STEP analysis STEP analysis of the Colorado Creative Music aims at analyzing macro-environmental factors in the music industry company is engaged in. These factors can be divided into political, economic, social and technological groups (Pearce, Robinson, 2000). Political factors affecting music industry in whole and CCM in particular the strong political stability in the U.S., regulatory and legal issues concerning the music industry including copyright laws for copyright protection for music writing and recording, copyright-related legislation affecting the issue of virtual internet marketing and distribution; such as The Audio Home Recording Act (1992), No Electronic Theft (NET) Act (1997), "The Digital Performance Right for Sound Recordings Act (DPRSRA) 1995, The Digital Millennium Copyright Act," Pending legislation. Music Online Competition Act and the Consumer Agency Broadband and Digital Television Act (CBDTPA) "and other environmental regulations and employment requirement does not affect business CCM is committed in regard to tax policy, in 2000, from total revenues. $ 216,614.05 the company must pay $ 4,744,97 of taxes, which is not high and amounts to nearly 2 percent from the total tax revenue as a whole, it should be noted that political factors are favorable for the music recording industry and for CCM in particular .. .. Economic factors indices of macro-economy that may affect the industry music recording Again, macroeconomic factors, such as economic growth, interest rates and inflation is favorable for CCM thus kept the U.S. economy has increased steadily since 1995, the CPI falls. . out in 1997, 1998, the unemployment rate fell gradually from 1995 to 2000 |. |. Social factors, including demographic and cultural aspects of the environment outside the music recording industry is population growth, age and attitudes carrier population growth in the U.S. is even and the age distribution also favors industry recording music. It should be noted that the music industry as a whole, teens and 20-year-olds is the primary customer segment, but CCM aims at attracting people in the 40-60 age. Thus of considerable part of the U.S. population this target |. | Technological advances in music recording, marketing and distribution has more impact on the music industry, one aspect of the problem is that musicians are no longer dependent on major record labels to create. . or distribute their products (Viljoen & Dann, 2000) MP3 software alternative to the CD becomes more popular since 1998 in the space traditional sound can fit 12-15 soundtracks .. MP3 software can store about 150 songs, "The move towards MP3 as the new format to replace the CD just as CDs replaced vinyl albums have been accelerated by the rush of new portable MP3 players on the market -. some for less than conventional Sony Disc Man "(Viljoen & Dann 2000, p. 173). On the other hand, new digital technology that emerged in the late 20's, not only to facilitate the process of recording music, but do it much cheaper, allowing for multiple companies with limited resources to enter the market. Thus, if in the 1980s, professional recording studio with all recording equipment, working on vinyl or tape carriers, costing several million dollars and therefore was a domain of five or six majors, in 2000, assembling a professional recording studio could be implemented at the cost of only $ 5000. All equipment and hardware, due to the global advancement in technology, is much cheaper for the average artist or businessman |. | SWOT Analysis Strength. * Cost benefits of new technologies due to the digital revolution is not only assembly of studio with all necessary equipment and hardware is cheaper, but duplication of CDs, storage and transportation is cheaper, too. Low cost of production, duplication (duplication of 500 CDs ranges from $ 1.90 to $ 3.63, duplication of 2000 CDs costs about one dollar per CD), making shipping and storage of the end product cheaper and cheaper for customers , thus widening the range and extent of the target market |. |. * Positioning of CCM in a distinctive market niche CCM is the micro label record label that specializes in classic and traditional instrumental music |. | * Growing customer base and customer loyalty in public Customer base growth due to expansion of product lines (four already, each year two new product lines emerge), and geographic listeners .. * Good customer service shown through direct contact between Darren and his fans Weaknesses * No clear strategic vision. CCM needs a long term vision which covers all aspects of operations, from marketing and management to distribution and human resources. Right now the company faces a dilemma on strategic development, which will focus on either improving or developing the record company or the more active promotion and distribution of products through the possibilities of other companies (the company is currently regarded by its management as a potential subject of an acquisition or investment) * competitive disadvantages: CCM can not enter the retail market because of its current sales level competitors as major labels have advantage because they have greater market power and influence these companies can set .. when their music is played on the radio and negotiate large contracts with distributors and retail outlets, thus giving themselves broader appeal * Limited distribution channels. At present moment the company is highly dependent on such sources are included as direct sales, which include sales at the gig, shopping mall distribution and sale in the back end (800 number order, website order processing and mail orders). These channels are major sources of profit for the company. Despite the fact that expand their customer base, the company must acquire formal channels, such as sales through traditional distribution network for the music and other |. |. * CCM is short of financial resources to pursue new opportunities result is thin, which means new opportunities may be unattainable and long-term improvements can not be given because of initial costs. enter into an agreement with major record labels, which would give it access to traditional product distribution, the company must sell at least 15,000 copies of its products per year. From the other hand, high sales figures are impossible to get without good traditional distribution channels |. | * CCM is losing ground to larger businesses because of limited exposure CCM currently do not reach a global or national audience as an independent and major labels CCM needs to broaden its reach and broaden their customer base ... Facilities * Serving additional customer groups by expanding co-operation with other artists and extend Acoustic Therapy and other product lines with new marketing strategies |. | * Internet by expanding e-commerce and drop MP3 |. | * Increase sales nationwide. * Acquisition traditional distribution channels to reach a larger customer base exposure * Development of new technologies to cope with the driving forces for the industry |. | * Releasing compilations with other artists has proven popular A strategy may be to the Assembly. songs (such as Accoustictherapy) in the studio, and sell the finished discs at a discounted rate back to the artists in their hometowns This approach would cover the cost in advance and give the players a financial incentive to drive the product .. * Pushing sales to non-traditional areas such as weddings, shopping malls, music, etc. Hot. * Large number of new entrants and the growth of other smaller brands because of the digital revolution Furthermore, major labels or independent labels decide to enter into CCM's domestic markets and try to push the smaller labels out of the market |. | * A reduction in sales to substitute products as MP3 files or downloads internet * Vulnerability to industry's driving forces because of CCM's weak position in its industry, taking in mind that it occupy micro-label market and is profitable primarily because of their low cost Digital Recording |. | Five Forces Model of Competition Michael Porter's model of competition (Porter, 1980), if applied to music recoding industry consists of the following components: Rivalry among sellers of recorded music (competition for better market position and competitive advantage), artists and other providers of music to producers or sellers of recorded music, distributors, retailers and individual customers in the music; competitive pressure from substitutes of recorded music to winning customers .. and the threat of new entrants to the industry of recorded music Perhaps the strongest competitiveness belonging to such factors as rivalry between the manufacturers and vendors of music products, music recording industry has 4 clearly identifiable segments: major recording studios, independent labels, microlabels and labels vanity Major, or primary, business have large numbers of artists with contracts, the number reaches 100, specializing in several types of music - rock, country. , Jazz, classical, traditional and other, and have formal and reliable national and international distribution channels. Examples of such companies are Columbia, Sony Music, EMI, GMG, Warner Brothers, Atlantic Records and some others. As a mater fact, such companies are few and their recording equipment is pretty expensive, amounting to not less than several million dollars, as these studios to record music with analogue and not digital equipment and get so three-dimensional, saturated, rich sound, rather than for accuracy, but the common digital audio independent labels have 10-100 artists under contract, focusing on the recording of one or two great musical styles and have either national or regional distribution channels usually Examples of independence. Higher Octave, Metal Blade Records, Rhino. Records, WAR, Windhan Hill, examination of the Planet. Such companies are more than first-tier companies and can use the analog and digital equipment. general, independent labels seeking growth in large ones, but because they have to invest a large sum of money to improve their equipment |. | .. Microlabels have less than 10 artists under contract and is tightly focused on definite style of music they are characterized by small staff and manager who performs as the leading artist in the studio Microlabels has rarely formal distribution system and highly dependent on direct sales to fans and wholesale to clubs and dealers specialty . For the U.S. market is microlabels presented with Etherian, Evol Egg Nart, Cuneiform Records, CCM and many others. general, those companies survive competition due to the low cost of digital recording |. |. Vanity labels fourth, last and most specialized part of the music recording industry, they are founded by independent artists to record and sell their products Examples of vanity labels Bob Culbertson. .. Watson and Company, Lao wood of tizerah, Esteban Ramirez and many others (Darren & Winn, 2003) Currently, CCM the micro label that seeks to convert to the record company |. | First, the competition between rivals on the basis of popular artists and songs recorded by their companies. Recording studios compete intensely to attract popular by promising artists to sign with them. If the songs or artists are very popular, the price is a secondary factor that may affect competition. But if the artist is less known or recorded songs are not very popular, play price role of competition and strategy factor. in the distribution process of rivals, is the special emphasis put on access to traditional channels of music distribution methods, such as retail music stores, large chains records, independent record stores and distributors like Amazon.com the Internet. These funds are very important