Sample Business Studies Paper on Nettwerk Management Case Study

1. Which marketing processes from music’s pre-digital era are now obsolete and which continue to be relevant?  Describe the industry structures and business models of each and their successes/failures.

The music industry has changed tremendously over the last few decades. The industry has experienced a number of failures as well as successes in different magnitudes. There have been periods of struggles, growth as well as prosperity in this industry over the last decade. In addition, the music industry has also seen many and diverse styles and names, which have been a hit, while others have swept away with time. The ways in which music was performed three decades ago has tremendously changed in the modern world today. A good example could be the change in the manner in which artist used to make money three decades ago, which has significantly changed over the time. Twenty years ago the industry’s music sales were fundamentally dominated by cassette sales as well as LP sales; however, with the advancement in the world today coupled with technology, sales in the music industry has been mainly CDs, which saw the great growth in revenues until its peak during the year 2000. The advancement in terms of technology has really been a driving force in the music industry, therefore, helping many of the music artists to make huge sums of money and increased popularity.

This also led to breakthroughs in the industry by many artists, who have been able to produce outstanding works using excellent marketing strategies as well as proper recording labels. On the other hand, the improvement in terms of technology has also had its negative share in the music industry as other musicians resorted to these technologies for selfishness means, including audio file sharing.  In the article Nettwek: Digital Marketing in the Music Industry, Mr. John Deighton and Ms. Leora Kornfel argues that, “In 1991, experiments in digital audio encoding had led to the global adoption of a standard digital format known as MP3. Shortly after this, another groundbreaking innovation came into the music industry with the development of software tools, which allowed compact discs to be transferred into digital files. In addition, other software tools could allow musicians to play those files. What is more, with the availability of the internet, audio sharing became rampant across the world. This acted to negatively affect or heart attacking the music industry. This lead to huge losses and many of the musicians suffered these loses on the hands of increased numbers of pirates who ripped away gains that were meant to benefit these musicians.

This contributed to the decline in terms of sales right after the peak years even after several years with the introduction of iPods in the market.  The coming of the push-out of iTunes store helped to save the declining music.  In addition, the new ways for artists royalty became digital downloading as well as Ringtones and Ringbacks. These became the main drivers for earning revenue and making enormous sales for music industry; however, it still cannot stop the decline for whole industry due to the huge drop of CD sales. The introduction of the smart phones in the market signaled the beginning of success in the industry as ringtones service faded away. The resurge of LP sales as   well as the launch of many great music streaming services, including Spotify have helped in stopping the decline in music revenues around 2010, which it hold the situation to an era of Revenue Stagnation.

The different periods of music industry change more or less for their marketing strategies through the labels, even recent years more and more indie labels were found. In the world today, the music industry do not have much revenue for the sale of physical product as before, and the ways they used to market for their CDs and retails have to change, and even obsolete because of it. Much less physical retail store are now in America, and most retails happened in Best buy, Wal-mart in addition to Target. As a result, both major labels and indies labels  had to choice if to make a lot of physical CDs and put those in a dusted showcase or not. In most of the time, only middle-class or even higher-class artists can release and distribute a lot in physical CD sales. When the main concentrate for the industries turned to music streaming services and also live performance. At the same time as the John Deighton and Leora Kornfel said that “To capture a share of these new revenue streams, major labels began to require artists to sign contracts that they called “360 deals,” in place of traditional album contracts. The 360 deals gave labels the rights to revenue sharing from such sources as concerts, fan clubs, and merchandise.” Which is a huge change in the industry and it is also the main stream for now because the risk for the labels to afford is so high that they were so afraid of losing money. These promotion companies including companies such as Live Nation and Ticketmaster came to the view of public, and touring became actually the coolest and most efficient way to make money and recoup the advance for artists.

 The significance for Promotion Company became a serious problem for labels and artists. At the same time, in the hi-tech era, artists possess more ways for themselves to market compared to years before. Individuals use social media in most of the cases, and also others music related tools apart from Spotify as well as Pandora, but also Sound cloud, Bandcamp which artists can now have the opportunity to cover as much as people as they want and promote for themselves. In addition, it is also similar as do what the labels did by using their own resources before under a super low cost way on it. Major labels were fully integrated of everything from signing contracts to produce and market, even more relationship with music relates business partners. On the other hand, in the case Nettwek, “Indies were seldom fully integrated. They all performed the scouting function, but they tended to buy some of the other services. The deals between indie labels and artists therefore depended upon the label’s in-house resources. With less overhead to support, indies could be more flexible and more creative than majors in the deals they struck with artists” tells that even major labels have their own power in the industry, but indie labels even independent artists can beat them because their flexibility of managing themselves and marketing.

