Music marketing and management industry

Published Date: 23 Mar 2015

Music Industry in India is one of the oldest and has had the reputation of being one of the strongest components of the entertainment sector in India. However, in the wake of the new age, the industry has undergone a sea change. With the emergence of new media and convergence of media, newer revenue streams need to be taken into consideration to truly define the length and breadth of the music industry. With the increasing PC penetration, the internet is expected to become a significant influence in the purchase of music.

The music industry is a vast entity and over the years it has witnessed significant changes. The potential of the Indian music industry can be better understood from its size estimated at around US$ 182.9 million in 2010, up from US$ 160.9 million in 2008, portraying a growth of 14 per cent during the reporting period. It is expected to grow at a CAGR of 16 per cent over 2010-14 to reach US$ 379.1 million.

Consumers spend primarily on the following fronts in the music sector

Revenues from physical sales of cassettes and CDs through distributors and retailers as well as modern retail and online sales.

Mobile Value Added Service that is sale of music for ring tones, songs, CRBT (caller ring back tone) and other value-added mobile services.

Radio stations that pay royalty for the content played, a part of which comes to the music company.

Online downloads, sale of music through internet and public performance where royalty is paid by event organizers for the use of music in their events.

Record Labels Industry and their working

In the music industry, a record label is a brand and a trademark associated with the marketing of music recordings and music videos. Most commonly, a record label is the company that manages such brands and trademarks, coordinates the production, manufacture, distribution, marketing and promotion, and enforcement of copyright protection of sound recordings and music videos; conducts talent scouting and development of new artists and maintains contracts with recording artists and their managers.

In today's economy, most large record companies are actually huge conglomerates that own a variety of subsidiary record labels. Often, the subsidiary labels are each mini-companies operating under the umbrella of the larger corporation. The various departments/ heads in the big Record Label Companies are:-

A&R (Artist and Repertoire):- It deals with discovering new talent. They do everything from assisting with song selection to choosing people for production.

Artists Development: - This department is responsible for planning the careers of the artists who are signed to the record label. It promotes and publicizes the artists over the course of their career.

Business Affairs: - This department deals with the business side of things. It takes care of bookkeeping, payroll and general finances.

Label Liaison: - This is usually one person, or small group of people, who serves as the liaison between the record company's distributions company (either an entirely separate division under the huge corporate umbrella or an outside company responsible for getting the CDs into the stores) and the record company.

Marketing Department: - This department creates the overall marketing plan for every album that the record company will release. It helps coordinate the plans of the promotion, sales and publicity departments.

Publicity Department: - This group is responsible for getting the word out about a new or established artist. It arranges for articles to be written in newspapers and magazines. They also deal with radio and television coverage of an artist.

Sales: - This department oversees the retail aspect of the record business. It works with the record store chains and other music stores to get new albums onto retailers' shelves. The sales department often coordinates these efforts with the promotion and publicity departments.

Number of players in the industry

The music industry in India is different from the music industry in any other part of the world.  The reason for this is the close ties the Indian music business has with the Indian film industry. The Indian music market is small in terms of the global market and part of the reason for this is that only about half of the revenue reported comes from legitimate tax- paying companies. The rest comes from small factories that mass-produce old and new albums for which they don't own the rights.

The major Record Label companies are:-

Saregama India Ltd. (HMV)

Universal Music (India)

Tips Industries Ltd.

Blue Frog Production

Venus Industries Ltd.

Sony BMG Music Entertainment (India)

Crescendo Industries Ltd.

Virgin Records

Magnasound Music

Times Music

Operations/Billings/ Revenues

Production of Music:- Music production in India is either film music or non-film music. The most dominant part of the Indian Music Industry is film. On an average a film's music has a shelf life of 6-8 months depending on its popularity.

Typically, the physical and digital rights of music are auctioned or sold to the music company for a negotiated time period. Three main models are followed to sell music rights:

Outright Sale - In this case the film producer does not earn any further royalties, as music becomes a property of the music company

Minimum Guarantee and Royalty-based revenue sharing

Only Royalty - In this case only royalty is shared and no upfront money is given

Distribution of music:- Distribution takes place in three varied but integrated ways to reach the consumer:

Direct Sales

Mobile Sales

Radio

Direct Sales: The music company produces physical formats of music in forms of CDs and Cassettes, which reach the retailers through the distributor/dealer networks. These retailers are both organized and un-organized. The un-organized retailers are small shops in cities, which might be dedicated to music goods or department stores, stacking all household items. In recent times, the organized retailers in forms of dedicated, atmosphere creating music stores have merged in the country.

