ONGOING LASA REPORT - STRATEGY ANALYSIS AUDIT - FOR ULTIMATE PROFF ONLY
General Starsky
salesm_m2_a2.docxRunning Head: External Environmental Scan 1
Market Position 7
External Environmental Scan
Michael Sales
Argosy University Online
July 17, 2017
Introduction
First of all something should be corrected from the Market Position Analysis. Mr. Danbert Nobacon's legal name is Nigel Hunter. Mr. Hunter writes all of his own songs. This makes sense going by his reputation. He advertises that you can contact him on Facebook if you need him to write you a personal love song.
Danbert Nobacon has done well for himself. He was able to leave the UK and come to the US. He purchased riverfront acreage in the Methow Valley on the Twisp River just East of the town of Twisp. His relocation expenses were probably substantial, and his property is probably on the Twisp River is probably worth over $300,000. He has settled in nicely, with a great reputation. He stared in a play at the Merc Playhouse in Twisp title "I Hate Hamlet" with the starring role. It was funny, and I think it was the first time I had ever seen him. He participates in the "Trashion Fashion Show" every year with outlandish costumes.
He likes to show his body a lot. During a Boardwalk Open House he worked an open bar in an alley wearing nothing but an apron. He was well liked as an instructor for the high school's drama curriculum. He stared in a full-length motion pictured filmed, directed, edited, and produced by a local filmmaker named Terry Hunt. The name of the film is "Haiku" and it can be viewed on IMDb. He again had the starring role as a burnt out rock star that became a newspaper journalist. He comes to the Methow Valley to interview an old rock star and write his life story. It's funny most of the way through and a pretty good film.
Paul Resnikoff, writing for Digital Music News, says that streaming problems are a big concern for the modern rock band musician. He says,
"The leading streaming music companies — YouTube/Google, Spotify, SoundCloud, Apple and others — have been routinely accused of treating artists poorly through duplicitous contract structures and low payments. Apple seems to be taking serious steps to repair this, and Tidal has emerged as a more artist-friendly platform. But sadly, most artists have no idea what they should be receiving, or what is fair payment for a stream (ad-supported, paid, or in-between)," (Resnikoff, 2016, para 1).
He goes on to explain that this creates a low trust environment in which there is very little guidance, streaming firms are deliberately creating complicated payout structures, firms are overstating their pay-stream payout structure, and they are paying lower rates to smaller label musicians. There are many, many more problems in the streaming sector, and a musician needs to embrace the business side of music and stay savvy.
Smaller musicians are increasingly playing for free as a promotional effort. Resnikoff says, "Musicians are increasingly playing free shows, in the hopes of getting paid work down the line. According to a recently released report from the UK-based Musicians’ Union, more than 60 percent of artists have played at least one free gig in the last year," (Resnikoff, 2017, para 68). He says musicians are ignoring the growing potential in performing cover gigs, such as weddings, parties, and bar mitzvahs. This can be remedied by latching onto growing services like GigSalad. I watched Danbert perform at a local ranch party this summer. I don't know if he was paid, but I know he sold albums there. This external environmental issue seems to apply a lot to a musician like Danbert who has just released his sure to be less popular album with his new band.
Porter's Five Forces Analysis of the Music Industry
The Porter's five forces analysis works like a framework that is beneficial in analyzing the real competition in an industry. It is also helpful in developing a business industry. The intense nature of an industry is defined with these five forces. Whether new businesses will be enticed into the industry is also shown. Porter stated that, ""As these forces grow stronger, they limit the ability of established companies to raise price and earn greater profit,” (Hill & Jones, 2012). For the music industry these forces demonstrate clearly the sluggish nature of developing a royalty stream and the sheer inability to recognize much revenue at all for most musicians.
Threat of New Competition – Danbert no doubt chose a community where he might do better as a folky music artist. His latest album is nearly all folk aside from two poppish songs that stand out on the album for me. Locals will certainly invest in his albums as it is very important in this small community to stay in the know and be able to gossip about popular topics. In the Methow Danbert is popular. His efforts to travel to Seattle and perform in small book shops and taverns may not sway as well in his favor, however. Locally there are a lot of musicians who want to perform publicly and will do it cheap. The greater Methow Valley has a population of about 5,000 friendly souls and there are lots of venues where local musicians can perform. The Blues Festival, local bar patrons, The Methow Arts Alliance, and pure entrepreneurial drive, brings bands that have regional tours here often.
