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Unformatted text preview: Analysis Of The Bmg Entertainment BMG entertainment, the worlds fourth-largest media company, was a subsidiary of Bertelsmann AG, a German media conglomerate. In 1999, it was a $4.6 billion music and entertainment company with more than 200 record labels and operations in 53 countries. Its revenue was derived from North America (51%), Europe (32%), Latin America (9%), and Asia-Pacific (8%). Despite of this BMG Entertainments ability of generating huge revenue, and its operating strategies to make the company sound, the BMG Entertainment, however, is now facing severe obstacles tough to overcome. 1) Executive Summary: As new technology came out in this world, music industry was destroyed. The advent of broadcast radio as well as Internet made many record companies change their organizational structures to fit to the new technology. No one can stop technology being changed. To be a survivor in any industry, firms must be flexible to the changes of technology. Therefore, BMG also need to fully respond to this challenging environment by adopting well-structured digital distribution system and shutting down its physical production facilities. 2) Problem Identification: In the late 20th century, the global music industry faced difficulties, as new technology, specifically Internet, was prevalent among people in the world. The new technology totally changed ways in which people used to buy goods and services, especially related to the music industry. The Internet accounted for 0.3% of all music sales in 1997, 1.1% in 1998, and amazingly 10% by 2005. Music was sold out over Internet through some well-known web sites, which uploaded samples of music by genre as well as information about the music and the musicians. Then, consumers listened the samples, and chose what they most enjoyed. An order from the consumer was received, and shipped by the web sites. Another way through which music could be sold was downloading music. New technology allowed surfers to download music directly to their... The Internet, by making free and non-free online distribution of music, has profoundly affected how business is conducted in the record industry in terms of distribution channels, copyright and the economic structure of the major players in the global market. Initially, the Internet was viewed as an opportunity by some of the major players as a new channel of promotion. However, after the existence of Napster and few others, the majority considered it as threat because of the increase in the free file sharing. Consequently, for the Internet to be an opportunity for the major players, they had to adopt new business model in terms of distribution for online customers while keeping their conventional distribution channels. Early response to this threat was searching for technological solution in order to prevent piracy, going to court to sue for copyright infringement, the five major players and others offered their own authorized online distribution joint venture, all in attempt to keep their...
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This note was uploaded on 11/10/2010 for the course BUL 3130 taught by Professor Tessitore during the Spring '08 term at University of Central Florida.
- Spring '08