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Market
Competition
FORM OF MARKET
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.
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.
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.
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.
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
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:
already made for future years, concerning
servers for example.
Digital music market is various as the service offered by different platforms.
Supply divides in:
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
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 .