Digital, Mobile Sales: The music company sells the digital rights to content aggregators, who further convert the music into digital formats. These digital formats are downloaded by the consumer. These formats are also sold to telecom operators, which the consumer buys in forms of mobile downloads of ringtones, dialer tones, etc.

Radio: Radio broadcasters buy rights either directly from the producer, the music company or in association with the music company and industry associations. The broadcasters in turn pay royalties to the producers on a per hour of music played basis.

Key trends and Future Prospects

Number of Hindi Movie music units (cassettes and CD's) is on the decrease.

A spiralling decline in revenues because of increase in piracy.

Over the last few years, the industry also witnessed the rapid rise of remixes, or cover versions and music videos of original sound track.

Future growth is likely to come from non-physical formats like digital downloads, royalty income and ringtones, among others

Industry experts said the music business is poised to become the fastest growing segment in the Indian media and entertainment industry over the next five years, and most of this growth will be on the back of content being available digitally.

A greater number of tie-ups between music companies and telecommunication companies to make music digitally available o as many people as possible.

Radio developing as the landscape of music hearing.

Live music concerts and music talent shows gaining greater popularity.

Market Leaders

Some of the major players in the Record Label Industry are:-

Saregama India Ltd:-

India's largest music recording company

Formerly known as the Gramophone Company of India

Has its registered office in Kolkata

Part of the RPG Group

Owns nearly 50% of all the music ever recorded in India

Universal Music India:-

Music company located in Mumbai

Subsidiary of Universal Music Group, the largest music company in the world

Leader in both International and Indian music embracing a vast array of artists covering the full spectrum of music around the world

Tips Industries Ltd:-

Music company based in Mumbai

Owns more than 3,500 titles and holds soundtrack rights to more than 50 Hindi movies

Other business areas: movies, artist management & distribution

UNIVERSAL MUSIC GROUP

An introduction

The music industry worldwide is dominated by the 'big four' of music - Universal Music Group, Sony Music Entertainment, Warner Music Group and EMI. Amongst these, Universal Music Group (UMG) is the world's leading music company.

Once attached to the film studio - Universal Pictures, UMG's origins can be traced back to formation of Decca Records in 1934. MCA Inc. bought Decca in 1962. The present organization was formed when Seagram purchased Polygram and merged it with Universal Music Group in 1998. In 2006, UMG became 100% owned by French media group Vivendi SA, who are its present owners.

UMG is comprised of two core businesses: recorded music and music publishing. The company discovers, develops, markets and distributes recorded music through a network of subsidiaries, joint ventures and licensees in 77 countries including India. UMG also sells and distributes music video and DVD products, and licenses recordings, encouraging the legal distribution of music online and over cellular, cable and satellite networks.

Record Labels - UMG's legacy of music flows from a diverse family of record labels which include: Universal Music India (UMI), A&M/Octone, Interscope Geffen A&M Records, Island Def Jam Music Group, Machete Music, Universal Music Latino, Verve Music Group, etc.

Artist Roster - UMG's roster is comprised of artists from all around the world, making UMG the leader in both international and local repertoire. Artists signed to UMG throughout the world include - Black Eyed peas, Maroon 5, 3 Doors Down, Rihanna, Lady Gaga, Elton John, etc. And in India - Shankar Mahadevan, Mohit Chauhan, Bhoomi, Raeth, Raghav, Bombay Vikings, Mehsopuria, Ali Zafar, Asha Bhosle, Pankaj Udhas, Anup Jalota, and Falguni Pathak.

Classical & Jazz Repertoire, Broadway and Film Scores - UMG is the market leader in the classical music market. Universal Music includes the world's leading Broadway catalogue and contemporary recordings under the Decca Broadway label with titles such as Mamma Mia!, Spring Awakening, Evita, Les Miserables, Phantom of the Opera, etc. Universal Music is also responsible for the success of numerous original Soundtracks including The Aviator, Gladiator, Pulp Fiction, and Mamma Mia! as well as such Oscar-winning scores as John Williams' Schindler's List, Gustavo Santaolalla's Brokeback Mountain, and A.R. Rahman's Slumdog Millionaire.

UMG has also entered the burgeoning business of classical artist management and production with Universal Music Classical Management and Productions (UMCMP). The company develops careers, creates distinctive live events and builds long-lasting brands within the classical music field.

UMG owns the world's largest jazz recording company, The Verve Music Group.

Universal Chronicles - the unit that manages and markets UMG's extensive catalogue through retail channels.

UTV Records - the television marketing unit.

Hip-O Records - its independent label that releases CDs and DVDs from outside sources.

New Door Records - a label dedicated to producing new music from historically significant recording artists whose catalogue is controlled by UMG labels like Queen.

UMe Digital - the first all digital label from a major music company.

