supply chain project

supply chain project - Music is a part of every persons...

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Music is a part of every person’s life whether it is their passion, career, part of a morning commute, or just something they hear in the background of movies and television shows. Since the 1890s when recorded music became a standard medium of entertainment for the public, it has become one of the biggest and fast-paced changing supply chains in history (1). Starting with the phonograph, music has been sold and distributed on records, cassettes, compact discs, and most recently the internet. From the time of its birth in the 1980s, the internet has become an enabling technology in countless industries. The internet has provided firms with multiple benefits: it is a less expensive way for distributing intellectual property, it has opened up firms to new customers and markets around the globe, it provides a way for customers to “self-serve” themselves through information found on websites, it is a medium that can be updated and edited instantly, and it provides a new source of marketing for a firm’s product or service offerings. Throughout all these benefits, however, the internet also poses a threat to intellectual product retailers, as piracy has become a mainstream activity. In 1982, music became available for purchase on compact discs (CDs) (3). CDs became the standard physical source for audio storage and the main means of purchasing music. The supply chain for music distributed via CDs starts off with musicians creating a recording with a producer and record label and setting a fair royalty for themselves with the recording label. The music is then burned onto a CD and packaged. A markup is added to the CD for this value adding activity. The recording label adds additional markups to cover its overhead and to receive a profit and then the CDs are sent to the distributors. The distributors also add a markup to cover overhead and profits before sending it to retailers, who also add a markup for the same purposes.
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With the introduction of the internet, online retailers have made music available through direct downloads, cutting out some of the activities that add no value to the customer and therefore
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This note was uploaded on 01/25/2011 for the course MGT 4803 taught by Professor Staff during the Spring '08 term at Georgia Tech.

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supply chain project - Music is a part of every persons...

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