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Transcript

Market

Competition

FORM OF MARKET

Monopolistic competition

The music market has changed through the last years because of the technology revolution.

At the beginning just five enterprises ruled this market. At that time the market considered was a sort of oligopoly.

After technology induction this market has transformed. Nowadays Spotify works on monopolistic competition.

Monopolistic competition

Low entrance/exit barriers

Low entrance/exit barriers

Entrance barriers are composed by istitutional, structural and strategic problems.

Exit barriers are made up for high postgraduate work, partnership, political obstacle and private influence.

Imperfect substitutes

Imperfect substitutes

The different formats in which digital music is sold by the different enterprises in this market is caused by consumers who don't perceive those as perfect substitutes and so they choose one of the services according to their needs.

High number of competitors

High number of competitors

Considering the recording labels, the streaming free and payment service and the download service enterprises,

we can say that there are lots of

competitors offering quite the

same service.

Barriers

Barriers

Entrance barriers

Entrance barriers

Technology: nowadays everyone can afford technology and so entering into a digital market isn't expensive

Strategic: although companies which already works on this marked invest a lot on different fields the network effect guarantees space for new enterprises

Institutional: legal problems about digital music enterprises is respecting different states authorisations concerning permissions and copyright but due to liberalization politics they are very low

Exit barriers

Exit barriers

The enterprises which work in the digital music market have different value propositions and therefore they have different needs of resoucers, partners. Each of them have different fixed costs which won't be retrieved. Some of commons exit barriers:

  • rescind a contract with partners
  • paying wind up
  • sunk costs which refers to payment

already made for future years, concerning

servers for example.

Substitutes

Substitutes

Digital music market is various as the service offered by different platforms.

Supply divides in:

  • streaming plus video as Youtube;
  • download single song as iTunes, Google Play and others;
  • subscription to listen offline for a specific time as Spotify, Apple Music, Amazon a.g.;
  • radio streaming as Pandora.

Competitors

30%

iTunes

23%

Pandora

Spotify

13%

As shown in the graphics on the side in 2016 the U.S. consumers' preferences were oriented towards iTunes and Pandora services, offering a quite different way of accessing the music

Google Play

12%

Prime Music

9%

Apple Music

7%

6%

Other

Source Statista

Network effect

The effective value of the product depends on how many people use it.

Network effect make enterprises make profit with a huge number of subscriptions. For technological market the change is sudden and unexpected in particular music tastes replace quickly .

Network effect

?

References:

www.musicadigitale.net

http://nova.ilsole24ore.com

http://confindustria.babt.it/index.php?option=com_content&view=article&id=266%3Amusica-digitale-opportunita-e-sfide-un-rapporto-dell-ocse&catid=142&Itemid=796

http://www.ifpi.org

Edited by:

Abbundo Chiara

Avizzano Gianluca

Balzano Mariaconcetta

Cannavacciuolo Stefano

Cicala Carla

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