Universal Music Media - a company that produces infomercials and long form music programming.

Universal Music Special Markets and Universal Film & Television Music.

Music Publishing - Universal Music Publishing Group (UMPG) is the industry's largest global music publishing operation. UMPG represents music in every genre from some of the world's hottest songwriters and catalogues including Abba, Adele, Christina Aguilera, Lily Allen, Mariah Carey, Eminem, Jimi Hendrix, Elton John, Avril Lavigne, Linkin Park, Britney Spears, 3 Doors Down, Justin Timberlake, T-Pain, and U2, among many others. UMPG is also a global leader in the areas of Production Music, Christian and Classical Music.

Bravado - Bravado, the only global, 360° full service merchandise company, develops and markets high-quality licensed merchandise to a worldwide audience. The company works closely with new & established entertainment clients, creating innovative products carefully tailored to each artist or brand. Product is sold on live tours, via selected retail outlets and through web-based stores.

Artist Services - Universal Music Group also includes some of the world's leading full-service artist management businesses, including Twenty-First Artists, Trinifold, and 5B. Its live music and event production divisions, responsible for booking and presenting talent throughout the world, include All the Worlds.

UNIVERSAL MUSIC INDIA

Universal Music India Pvt. Ltd (UMIPL) is a subsidiary of Universal Music Group (UMG), which leads the music industry in global sales with an estimated worldwide market share in 2004 of 24.7%.

Its primary services include, release and distribution of music albums and mobile downloads.

Identify 7Ps for the chosen company and how it compares across competitors, elaborate on how challenging it is for the company to formulate the 7Ps given the extent of its intangibility, inseparability, variability and heterogeneity.

PRODUCT - The services available by UMG can be broadly divided into three segments.

Albums and Artists - The service offering here are all artists scouted, managed and promoted by UMG and all albums recorded and released. It also includes tie-up with artists as music publishers.

Marketing and distribution - UMG has several divisions that look into all aspects of marketing and distributing music and its subsidiary services. For example - in store-retailing, promotional campaigns, merchandising, etc.

Artists and Music Management - It also manages its artists - with a special division for classical music artists - for their career planning and marketing.

PLACE - 1. In-store - UMI music albums and merchandise are available in all leading music stores across 77 countries in the world.

2. On-line - Music albums and videos can be bought online on several associate websites.

3. Mobile - Ringtone and callertune downloads of UMG music is provided by several mobile network providers. It is also available with Spotify's iPhone application and MusicStation on Android.

4. Launches and live-shows - As UMG also manages its artists, all album launches and live-shows and music tours are also controlled by them.

PROMOTION - 1. With its growing list of today's most popular artists and with a young audience in mind, UMG's most popular promotional means is digital - online and mobile. Its website offers extensive information about all upcoming launches and includes short audio and video clips of its presently released albums. Other than the website, UMG's online presence is dominated by social networking means like Myspace Music, Facebook, Youtube and Twitter.

2. Commercials of UMG albums are previewed on popular GEC and music channels. The company also enters tie-ups with music channels to feature its artists' music.

3. Print Media - Advertisements of newly released albums and advertorials of artists from the house of UMG are a common feature in leading dailies across the world and in magazines like Rolling Stones.

4. Artists' events - UMG holds several promotional events for its albums and artists like album launch in music stores, tie-ups with reality shows to feature a newly released artist, etc.

5. Promotional music tours.

6. Tie-up with mobile service providers to promote music albums and artists as callertunes or ringtones.

7. Outdoor - Promotional hoardings and panels of new album released and concerts to be held.

PRICE - In India, CDs and DVDs start Rs. 99 onwards

Mobile downloads are as per service provider.

Concert pricing is very artist and venue specific.

PEOPLE - The people who represent UMG to the outer world are its plethora of artists. These are the face of the company.

PHYSICAL EVIDENCE - In-store and online.

PROCESS - UMG's services are a simple, pleasure and recreation seeking process. It is standardized for in-store buying, concerts and online purchases with only certain country specific variations.

The music industry is ever-growing and ever-changing. Currently with its main focus on digital sales, there is very little distinction from other Record labels. On comparison with competitors - Sony Music Entertainment, Warner Music Group and EMI - all services offered by UMG can be differentiated solely on the basis of their catalogue of artists as other services provided are similar by all record labels. UMG is a very people-centric service.

Intangibility

Albums offered by UMG, by the means of CDs, mobile downloads, etc. are tangible in nature as they can be bought, touched and experienced but other peripheral services like concerts in particular is an experience created which is intangible.

Inseparability

Promotions and events are very crucial for an album to garner sales. Hence an album sold by UMG is inseparable from its other sub-ordinate services like availability online and on mobile, promotional concerts.