2. Describe and discuss how viable is the “long tail” strategy for musicians / artists?

The “Long tail” strategy denotes to the strategy base in which the demand for the infinity tail is more emphasized as opposed to focusing on ways to get a high and attractive head, which first articulated in late the year 2004 by Wired Magazine’s Chris Anderson. in essence, the “Long tail” strategy official explanation   can be in “the argument contended that digitization would enable marketers to serve small pockets of demand far out on the tail of the distribution of music tastes, many of which had previously been too small to serve profitably.” In addition, utilized by lots of industries, as we all known companies, Amazon is one of the most famous companies, which makes use of the well-known “long tail” strategy. As a company that sells books, Amazon has everything from the top 100 to Barnes & Noble’s book, and also millions of the books not on Barnes and Noble’s list, and surprisingly half of the revenue comes from the books which are not on the list.

In particular, it implies that all those books not showing on the bookshelf bears even bigger market than the books are. Because there will never be enough space and it probably don’t worth or I can say it’s not possible to put every book on the shelf. Therefore, Amazon made a market for them, and it solved the limitation of lack of resources. Same thing happened in music industry, such as digital selling use it a lot. Most people don’t always just buy Top 50 songs and album or only listen to that kinds of list on Spotify, we each has different flavors and even many people’s favorite is on obscure music. Indie labels and independent artists become the “loyal customer” of “long tail” strategy. Most of indies focused on specific fan groups, and tried to develop them to dedicated fans. An article called 1,000 True Fans which said 1000 true fans can already let their idols get enough money to set up for life: “One solution is to have 1,000 royal and true customers. Whereas a number of artists have indentified with this particular trail without arguing that they think it is worth for them to try and formalize.

The idea that1,000 loyal and true fans or customers may be simply said as, “A creator, such as an artist, musician, photographer, craftsperson, performer, animator, designer, video maker, or author” – in other words, anyone producing works of art – needs to acquire only 1,000 True Fans to make a living rather than having a million who are not loyal. It happened a lot, and it also fit when they promote. Because “indies” do not have as much power as major labels in the whole music industry, but they may have their strong fan base and relations in some cities, such like the cities they born or grow up. Artists and labels could focus on a local way to promote, and on music relate applications.

3. What are “awareness bumps” and how does Nettwerk exploit them?

The term “Awarness bumps” is a method Nettwerk started to use for marketing its music files. In this case, Nettwerk made use of five different awareness bumps, which were aimed at advertising as well as developing the company’s business. These awareness bumps comprised of the television placement, ad placement, cause-related marketing, niche taste in addition to promotion strategies.  Television placement is one of the method that Nettwerk used in order to magnify its targeted coverage on social media sites to fans. It was simply like putting the songs under their label into a TV shows or plays. The other method that was extensively used was the Ad placement, in which Nettwerk’s New York office called regularly on advertising executives, matching its bands to the needs of advertising campaigns. In this strategy, the company put its songs in an ad then earned revenues from it, while at the same time promoting themselves on other digital download sites. The Cause-related marketing is equally beneficial collaboration between corporations and nonprofit companies, which is actually designed in efforts to promote the former’s sales and the latter’s cause.

A perfect instance is when Sarah McLachlan’s support for the American Society for the Prevention of Cruelty on Animals. “McLachlan herself appeared on camera and made a direct appeal to the public for donations. The ads were kept fresh with the use of two more McLachlan songs. When the commercials were uploaded to YouTube, Nettwerk bought advertising on the site to promote her songs and albums. The campaign raised $30 million for the ASPCA.” Niche tastes is also another important approach, which happened while McBride form Nettwerk was attending a yoga class. After finding out a sel-released yoga album, he got inspiration from it. “In late 2006, McBride tracked down Morissette and signed him into a three-album deal with Nettwerk’s Nutone label. He added kirtan artists, including artists such as Krishna Das as well as Jai Uttal among others.