in order to sell CDs by the artists apart from the direct sale of their performances. also another factor that greatly influences CD sales, promotional tracks, and radio marketing and transmission |. |. For the CCM is the rivalry of the single most important source of competitive pressures, the strong competition from rival producers and sellers of music can be explained by the fact that members of the CCM is not known to the public at large in comparison with the artists of the primary and independent labels |. | Competitive threat of new entry, is the opposite, by far the weakest competitor, ranked between weak and moderate obstacles. for entry are not high for the producers of recorded music, special programs for limited market segments and employing cheap digital technology for recording. CCM can serve the brightest examples of entry. Can such an inexpensive digital technology is now fitted with no more than $ 5,000. Still expensive analog technology to keep costs hundreds of thousands or millions. The technique used by the company automatically determines its resources and within the music recording industry. In addition to cost of the equipment, the main subject of the competition for new entrants will be different market shares and sales volume. Significant volume of sales, in turn, depends on the newcomers' ability to attract well-known, popular or famous artists and singers whose songs are able to get to the top of popularity charts. Given the fact that almost all the popular artists who have already signed contracts with major recording studios, this is a significant barrier to new entrants. Another major obstacle is to have a significant distribution channel. Generally, large distribution centers and music CD retailers interested in selling music artists famous and reluctant to accept products from relatively unknown artists. For CCM, is the threat of new entry is not particularly strong, since it is relatively narrow market segment. While the entrant uses the same recording techniques, distribution channels and target the same niche in the market, can the fact be a matter of great importance |. | Competition from substitute products can be considered moderately competitive player in the music industry such replacement products are presented in the form of enabling the consumer. listening to music with others as a CD as radio, cable TV music channels, live concerts, local bars or nightclubs with live entertainment or recorded music and the Internet. The Internet has become the most important and most powerful substitute to the traditional buy CDs as music available online is usually cheaper or completely free and is not much worse in quality than. WMA-format CDs. Therefore, the number of people in these funds serve as effective substitutes, but for music fans, buy the official CD .. is obligatory in the case of Colorado Creative Music, people can enjoy the performance of live concerts of these artists and refrain from buying their CDs Therefore from CCM standpoint, this might be quite significant competitor |. | The forces left the bargaining power of suppliers and bargaining power of buyers and collaborative buyer seller relationships, which are both highly competitive |. | The first, bargaining power of suppliers depends on the popularity and reputation of the artists who are popular and whose recordings sell. Well, have a strong bargaining position, they can choose from many recording studios CCM specializes on recordings of unknown artists, and therefore have low purchasing power, because the artists involved with the CCM does not have many options for studio recording and CD distribution .. bargaining power of buyers and cooperative buyer-seller relationship is very strong competitive force, the largest distributors of recorded music CDs delivered to the leading music stores and other retailers of music, these leading distributors stock about 40,000 copies of a CD and work on the 60th - 90 hours maintain the benefit of full recovery of investments for the unsold copies. So-called "one-stop" is when supplying products to independent music stores in smaller quantities and often with limited selection of music types. general, those distributors prefer to manage inventory sheets of the very popular artists, or at least well-known artists and often they are not interested in going into distribution of CDs of unknown artists. Therefore, CCM is very difficult to obtain decent and formal distribution, particularly in getting their products sold by music stores such as Sam Goody, Tower Records, Borders Books and Music, and Barnes and Noble |. | In addition, a major role in the distribution process is played by getting the music heard by people so that they would be more likely to buy CDs. This includes playing music on the radio, on TV channels with music and soundtracks to movies. Until artists and artists of CCM has become so famous that they requested in retail music stores, the company has little chances to get a large representation of the major CD distributors. head of the company, Darren Skanson, has contacted some dealers on their own and found out that it is very time consuming and onerous task to get his records are distributed by dealers in their area. the people he was hired to tackle the problem had any luck either. CCM has had some experience of selling CDs through a single distributor, but it was not very successful because of the high markup imposed by the distributor on the CDs of CCM. In the long term, plans Darren make their product lines as Darren Curtis Skanson, Music for lighting and other artists, popular enough to have their CD distributed through major music stores. But for the present moment, stems largely from CCM sales volume from direct marketing sales at the gig, shopping mall distribution and the Internet, mail and telephone orders of the musicians' CDs.
