Sony Music (India) Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Introduction

In spite of being a multinational company, Sony came with a mandate to participate and grow its share in the local music market and debuted with the successful release of “Maa Tujhe salaam” in the year 1997.

In the year 2002, the industry witnessed a shakeout with the film companies such as Yash Raj films and UTV entering the industry as music companies and the mobile market grew. Television had an increasingly regional focus, and music companies in market like Punjab and Tamil Nadu became important players.

In spite of the concerns, the company was making its way towards success and the company was giving hit music to the music lovers. The concerns were not affecting the company’s progress. However, the company aimed to look for new markets and started to enter the Tamil industry to increase the growth of the company.

Analysis

The situational changes are faced by the industry in which the company is operational. The music industry is facing problems not because of any change in demand or bad music developments. The whole industry is facing a challenge to sustain profits in a more challenging situation due to technological changes and reducing costs of consuming the music.

Traditional value chain:

The value chain followed in India was quite different from the west, as in west the artists and bands were the most important factor for the music companies however,in India the scenario was totally different. The music industry depended on the film industry, as most of the songs that receivedrecognition were because of the movies.

Sony also focused on the film industry as the film industry was providing 60% business to the music industry. The film producers appointed music directors and after the making of songs, they approached a suitable music company, which wouldbuy the copyrights of the music and will launch the music of the film.

Technological changes:

As the technology was changing by leap and bounds, the music industry was being affected by these changes as the cost of producing, selling and buying was also changing. The technology changed from cassettes to CD’s and from CD’s to digital music.

The approach of public was changing largely, as now the people want to have the music in their mp3 players, mobiles and laptops. Therefore,the demand for CDswasdecreasing so the company had to find an alternative to provide to the people, which gave itaccess to the music and which wouldalso generate substantial revenues for the company.

Industry economics:

As the industry was totally different from that of thewest, the success rate of music of a film was 10% and 90% were failures. The music industry depended on the film industry.A film producer acquired the music from the music producer and then approached a music company which couldeither acquire all therights of the company or contract on a profit sharing basis.

The Indian music industry was a national recording industry association that protected the rights of its members, which included most of the major record companies. Royalties collected from radio broadcasters and other end users such as restaurants, clubs, and discotheques were managed by independent licensing bodies such as phonographic performance limited an arm of IMI, IPRS and south India music companies association. However, their role was insufficient.

Digital revolution:

The music industry of India earned its revenues from four major streams: physical sales of music, digital sales, radio and television broadcast royalties. The Indian music industry’s physical sales were surpassed by the digital sales in the year 2010.

In the year 2006, physical sales of music comprised of 81% of the total sales of the music industry and by 2010, this number declined to 38%. The sales of 2015 were estimated to drop by a huge percentage of physical sales of music. The estimationindicated that the sales would decrease to 6% of physical music whereas, the sales of digital music will increase.

Problem statement

What the company should offer to its customers in digital platform to keep the company’s revenues grow?

Alternatives

Alternative no. 1

Launch a user friendly application for the mobile users to provide the company’s music to public at large and charge a subscription fees.

The company should introduce an application for the mobile users, which will be available for the subscribers on the payment of a minimal amount. This will increase the revenues of the company as most of the digital music consumers are mobile users. The company can also charge for downloads and it will be suitable for the company to provide free streaming to the subscribers..............