Heterogeneity

For albums, customer satisfaction highly depends on how truly an artist has been able to live up to the expectations created prior to the launch.

Variability

The variability factor for UMG comes from its different artists from across all genres.

Identify the customer segments and how the service is accordingly differentiated to the benefit of the company and customers

Universal Music Group has artists signed up across all genres and is present in 77 countries through subsidiaries, joint ventures & licensees. UMG's strength and legacy of music flows diverse range of record labels which include A&M/Octone, Barclay, Decca, Deutsche Grammophon, Disa, ECM, Emarcy, Fonovisa, Interscope Geffen A&M Records, Island Def Jam Music Group, Machete Music, etc.

Since UMG constitutes about 98% of music market, the customer segmentation study is quite similar to the market as a whole. The group caters to music across all age groups - teens to the older generation.

Demographic Segmentation

Age Group

Service/Product Offered

Pre-Teens

Merchandises, CDs & DVDs

Teens

Digital downloads, CDs & DVDs, Subscription

Tweens

Digital downloads, Subscription, Webcasting and Internet Radio, Live Music

Middle Aged

Digital downloads, Subscription, Webcasting and Internet Radio, Live Music

Oldies

Collector's Edition CDs & DVDs

The volume of physical albums sold for the music industry declined by 17% due to digital downloads, causing a significant decline in revenues and profits for the "Big Four" and other record labels. UMG's total revenue fell by 11.7% in 2007 which is the least compared to the losses borne by the other record labels.

It can be observed that the listeners are in form of attitudinal groups. There is also a debate about how attitudes change - is it the advertising and the product that create the attitudes, or do the attitudes lead to the choice of a particular product. In particular a single individual in different circumstances or mode may fit into a different segment. Capturing this complexity in a single dimensional study is difficult.

Demographically speaking, the typical buyer is getting younger. Country music suddenly saw a sudden increase in the listenership while rap music saw a decline. Classical and soundtracks are warming. Digital downloads are revitalizing the industry with more people are listening to more music-more genres through more venues. People are talking about online music services & are spending more and more money on music-mostly digital, but also live.

Identify the buying behaviour of your customer segments. Chart out the buying process of customers from Identification of need to consumption of service to post purchase stage

Buying Behaviour

Needs - Why do people listen to music?

Social Needs

Acceptance from Peer Groups

Source of Relaxation

Information Search

http://www.universalmusic.com

Social networking Websites - MySpace, Twitter, Facebook

Billboard & other music channel websites

Evaluation of Alternatives - Evoked Set

Other 3 biggies in the record label industry - EMI, Warner Music & Sony Music

Other small record label companies in the market

Free music download websites

Service Purchase & Consumption

Emotion & Mood

The need with which the customer listens to music when satisfied he/she feels contented, thereby bringing about a positive emotion towards the product

Service Role & Scripts

UMG service is consistent in all modes of its communication vehicles

The role of the digital source for downloading songs are clear making it easy for the consumer to understand its functioning

Compatibility of customers

Through contests, album releases and artist directories they engage the like minded audiences to interact with each other

Post Purchase

Attribution of Dissatisfaction

Particularly doesn't have a strong position in Europe & Asia

Brand Loyalty

UMG dedicatedly promotes music to the world and its number one position in the record label brands proves to the fact that it has a group of loyal audiences

Role of Culture

Depending upon the location UMG is present in and its licensee, it accustoms itself to the kind of music to be promoted

UMG is present in 77 countries through subsidiaries, joint ventures & licensees. Thus artists of the location shall be signed up with the record label

UMG is the market leader in today's highly competitive classical music market

How are customer expectations formed? How can your company control customer expectations? Explain with relevant illustrations.

Customer expectations are formed as a process of traversing from what the customer desires to what the company has on offer for the customer. It is in a way the middle path between the two sides. Customer expectations are formed based on what the company positions its products to be. This positioning is done essentially through the marketing and advertising. At various stages of the products life the customer expectations are formed using different means. When the product is about to be introduced it the Integrated Marketing Communication (IMC) plan which helps in the formation of the customer expectations. The buzz and curiosity created by the IMC plan is what defines the expectations at that stage. Posts launch the leverage that the product got initially by the advertising fades. At this stage, the customer experience is what sets the mood for the customer expectation. This moment of truth is the defining point for the customer expectation. For Universal Music Group (UMG), the product is music which usually has a short shelf life. So, mostly the sales happen as soon as there is a music launch. It is therefore important that the customer expectations are set to correct levels right from the start. For doing this the company needs to have promotional features like contests, PR routines, initial teasers etc. This would ensure that the customer gets the feel of what the product is like from the word go. The more exposure the customer gets to the product in this case the more realistic are the expectations. By using this method chances are of reaching the target group are better.

