customer reach. It should be noted that no other competitor has a digital file sharing program, and the development of one would put WMG in a more dominant presence in the digital market. Even though currently, physical format recorded music sales outweigh digital and Internet sales, the trends are apparent that numbers are on the fierce incline for digital sales, growing around 58.8% annually for the last couple of years (RIAA) . The timeline of events can be found in Appendix I. Resources that would be required would include a web and computer program graphic design engineer. This individual’s job entails to development of the file sharing system that WMG plans to unleash, as well as the maintenance and revisions to keep up with the changing trends. This would require a salary of $65,000, which is $15,000 above the web designer average salary (CNN Money). A total of $2 million should be implemented for guerilla marketing techniques, such as cell phone alerts, direct mail, and viral marketing. This helps to establish the name of file sharing program and its benefits while building consumer recognition. R&D should be carried out to find where to target the marketing techniques to ensure highest possible
customer reach, allotting a budget of $50,000. Lastly, since more traffic is planned to come online through their business, WMG should acquire 4 more web designers to keep maintenance and give consumer targeted websites to more artists and labels. This requires four salaries of $50,000 due to only keeping up with websites. Altogether, WMG should allot a budget of $2.5 million to this expansion. This covers the specified costs and others not yet come across. There should be no problem due to the costs this budget, being that it’s only 1.2 percent of WMG’s operating income (Hoovers). When averaging the last two years annual percent change of digitally distributed music sales I got an average of 58.8 percent (annual percentages from RIAA key facts). I then added that percent change to last year’s total revenue of digitally distributed music of $1.257 billion (RIAA), which gives me an expected $1.996 billion in sales for the industry in the upcoming year in digitally distributed music alone. Using the case’s information of WMG’s market share of 11 percent and multiplying it by the $1.996 billion expected industry digital music earnings, I am able to estimate Warner Music Group will post $219.56 million in revenue from digitally distributed music content. By using the same method, I can calculate that this is roughly an $81.3 million increase in revenue, over last year’s earnings from their digital segment. Control When configuring goals, one must make them qualitative in order to assess if improvement actually occurs. In this, the obvious measure of success for the file sharing program will be in the numbers of subscribers, and music downloads. This should take place over a 3 year period of time in order to give the fairest possible chance to the program. This is taking into consideration that in three years digitally distributed music content will likely double what it is today, as well provide a decent time frame for brand recognition to develop for the program. The
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- Spring '09
- Record label, Warner Music Group