Section III
1.) Industry Development, and Growth Patterns
The music industry or the record industry is a very profitable enterprise that deals with
the organizations that record, produce, publish, distribute, and market recorded music. It
is a fairly new business, with its major impact in 1877 when Thomas Edison invented the
phonograph. Since then, recorded music has been a predominant part of American
lifestyle. Unfortunately, Edison’s invention did not cause the industry to boom. In fact,
it almost went bankrupt until the idea came about to sell small disc records (the
gramophone) for cheap. It wasn’t until after the Great Depression, in the mid 1950’s that
the music industry was one of the most important in the world.
2.) Small Firms Operate
In the music industry there are many different job opportunities, specifically for a small
independent label. For instance, you can be an artist, where you are to perform (sing, rap,
etc.) and tour in order to make revenue for your label or record company. It is also your
responsibility to prepare good products, in this case LP’s or CD’s, in order to have
successful record sales. Marketers are also very successful and play a very important
role. It is there job to get your product out to the public, via press meetings, radio, or
other forms of advertisements. You can produce or create music. Arrange or write the
music for an artist. Publish of distribute manufactured goods. Also, it is necessary to
have a well-adequate management team. In order to successfully supervise your artists
under a label, and keep your business running.
3.) Current Trends
The reason the record industry is so dynamic is its basis of sales varies with a changing
society. Social forces affect music as a product, and they reflect the structure of our
society. This society is filled with buyers of different trends and tastes of music, and
ever-evolving advancements in technology. For the next 25 years the industry continued
to grow nearly twenty percent every year, with its most dramatic growth in the seventies.
Considering, the disco era was bringing many hit records to the charts, the sales were
racking up. Although, near the death of the disco music, the gross sales began to
drastically fall. The situation of falling sales began to change considerably with the birth
of the Compact Disc, or CD. From the CD, came the Mp3. From the Mp3, came the
Ipod. Which brought birth to present day technology of purchasing music online. All
these developments in technology brought just as many progressions in the music
industry. This caused the business of music to only create more profit in sales, and for
artists. As well as expanding music internationally, and generated competition along with
other forms of media.
4.) Future Trends
The transition to digital music has been the most influential trend in the industry.
Digital music is now 40% of the music industry, up from just 8% in 2005. Current
projections show digital music accounting for 50% of the industry by the end of 2010.
According to the 2009 IFPI Digital Music Report, the digital music business grew about
25% in 2008 to about $37 billion trade value. Nielsen Soundscan reported that overall
sales were at an all-time high in the US in 2008. Nielsen also reports that CD sales are
down 45% since 2004, while digital sales are up 490%.
One of the many difficulties of being in the record industry is (as stated above) the
demand of the society. People in the business have to constantly investigate what is ‘in’
in today’s culture. You have to stay on top of trends, and ways of marketing to the
public. It is also necessary to know what demographic you are marketing to, and the
quickest most effective ways to reach them.
5.) Brief History
The drive for my Independent Small Business was created after assessing my resources.
After review of my work experience, personal interests, family, and education, it seemed
fitting for me to pursue profit within the Music Industry. My father and I, founded our
“label” my freshman year of college. He thought it would be an opportunity for him and
I too work together in the studio, and allow for growth in our musical process. We came
up with the name “Turner-On Studios” based off of our last name, and lyrics that I had
written for an original song.
My personal in-home studio, being the main source of capital, allows different levels of
profitability, while offering different services. The first option is opening the studio for
the outside use of artists. This offers others the materials needed to create their own
music, with the help of my expertise. It is low profit, as well as low product growth,
considering the artist leaves with the rights to the created project. The second option is
leaving the studio for strict private use. This has the highest chance for extreme
profitability; I would be marketing/selling my own product, without getting charged for
time or the necessary assets.
6.) Business Fit in the Industry
As an independent label, and through the advancements in technology, everyone in the
music industry has a fair and equal opportunity to release music. Prior, only the four
major record labels had the revenue and the networking to successfully market new
music. Considering our plan to release music digitally, we have found a successful
niche’ and fit in our market.