The picture above is a typical example of creating buzz around new launches. The music lovers are given a preview to the music. This enables them to decide what to expect from a particular music album.

Identify any situation where the company has achieved a service recovery or has instituted a service recovery program successfully.

Service Recovery is defined as a the negotiations that happen with a customer who is dissatisfied with the company's service that (s)he has consumed. This is done essentially to ensure customer retention. There are two ways to deal with the situation depending on how important retaining a customer is to the service provider. When retention is not very important in such situations not much incentive is given to the customer, the damage control is to the extent that (s)he does not become a source of negative publicity.

In cases where the customer retention is important (the retention of customers is not a very difficult task at hand) (s)he maybe given incentives that are big enough to offset the bad service that was provided to them in the first place. This will ensure that the customer returns satisfied and the bad experience is erased off. Further this will also create goodwill for the company as there will be positive publicity that the customer might do.

The idea behind service recovery is as simple as damage control. With a little effort a win win situation can be arrived at despite starting form a disadvantaged position.

With respect to Universal Music Group, service recovery may be in cases where the record quality is faulty or when the quality of the music that has been recorded is not up to a certain standard. In such cases a batch recall can be done or customers can be given newer records from a new batch. No such incident has been reported so far at UMG.

Identify the service around tangible product offerings of the chosen company if applicable

Besides being the leader in sales of music videos, DVD's, CD's and record labels, Universal Music Group also provides a whole host of services for its customers and clients. UMG discovers, develops, markets, and distributes recorded music through a network of subsidiaries, joint ventures, and licenses in 77 countries.

Its services can be divides into the following major segments:

Universal Music Classical Management and Productions

Universal Music Publishing Group (UMPG)

Artist Management Services - including Twenty First Artists, Trinifold, and 5B

Live Music Agency - including Helter Skelter and All The Worlds

Digital Media - distribution and sharing of music online as well as through various applications on mobile phones

Universal Music Group Distribution

UME

Universal Music Classical Management and Productions

Established in May 2008, it was the first company within the classical music world to provide truly integral management to artists' careers. UMCMP manages some of the most celebrated classical artists of the present day, assisting them in all their needs and media and recording opportunities to provide a unique 360-degree service to customers and clients alike. The company works with established classical promoters as well as independent producers of classical performances to showcase their talent in performance venues throughout the world. It oversees artist management as well as event production and promotion.

Their vision for artist management focuses on breaking new grounds within the world of classical music and to action innovations in the way that classical music is presented, performed and experienced worldwide. In 2009, it announced an innovative long term agreement with First Classics GmbH, the new network of top German classical music concert promoters. They hope to better familiarise their audience with the upcoming stars through extensive promotional tours and widespread media visibility.

Universal Music Publishing Group (UMPG)

Leading global music publisher which operates through both direct signings and catalogue acquisitions. UMPG is also the global leader in the areas of Production music, Christian/Gospel, and Classical.

UMPG also manages and administers many of the world's major film and television companies' music catalogues including Warner Bros. Pictures and Warner Bros. Television Production, Universal Pictures, Universal Studios Entertainment, Media, BBC, Beacon Films, CNBC, Celador ("Who Wants To Be a Millionaire"), Endemol, Focus Features, Moonscoop, MSNBC, Proseiben, Sci-Fi Network.

UMPG offers its artists and songwriters a diverse array of marketing outlets including: UMPG magazine, publicity, websites, e-newsletters, e-samplers and more.

The global leader in production music -

Universal Production Publishing Music is the preeminent supplier of high level production music throughout the world and serves the burgeoning business that creates, produces, and licenses music for use in film/TV, advertising, broadcast and corporate clients. Owning both the Master and the Copyright for the composition, UPPM allows clients to license music both in an easy and affordable one-stop shop.

Artist Managenent Services:

The entire array of agents and talent scouts which encourages and develops budding artists is covered under this aspect. UMG has agencies like Twenty-First Artists, Trinifold and 5B under its wing.

With the recent change in management, Universal is serious about becoming a major player in management industry and has plans of dominating the market in the near future. The agency will fully manage all the activities of artists from discovery to development to maintaining PR.

Live Music Shows

Universal's live music and event production divisions, responsible for booking and presenting talent throughout the world, include Helter Skelter and All the Worlds.

Digital Media

Universal Music Group's (UMG) revenues were €4,363 million for 2009, a 6.2% decrease compared to 2008. However, Digital sales increased by 8.4%, thanks to a very strong growth in online sales, despite the slowdown of cellular telephones sales in the United States and Japan.

