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Unformatted text preview: sell songs directly to online buyers? Value Chain for Selling Music on the Internet 1. Record company direct production costs 2. Royalties 3. Record company marketing expenses 4. Record company overhead 5. Total record companys cost 6. Record companys operating profit 7. Record companys selling price to consumer Costs cut out of value chain by selling songs directly to online buyers: 1. Pressing of CDs and packaging 2. Wholesale distributor markup 3. Retail markup The 3 main costs that are cut out of the traditional value chain are the cost of making the CDs, the markup from the music company to the retailer and the markup from the retailer to the consumer. The markup from the retailer to the consumer is basically replaced by a markup from the music company to the consumer. Sources: Thompson Jr., A A., Strickland III, A J., & Gamble, J E. (2010). Crafting and executing strategy . McGraw-Hill Irwin....
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This note was uploaded on 07/13/2011 for the course BUS 421 taught by Professor Ness during the Spring '11 term at Edison State College.
- Spring '11