Record Industry and Bmg Music

BMG Entertainment Since the earliest of times, music has become a way for everyone to be entertained, have a sense of closeness and the capacity to connect with each other. Prior to the 18th century, it was focused on the formal printing, arrangements and marketing. However, in 1877, technology changed the industry and the way it was delivered when Thomas Edison first discovered sound recording devices. This led the way for continuous transformations from LP records to digital music players / smart phones.

BMG has been experiencing tremendous amounts of volatility in the last 25 years in order to keep up with these shifts. (Rivkin) To fully understand what is taking place requires looking at: these transformations within the industry, BMG's strategic relationships and organizational choices. Together, these elements will illustrate how the sector has influenced changes within the company itself. Does technological change as a rule unseat the current leaders in an industry? What kind of changes causes difficulties for incumbents while other kinds do not? Be specific.

Do digital innovations present challenges that are different from any other preceding competitive disruptions? Advancements in technology forced the industry's leaders to be continually unseated. This occurred as far back as the 1920s, when radio created a divergence. It led to decreases in record sales and indicated a tsunami of coming shifts. As time has evolved, these numbers continued to change with technology as the primary driver. In the 1990s and early 2000s, digital music forced a major shakeup in how people listened to and recorded songs.

Both the I Pod and MP3 player quickly became the items of choice. (Rivkin) While the Internet, was replacing traditional radio stations with free and fee-based music sites. Firms such as Apple went from being on the brink of bankruptcy to domination (from the release of the I Pod). Whereas traditional record companies; lost their supremacy due to the lack of tight controls. Recently, smart phones are offering consumers with the ability to integrate their I Pod / MP3 player with the Internet and traditional cell phones.

For many years, Apple was the biggest player thanks in part to their success with the I Phone. However, Google has quickly emerged by dominating the sector from a partnership utilizing Samsung (via the Galaxy 4). (Standard and Poor's) These transformations are illustrating the constant changes in the current leadership. Over the long-term, this will occur during some kind of technological shifts. As a result, the biggest challenges incumbents will face are recognizing and quickly reacting to them. This is what has occurred since the 1870s.

(Hull) (Rivkin) In the last several years, digital innovations are presenting issues that are much more complex. This is because of the availability of online music sites and free bootleg recordings. The result is the recording industry cannot police or prevent what is happening. To make matters worse, combining cell phones with portable listening devices are splintering the marketplace. This is leading to a rupturing of the profit margins inside the sector.

In this case, the recording companies are having major problems from failing to adjust to these changes with their revenues become smaller. (Hull) (Rivkin) (Standard and Poor's) BMGs leaders face an array of strategic choices, not one isolated decision. What are the choices involving timing, organization, customers and technology partners? Is there one choice that is the most internally consistent? Why is this choice consistent? BMG is facing timing related choices, based upon how fast they are adapting to the digital music-based structure. This means that their royalties are declining.

These are the fees they charge for the use of specific copyrighted works. The basic idea is to utilize this as a way to protect their profit margins. The problem is that technology has decreased these amounts considerably. As a result, this has been declining based upon a small percentage of revenues from sites such as: I Tunes and Amazon.com. (Standard and Poor's) (Rivkin) To make these adjustments, the organization must become more flexible.

This is because customers are demanding specific songs they can download and play for one low fee. The technology partners they should be working with include: online retailers, independent labels, web masters, entrepreneurs and anyone who can help to make these songs readily available. This can be accomplished for a fee when someone buys it such as: $.80 cents per song. (Standard and Poor's) (Rivkin) The biggest internally consistent choices are to encourage the management to become more flexible. This is because changes will occur rapidly inside the industry.

To keep up with them, requires executives having the ability to quickly adjust. Moreover, various divisions are embracing particular attitudes and mindsets. This is troubling, as any kind of integration will make it difficult for them to work together. In the future, this has the ability to fail to understand the root causes of the problem and it makes it challenging for the company to adjust with these changes.

Until managers become more flexible, there is the realistic possibility they could have trouble adapting with these shifts from embracing this culture (Standard and Poor's) (Rivkin) BMG' leaders also face an organizational choice: they can (a) integrate their digital distribution into existing distribution operations or (b) establish a separate organization to serve digital customers. In making the choice, they must balance the static benefits of intra-organizational linkages against the inflexibility that such linkages often entail.

Does the integration of digital and conventional distribution provide a benefit? Would it slow down digital efforts? Is there a tension between organizational coordination and speed of implementation? The integration of digital and existing distribution segments does not make any sense. This is because it is combining two rival divisions of the firm and forcing them work together. In many organizations, one of the biggest problems is effectively merging them with each other. As each one, have specific practices, customs and traditions employees / managers are embracing.

This makes any kind of transformations difficult, by failing to understand.