Vevo - VEVO is a music video website. It is a joint venture between Sony Music Entertainment, Universal Music Group, and Abu Dhabi Media with EMI licensing its content to the group without taking an ownership stake. The videos on VEVO are syndicated to YouTube, with Google and VEVO sharing the advertising revenue.

The aim behind Vevo was to attract more high-end advertisers. To this end VEVO censors the content of some of its videos for language, to make them more acceptable to advertising partners. The other revenue sources include a merchandise store and referral links to purchase viewed songs on Amazon MP3 and iTunes.

In August 2010, VEVO introduced a free application for the Apple iPhone that allows users to stream videos in the VEVO catalog and create playlists.

eLabs - This division is responsible for handling the company's electronic commerce initiatives, internet exploration, and new technology opportunities worldwide. eLab's business development staff supports all of UMG's e-business initiatives, including digital downloads, subscription services, webcasting, and interactive radio through all digital channels of purchase. It is with the help of this division that UMG has been able to maintain its market share and save face as the overall industry's sales and attractiveness have declined due to digital downloads and piracy. With these efforts, legal digital distribution of UMG's music has continued to increase due to the company's partnerships with Apple's iTunes and other digital download retailers, such as Napster, RealNetworks, and Wal-Mart. In 2007, UMG made an investment in hip-hop music portal Loud.com, and in the same year the company began selling its music catalog online in unrestricted mp3 format through Amazon.com.

Mobile phone apps - The growth was driven primarily by Apple's iTunes and other US digital download retailers such as Napster, Real Networks, and Musicmatch. The company sold over 48 million mastertones in the US in 2005, compared to 10 million in 2004. Mobile revenue outside the US continued to grow briskly, nearly doubling in 2005. The company has relationships with portals such as Yahoo!, AOL and MSN.

Universal Music Group Distribution

It consists of - Universal Media Distribution, Fontana, Vivendi Visual Entertainment (VVE), UMGD Digital.

Also collaborated with Destiny Media Technologies to expand their digital media distribution services in Canada and Mexico. Under this multi-year agreement, Destiny Media remains the primary, and only company-wide platform, for the global distribution of UMG's pre-release digital media in North America.

Universal Music Enterprise (UMe)

UMe is comprised of several business units and record labels:

In addition to centralized support of each of these areas by UME's A&R, Business Affairs, Finance, and Production departments, a Strategic Marketing unit has been created to provide an overall direction for strategic alliances, promotional partnerships, integrated marketing programs and public relations. Strategic marketing initiatives and opportunities in new technologies such as the Internet will be heavily utilized.

With this new structure, UME will oversee the use of the company's master recordings through new markets and non-conventional channels. Additionally this organization within UMG will continue to create, acquire and market new catalog product.

Identify the hard measures and soft measures that can help identify the service performance at each stage of customer touch points.

Hard measures:

Tangible reports and surveys which can be used to judge the service's performance could be -

Annual report to measure actual sales

Market Analysis to measure market share in publishing and distribution

Number of songs downloaded on mobile phones through various applications available

Traffic on website - important due to the rising popularity of online shopping

Tickets sold in concerts and live shows

Soft measures:

The measure of soft service should include assessment of interaction with clients as well as customers. This can be done through -

Relationship surveys - to find out how many artists actually stick with UMG

Overall performance of Talent scouts and various middle men, agents

Various CSR initiatives taken up by the group

Identify the pricing strategy for one of the pdt/service offerings in as much detail as you can with suggestions and recommendations or why you think the pricing strategy is the best strategy

The three basic price structures that are used to set prices are:

Cost based approach- In this approach company determines expenses from raw materials and labour, adds amounts or percentages for overhead and profit and thereby arrives at the price. This method is widely used by industries such as utilities, contracting, advertising etc.

Competition based- This focuses on the prices charged by other firms in the industry. It doesn't imply charging the same price as other firms but it is just that other firms' price is taken as an anchor for the firm's price. Used widely in the services sector

Demand based- This involves setting prices consistent with customer perception of value

MUSIC INDUSTRY - The music industry in general and Universal Music Group, specifically follow a competition based pricing strategy. Competition based pricing approach focuses on the prices charged by other firms in the industry. It doesn't imply charging the same price as other firms but it is just that other firms' price is taken as an anchor and prices normally hover around the same

Universal music prices its music CDs in the range of Rs.125-175 for all genres like Classical, Indi pop, Remix, Devotional, Soundtrack etc.

An interesting pricing tactic that the company follows is charging very high prices for exceptionally popular performers like AR Rahman, Rahat Fateh Ali khan, Kishore Kumar.

