preliminary report written by____, employd by the consultancy company X, with a purpose to evaluate the situation in the music retail industry and how it affects the client Helix Sounds. Additionally, the report is going to provide Helix with recommendations for their marketing strategy, based on the present situation in music industry.

2. Procedures

The report was made by a primary research. The information used is based on articles and Internet research; the findings are supported by electronic and printed sources.

3. Facts and findings

3.1 The music market

Over the last three years the sales of recorded music has fallen sharp. In June 2005 the physical music market worldwide had decreased 6.3% to 7.05 billion pounds in six months time, while the recorded music market fell 1.9% to 7.5 billion pounds. (C, Marriner. 4/10/05)

A total fall of 13% in the last six years clearly indicates the low profit margin in the music market today. (E, Smith. 27/9/05)

3.2 Downloading of music

The digital music business is a constantly growing market. The rapid growth resulted in an increase from 125 million

pounds to 449 million

pounds the first half of 2005. That makes digital music business account for 6% of the total record sales. Online sales of music can be downloaded through 350 legal outlets like Apple's iTunes Music Stores. (C, Marriner. 4/10/05)

3.2.1 Illegal downloading

The charing of downloaded Mp3 files between users on Internet, with no important matter of payment, is a big illegal market today. These actions are supported by websites as former Napster or Kazaa, which curage the market of music piracy worldwide. By rules and regulations as the copyright laws, organisations like IFPI are fighting this illegal actions and trying to raise awerness. Unfortunately other markets like the record industry is negativly effected and feel the strong impact of illegal downloading. (www.ifpi.com)

3.2.2 Socialcultural aspects

The downloading of music through Internet has made a big socialcultural impact, and music is consumed more than ever before. People live a more hectic life and when they finally

get home late at night it is easier, faster and more comfortable to download from your own computer then buy music from stores. More than 55% of the households in the UK have Intrenet and people are ready to pay for downloading of music files. (Appendix 1)

3.2.3 Technological aspects

The technology of music equipment has developed extreamly fast. Music can be downloaded from variuos portable devices and the audiorates are getting higher. The uptake of broadband is another tecnological factor that has made the Internet expands, with more types of music formats to use. Not to forget co operations between organisations and/or companies that are resulting in multiability in technology, to mention Sony and Ericsson or Vodafone and 3G. Together they have made it possible to combine mobile phones with portable Mp3 players. (Appendix 1)

3.3 Strength

The "extensive catalogue of unusual and difficult to obtain music" (Module Guide BUS104) is a strength for Helix Sounds. In the stores in Cambridge, Edinburgh, Oxford and York the CDs and vinyls of classical music are the best sellers, and in Brighton, Leeds and Manchester the popular music sell best. The avalibility of a coffee bar and concerts held in the stores are as well

strength for Helix sounds. (Module Guide BUS104)

3.4 Weaknesses

There is a lack of marketing for the extensive catalouges, the music supply, the concerts and the coffeebar in the areas for which Helix Sounds opperate. The restrctive opening hours are a weakness as well

, this will leed to less costumers purchasing music on their way home at night. They also have a lack of costumes less than 18 years old in all retail stores.

3.5 Opportunities

The concerts combined with the coffebar are great opportunities to diversify and at the same time get a reputation in the area. There is as well

an opportunity to focus on a specific niche where bands without recordlabel contract can perform. And in addition to sell music online, Helix Sounds have an opportunity to give costumers more value for money by packaging bonus DVDs of concerts together with the CDs and LPs.

3.6 Threats

Downloading of music, both legal and illegal, is the biggest threat to Helix Sounds.

Other local music stores can be a threat as well, because of their extented opening hours.

4. Conclusion

The Internet and the downloading of music are the main reasons