Currently much of the music to be taken in in local venues is folky. There is certainly plenty of classic rock, jazz, and mixed genre bands that may even have rap or hip-hop elements to their style. Nationally hip-hop and rap music continues to become more and more popular. The younger crowd wouldn't go out of their way to see Danbert and his band perform.
Threat of Substitute Products or Services – a popular solution for local patrons is to simply host an open mic night. There is seldom a cover and the performers don't generally even put out a donation jar. Karoke is regularly held at The Branding Iron, which is the most profitable saloon in Twisp. Danbert does perform locally and it helps to bring the musician into the more interesting and popular third dimension. Danberts participation in alternative entertainment at night including plays, fashion shows, and fundraisers seems to be well planned by him, possibly before he ever moved here. Bands and musicians can perform at wineries, breweries, resorts, art galleries, holiday events, and this is again that sort of low or non paying effort that can be a real drag for an artist hoping for bigger and better things.
The sheer number of local performers and music available for sale puts a real damper on Nobacan album sales, I'm sure. People can always go on YouTube binge and watch Danbert throughout his career for free easily from the comfort of their own home. To get a chance to see him in person you can attend any local event or stop at the post office and likely see him. He will engage the public and total strangers, although he may not reply to messages on Facebook.
Bargaining Power of Customers (buyers) – There are many different music genres today, and there are of lot of bands that area blend of several. Danbert's style is presently almost exclusively folk, and folk isn't that popular. Physical CD album sales continue to fall, and other revenue streams are tending to cut musicians short. Album sales were down 16.9 percent in the first half of 2016, (Christman, 2017, para 1).
Pop hits have to be pretty awesome to get radio time on the wider reaching stations. Locally any artist can get on the radio as long as they don't cuss in their lyrics. But local stations have non-profit radio licenses and their royalty payouts are a small fraction of what a for profit radio station must pay. Band loyalty is good, and Danbert has his share of followers from Europe and his Chumba Wumba / Tub Thumping hay day. That song remains popular. We must not dismiss his fortune in having a probably substantial royalty stream still flowing in from that song. He says he made a ton of money. That's a good thing to say whether it's true or not. The song was everywhere back in 1998. It was at the club, it was on the radio, it was on television, it was in the movies, and you'll still hear it on the radio today.
Bargaining power of Suppliers – There are a lot of options for a musician to get their work produced at this time. Many musicians tend to be tradition, thinking a big label is their meal ticket. The distribution chain for physical albums is increasingly going to Amazon.com and big supermarkets. Traditional record stores are scarce. The musician is dependent upon a firm that can produce physical CD albums cheaply and promise the biggest royalties on those as well as downloads.
Intensity of Competitive/Industry Rivalry – New album releases vary from year to year, but overall the competition in the market is shrinking. Christman writes about the 2016 industry statistics, "New album releases have been most affected by the continued contraction, falling 20.2 percent overall, to 44.1 million units," (Christman, 2016, para 2). With an increase in the popularity of classic rock, old albums become a greater completion. Christman says that although sales have sunk, "People are listening more than ever," (Christman, 2016).
Key Factors and Trends in any other areas affecting your industry
Current free market conditions that effect the purchasing power of consumers affects the music industry like many others. Political views cause the public to perhaps shun rap or embrace a philanthropist like Sting. Technology such as Wi-fi enabled mobile smart devices let people stream at little or not cost at any time they want. Online ordering makes placement a whole new dynamic for business-minded musicians. These are some of the factors affecting the industry.
External Factors as either Opportunities or Threats
The external factors would chiefly be the use of technology and the change in consumer trends. If a band does their research in regard to CD printing costs, public performance planning, and companies that are a one stop shop all for all of their 100's of streaming, download, and physical CD distribution avenues on the internet, they will be able to pump out new albums and build a breadth of work. With this breadth the brand will become more recognized. By implementing their own technology is the wake of a technology hurricane, bands can compete in the modern age. A new generation of consumers can latch on to your bands unique style and presentation. If you stand out in some way your product will be more attractive.
References
Chistman, E. (2016). U.S. Record Industry Sees Album Sales Sink to Historic Lows (Again) –– But People Are Listening More Than Ever. Retrieved July 17, 2017, from http://www.billboard.com/articles/business/7430863/2016-soundscan-nielsen-music-mid-year-album-sales-sink-streaming-growth
Resnikoff, P. (2016). The Music Industry Has 99 Problems. And They Are… Retrieved July 17, 2017, from https://www.digitalmusicnews.com/2016/07/22/music-industry-99-problems-2/