CDs for these artists are priced in the range of Rs.275-350. Soundtracks of old Hindi movies retail at Rs.99 due to high demand elasticity. These pricing strategies are followed by other record labels like Sony BMG, EMI India, T-series, Yashraj Music, Times Music etc and hence these form an anchor price around which prices generally hover.

Competition based pricing is an appropriate pricing strategy keeping in mind the structure of the music industry as a whole, and also the problems associated with the demand based and cost based pricing strategy

Identify use of new media by the company to promote and communicate service/ pdt offerings to their respective TG. Do you think the company can attain better marketing ROI by calibrating investment judiciously across online and offline ad and marketing spend?

New media tools are extensively used by UMG.

It promotes its music online by -

VEVO - A music video website. It is a joint venture between Sony Music Entertainment, Universal Music Group, and Abu Dhabi Media with EMI licensing its content to the group without taking an ownership stake. VEVO offers music videos from three of the 'big four' major record labels: Universal Music Group, Sony Music Entertainment, and EMI. It was launched on December 8, 2009. Currently available only in United States and America, it was set to be launched worldwide sometime in 2010. It is syndicated with YouTube and Google.

MySpace - With clips and tracks being uploaded, MySpace Music has served as a great portal for UMG to give music previews and gather customer responses to it.

Facebook and Twitter - UMG's pages on these social networking sites are full of updates of new albums launches, videos released, tours and events gathering immediate responses from fans across the world.

Mobile promotions for UMG are done through downloads of callertunes and ringtones which are provided by several mobile network service provider and through applications like VEVO available on iPhone, UMG music availability on iTunes and MusicStation, etc.

Over the last five years, digital sales of music have been on a constant increase. As a result, online and mobile media marketing has been the primary tool for record labels. This calls for the company to invest more in online ad spends which it has been doing. The remaining offline promotions should be concentrated on tie-ups with music channels and GECs to increase visibility of the album and the artist.

Identify key investments in the company which have helped improve service quality. Elaborate each investment conceptually and with approximate quantitative details wherever possible.

Universal Music Group is a dynamic group that constantly reinvents itself and is always testing new waters. In the recent years they have made a lot of investments in many spheres. However since these have been very recent investments, there are no quantitative details to support the same.

MUSIC VIDEO WEBSITE-VEVO

VEVO was ranked among the web's top 10 video networks in January and, for the third consecutive month, was the most-visited U.S. web network in the coveted Entertainment-Music category with 35.4 million unique visitors in February, according to new data released by comScore Media Metrix, a recognized leader in measuring the digital world. VEVO also recently announced it has signed nearly 20 new brand advertising and marketing partners for 2010, covering such important consumer categories as Automotive, Entertainment, Retail, and Health and Fitness.

AMERICAN IDOL AND UMG JOIN HANDS

19 Entertainment and Simon Fuller, creator of 'American Idol, and Universal Music Group (UMG), the world's leading music company, entered a long-term strategic alliance to increase the development, distribution and marketing of 'American Idol's' musical artists. As part of this multi-year agreement, UMG's Interscope Geffen A&M will market, promote and distribute albums globally from 'American Idol's' finalists and winning contestants across a broad array of retail and new media platforms

UNIVERSAL MUSIC GROUP (UMG) PARTNERS WITH EMUSIC

Universal Music Group has partnered with eMusic, the Digital Music Club, to offer its U.S. members access to UMG's deep and rich catalog of groundbreaking and chart-topping artists starting in November, 2010. This agreement is another step in eMusic's evolution to a digital music club that offers a comprehensive catalog, the best value, editorial and contextualization significant additional benefits for the most passionate music consumers. The deal will add more than 250,000 tracks to the eMusic catalogue, which now stands at ten million.

UNIVERSAL MUSIC ANNOUNCES LABEL DEAL WITH SUPER PRODUCER REDONE

Universal Music is honored to announce their joint venture with super producer RedOne and his new record label 2101 Records. The international Grammy winning hit maker, who was recently honoured as Billboard Producer of the Year and BMI Songwriter of the Year, is famed for his work with Michael Jackson, Sean Kingston, Enrique Iglesias, Akon and Lady Gaga. The venture is with Universal Music International and each artist signing to 2101/Universal will be released by a label within the UMG Group. RedOne will A&R, executive produce and produce all artists signed to 2101 Records.