4. What is the role of marketers when fans/consumers have the ability to create, communicate and publish?

The major function of markers is essentially making more interactive possibilities and encounters between artists as well as their fans. For the case of Nettwerk, it actually did well in letting their fans mix as well as produce a song they recorded for a singer, and let them be “the record company” itself. In essence, offering them the opportunity to have fun in addition to allowing them to stick together with artists was very important. On the other hand, it can also do more than just connecting fans and musicians. Much more can actually be done including increasing the level of popularity of musicians, refining the online information for musicians, promoting live gigs, and remaining as well as getting more public relations for them.

5. What are the prospects for Polyphonic?  Contrast the major label model, Nettwerks digital industry model and third, the Polyphonic model.  Give examples of success and failures for each in marketing their products/artists.

According to the article by John Deignton and Leora Kornfel, Polyphonic was funded the sum of about $20 million. In fact, its proposal was supposed to identify bands that were either not yet signed to record deals or dropped by their labels. In addition,  it also was to advance about $300,000 to each band in efforts to cover recording, video production, as well as initial touring costs, as well as marketing in addition to promotion expenses. Indeed, Polyphonic has a very strong prospect for raising money in addition to becoming very profitable. It is also unique in a number of ways. It has became a different “product” as compared with the “360” deal.

In addition, Polyphonic net revenues made from publishing, touring, merchandising, sales of recordings, as well as other licensing can be split in the ratio of 50-50 for new artists and on more favorable terms for experienced artists without necessarily owning the master recording copyright. Furthermore, they still need the right to exploit copyrights created during the contract, and it became so much flexible for both artists and labels to decide and do what they think will work the best. On the other hand, the traditional “360” deal are contracts, which allow a record label to get a percentage of the earnings from ALL of a band’s activities rather than just from record sales.

It takes lots of struggle for the artists to make money from it. In addition, from digital sales, tours to synchronize fee, it is indeed a very large cut from the artists to recoup over the advance company give it to them, which also allows the label to acquire the copyrights in the artist’s recording and options for multiple albums. However on the other hand, the Polyphonic sounds so friendly to the artists by helping them contracting from outside sources. According to Berklee Music business, irrespective of the many efforts made previously, the issue of Polyphonic has been largely ineffective, especially in terms of getting venture capital investments. However, the organization significantly remains undeterred, at the same time, working in order to prove to investors that their new model has an excellent possibility. Nevertheless, right from the organization’s formation during the year 2009, it has particularly received modest popularity. In addition, it is surprising that there have been no artists that have been signed yet into the company’s roster. Moreover, the company is still not receiving the needed support, especially when the company’s main competitors are failing. Warner’s stocks fell by about 40 percent in the year 2010, from 8 dollars to 4.64 dollars per share.” In particular, this is not such a positive prospect now. As for 360 deals, when an artist gets enough power for both reputation as well as public relation, they may get out off it for sure after their contract and become their own boss. The case of Jay Z presents a good example to get out off the 360 deal and becoming his own boss. In this example, Jay Z has been able to obtain enough power in terms of publicity as well as reputation in addition to opening his own music, which has received great popularity around the globe.

6. Your opinion of the future of the music industry?  Healthy or heart attack?  Argue for and support your supposition. 

I strongly believe that it appears as if it is now a fading moment for the music industry, but the period might not stay for a long time. In essence, the music industry has been through a heart attack in the beginning of 21st century due to the pirate recordings in addition to audio sharing problems on the Internet. In the modern time, the big companies for music industry, Spotify as well as Apple music are raising billions of dollars in order to enhance their services, and they could be bringing enormous improvements into the whole music industry.  In essence, with these companies acting on behalf of artists as well as supporting both upcoming and renowned musicians, artists have been able to make significant fortunes; therefore, leading better lives compared to those that existed before them.

With this understanding, I know that the main label companies are experiencing declining trends, but at the same time, the indie labels and independent artists got a great opportunity to grow fast. It could be a successful moment again for the music industry after few decades. The professional and reasonable management on royalty and revenue especially for music streaming service will be critical.  This is because through this way, artists will be able to maximize on their revenues from the sale of their music in addition to guaranteeing growth in the industry.