in April 1999 BMG and Universal announced a new venture,

Getmusic.com

In July 1999, Sony and Warner announced plans to acquire CDNow and merge it into

Columbia House

Through Getmusic, a venture with BMG, Universal sold

conventional CDs and cassettes and promoted its artists online.

By 1999, Time Warner was scrambling to catch up in the

online arena.

Way Forward – Ø  By 1999, the top 5 started some kind of joint activities Ø  Some of the companies were struggling to shift to Internet ** Will use this qualitative analysis for recommendations

Qualitative Analysis

Paremeters 1991 1992 1993 1994 1995 1996 1997 1998 1999Retail4Value4of4Sales4(US4$4in4Billion) 27.8 29.5 31.2 36.1 39.7 39.8 38.6 38.7 38.5

Units4Sold 2.8 2.9 3 3.3 3.4 3.6 3.6 3.6 3.6

Size4of4Global4Music4Industry Plot4of4Yearly4Trend

Take Away – Ø  After 1996, the growth in terms of Revenue & Units sold is stagnant

Quantitative Analysis

Companies Revenues-(US-$-Billion) %age-Market-ShareBMG-Entertainment 4.3 11.2EMI 3.6 9.4Sony-Music-Entertainment 6.3 16.4Universal-Music-Group 3.7 9.6Warner-Music-Group 3.8 9.9

Total 56.4

Financial-results-of-major-record-companiesCompanies %age,Market,ShareBMG,Entertainment 17.3EMI 9.3Sony,Music,Entertainment 16.9Universal,Music,Group 25.5Warner,Music,Group 15.8

84.8

Music,Industry,Market,Share,in,US

Type Market*Share*of*the*top*4*Entreprise Total*No.*of*Entreprise*in*an*IndustryVery*High*Concentration*Oligopoly*(A)*type >*75% <*20Very*High*Concentration*Oligopoly*(B)*type >*75% 20K40

High*Concentration*Oligopoly*type 65%*to*75% 20K100Medium*(Upper)*concentration*oligopoly*type 50%*to*65% The*Number*of*Entreprises*is*very*largeMedium*(Lower)*concentration*oligopoly*type 35%*to*50% The*Number*of*Entreprises*is*very*large

Low*Concentration*Oligopoly*Type 30%*to*35% The*Number*of*Entreprises*is*very*large

Concentration*Ratio*Matrix*by*Bain*Consulting

Take Away – Ø  As per the concentration ratio matrix, the global music industry is approaching Medium (upper)

concentration Oligopoly, and in US the Music Industry has already achieved very high concentration Oligopoly.

Recommendations

Snapshot of Music Industry Practices over time: •  In 1929, due to depression in the recording industry, Thomas Edison went out of business •  In 1931, Columbia, Parlophone, and Gramophone merged to form Electric and Music Industries (EMI) •  CD Now, merged into Columbia House •  ** From the discussion between CEO & VP - Two of the six companies that dominated the industry had merged a year

earlier, and at least one other was rumored to be looking for a buyer. •  Seagram acquired Universal Studios in 1995 •  Seagram purchased PolyGram in 1998. •  From page 4 - By 1999, nearly 85% of the global market for recorded music rested in the hands of five corporations

Concluding from Qualitative, Quantitative, and Industry practices ü  From the CR4 analysis of respective market shares, it seems that the market has reached a

consolidation phase wherein some of the leading players will be acquired by others. ü  BMG Entertainment should look for acquisition or get merged with some company. ü  From the financial results of 1999, the return on sales for BMG (4.1%), is lower than EMI

(10.2%), and Sony (5.1 %), so BMG could look for merger with any one of the two. ü  BMG should focus more selling more online products.

Thank you …