RCOM & UNIVERSAL MUSIC SIGN EXCLUSIVE STRATEGIC PARTNERSHIP IN ITS PREPARATION FOR 3G LAUNCH

UMG has entered into the Biggest & first-ever comprehensive music deal signed with an Indian telecom operator. Reliance Communication will offer Universal Music's catalogue for its GSM, CDMA, 3G and Mobile Broadband customers.Also, this partnership will see the nationwide launch of Simply Music Initiative to showcase a constantly evolving Music service over the next quarters

Universal Music & RCOM plan live music concerts with Blockbuster Indian & International artists

Reliance Communications announced the signing of an exclusive strategic partnership with Universal Music to offer music-related services and content across RCOM's GSM, CDMA, 3G Mobile and Wireless Broadband platforms. The agreement between Reliance Communications and Universal Music has been signed with a commitment of substantial investments to be made by both the parties to offer 360 degree music experience to customers across all platforms including Voice, WAP, Web, IVR, Blog & through On-Ground Events.

MUSICAL SOCIAL GAMES

Universal Music Group (UMG) has struck a deal with Conduit Labs, a start-up that creates musical social games, to provide users with access to UMG's library of licensed music from the record label's artists such as Lady Gaga, Rihanna and others. The partnership will extend to all 1 million users of Conduit Labs' games, including Music Pets, Super Dance and Loudcrowd, to access the tracks.

All of Conduit Labs' games are free-to-play but allow users can purchase virtual items, such as songs, to further personalize their experience. For example, Loudcrowd, which we reported on here, allows users to create their own virtual world with avatars and access music playlists while playing a series of music-themed games with friends. Conduit uses a virtual goods model to sell music within games and songs on the social network range will range from costing nothing to several dollars. Through the agreement, Conduit will share revenue from all sales of UMG's music with the record label. Users will also be able to purchase separate digital downloads of UMG music and other products. UMG will be offering licensed music from Lady Gaga, Little Wayne, Rihanna, The Killers, Beck, Kanye West, Black Eyed Peas, Weezer, Justin Bieber and several other well-known artists.

Identify gap/s in the company's operations and marketing and suggest how your company can overcome the same using Gaps model of service quality

UMG is the world's largest music company with an estimated 25.6% share of the global music market. UMG's recorded music business is the largest in the world with particularly strong positions in the North American and European markets, which together account for nearly three quarters of global sales. Through Universal Music Publishing Group, UMG is the number three global music publishing company with over one million owned or administered titles.

Some of the significant artists and songwriters represented by UMG include ABBA, Avril Lavigne, 50-Cent, The Beach Boys, Mary J Blige, Bon Jovi, Estefan, No Doubt, Prince, Michel Sardou, Paul Simon, Andre Rieu, Shania Twain, Andrew Lloyd Webber and U2. Legendary composers represented by the company include Leonard Bernstein, Elton John and Bernie Taupin, and Henry Mancini.

Market leadership helps the company establish its brand image. In addition, it also enables it

to benefit from scale of operations, which helps it compete against regional players. Also, the company has strong digital offerings. In 2005, UMG maintained its leadership position in digital distribution with a market share of 31.7% in the US. UMG's large market share in digital distribution is primarily due to the fact that the company offers the largest digital distribution catalogue; delivers new releases to digital retailers; and collaborates with digital retailers to promote its products. The group has a global presence with operations spanning across 75 countries. The company offers its services throughout North America, Asia, and Europe. In fiscal 2005, the company's North America, Europe, Asia and 'rest of the world' geographic segments contributed 46%, 40.1%, 9.4% and 4.6% respectively to the total revenues, indicating a well spread out geographical revenue base. This diversified customer

base decreases the group's exposure to a particular market and provides it with cross selling opportunities to different customers across regions Weak performance in Europe and Asia

The company's performance was weak in Europe and Asia in fiscal 2005. Revenues from Europe and Asia declined by 9.1% and 6.6%, respectively, in 2005. Declining revenues from Europe and Asia, which account for about 50% of the company's total revenues, could adversely affect the overall financial position of the company.

The group's offering in Asia, specifically India is not as impressive as the ones offered in North and South America. The group has signed on popular singers like Lady Gaga, Enrique Iglesias, Taylor swift, Bon Jovi there however in India UMG doesn't have a lot of hotshot singers on board. Singers like Kailash Kher, A R Rahman Atif Aslam are signed on by other record labels.

Also album culture is not very popular in India, 40% of the revenue of the music industry comes from movies and UMG's doesn't have a very prominent presence in that sphere. It loses out to players like Tips, T-series, Sony BMG, EMI etc.

To bridge this gap the company needs to renew its marketing efforts in Bollywood and also at the same time try and sign on popular singers to boost its sales in India.

Acknowledgement

We would like to express our gratitude to Prof. Anita Basalingappa for giving us this opportunity to conduct research on the Music Industry and its Management and to study the various processes, strategies, business implications, future trends and growth opportunities associated with this industry. The assignment also helped us understand the working, business planning and strategies involved in the day-to-day operation of the Universal Music Group.