What should zelnick and conroy do

When he arrived at BMG North America in , he found a division that had diversified, largely unsuccessfully, into businesses such as video distribution and apparel licensing. All but three of 25 units within the division were losing money. Zelnick rapidly withdrew from loss-making positions, cut the costs of operations, and refocused the division on music. Traditionally, individuals had risen in record companies based on their creative talents and track record of breaking new artists.

In contrast, Zelnick was best known for his strong business background and his focus on efficiency and profitability. Zelnick held MBA and law degrees from Harvard. Manufacturing, distribution, music-publishing, and some sales and marketing activities were centralized and coordinated across the labels.

A technology group within the division, established in , tracked the development of new-media products and served as a contact point within BMG for technology questions. Through some acquisitions, it had accumulated the catalogs of diverse artists such as the Beach Boys, B.

King, Barry Manilow, and Santana. It also sought to generate royalties from its copyrights by placing its songs in films e. Club members ordered a set of introductory CDs or cassettes at a very low price. Subsequently, they received a selected album each month, which they could decline to purchase, as well as a catalog of other available albums.

Marketing At BMG and other major record companies, marketing had traditionally been managed entirely within individual labels. In this new role, Conroy coordinated the marketing activities of separate labels and established strategic alliances and partnerships with other companies e. The Other Majors The five major record companies represented different artists and operated under diverse labels Exhibit 1.

In many ways, however, they resembled one another closely. All were organized in the same fashion. All operated around the globe and were large enough to do so effectively. All performed the same basic functions, though with different degrees of efficiency. Artists chose among the majors largely on the basis of characteristics of particular labels, not corporations. Personal relationships between label managers and artists were especially important in attracting and retaining artists.

Industry observers believed that the merger had been difficult. Beyond music, Seagram participated in the production and distribution of spirits and wine, film and television production, the operation of theme parks, and specialty mall retailing. Sony Music Entertainment was part of Sony, the Japanese entertainment and electronics giant. Sony produced not only music but also hardware to play music, such as the Walkman.

Other divisions made video games, films, television programs, computers, wireless telephones, semiconductors, and magnetic media. The corporation prided itself on its cutting-edge technology. The corporate parent operated a set of cable channels including CNN and HBO, published magazines and books, produced feature films and television programs, and provided cable television connections to more than 12 million homes.

With its cable system, one of the most technologically advanced in the United States, Time Warner was providing high-speed Internet access to roughly , households and was experimenting with services such as video on demand, high-definition television, and interactive television. Among the majors, only the U. In , many observers felt that EMI was looking for a buyer. The financial results and market shares of the five major record companies are shown in Exhibits 9 and 10, respectively.

The Internet Music was one of the categories of merchandise most affected by skyrocketing use of the Internet in the late s. The Internet accounted for 0. Through sites such as CDNow and Amazon. Downloaded music was a more radical departure from convention: new technology allowed surfers to transfer files containing music directly over the Internet to their computers.

Thousands of sites posted illegal, pirated copies of songs. Supported by new software and hardware, a growing number of sites offered legal digital downloads. CDNow was typical of this new type of retailer. Visitors to its site could browse the selection by genre; search for favorite artists, albums, or songs; listen to music samples; and read countless articles related to music.

Once shipping charges were included, CD and cassette prices at CDNow were comparable to those posted by storefront retailers. The company focused its own internal efforts on the development of its website and aggressive marketing to consumers. Downloaded Music Technology of downloading Thousands of websites gave surfers the opportunity to download copies of songs or albums directly over the Internet.

The downloading of music involved software and hardware beyond a computer, an Internet browser, and an Internet connection. The first element of additional software was a compression protocol—basically, a standard for reducing the computer file that contained a song to a size that could be downloaded quickly.

MP3 was the most common protocol. A typical MP3 file containing a three-minute song could be downloaded by a computer with a 56K modem in seven minutes or by a computer with a cable modem in less than one minute. A second element of software, a player, opened the compressed file and played the downloaded song. Computers were increasingly equipped with CD drives that could write files to a compact disc, not simply read from a disc.

One could plug the stick into a computer, download music, then move the stick to a portable player. Liquid Audio, for instance, marketed a complete system to companies that wanted to sell downloadable songs. Liquid Audio managed the billing of the customer. Songs downloaded via the Liquid Audio system were remastered using proprietary technology. Competing systems, or components of such systems, were offered by technology giants such as IBM and Microsoft and new ventures such as Intertrust and Reciprocal.

Industry groups were also working to enable downloading without piracy. Involving dozens of companies, SDMI aimed to set open technology standards that would ease digital distribution while protecting copyrights.

The organization intended to have a full set of standards in place by March 31, Each page included free, downloadable samples of music posted by the artist.

Once an order was placed, MP3. The company also gave artists daily information on the numbers of visitors to their pages, numbers of downloads, and rankings within genre. The website guided consumers to artists by genre and by online popularity. As of late , MP3. The most popular musicians, however, were absent from the site, in part because the major music companies did not allow participation.

In , MP3. CD sales accounted for the rest of its revenue. As of late , EMusic. Half of the proceeds, net of administrative costs, were paid to the label. The company had recently inked agreements to offer its downloadable music library through Yahoo! It had also acquired the Internet Underground Music Archive, which hosted the home pages of 5, artists.

In the year ended June 30, , EMusic. The company directed users only to sites it believed to be selling music legally. Its site also featured guides that helped users learn how to download music. Founded in December by Rob Reid, a former venture capitalist, and launched on the web in June , Listen.

In June , it announced partnerships with leading online music-selling sites such as EMusic. Soon afterwards, seven leading independent labels agreed to work with Listen. By then, Listen. The company was allegedly in investment discussions with all five of the major record companies. Napster maintained a list of the users currently online and the titles those users were making available. Copyright holders received no payments for such downloads.

Retailer Reaction Traditional brick-and-mortar retailers saw both the online sale of prerecorded music and the downloading of music over the Internet as serious threats.

Retailers used their sites primarily to promote music and provide customers with information. Many sold prerecorded CDs and cassettes through their sites. Of those that did, most allowed customers to return unwanted CDs and cassettes purchased online to traditional storefronts. One-third offered some ability to download music, and another quarter expected to add downloading capabilities during Tower, for instance, went online in but relaunched its site in the middle of with new features that matched those of CDNow and Amazon.

Through its site, Tower sold new, used, and out-of-print CDs. It offered music reviews, columns, and a function that let shoppers know what other customers were buying. The site also included a catalog of downloadable Liquid Audio songs. At the same time, retailers were considering a full range of options. Ultimately we could pull out of music altogether.

With the funds, BMG set up a series of websites dedicated to particular genres of music: Peeps. The sites linked fans to exclusive information about BMG artists, interviews with the artists, live broadcasts, chat rooms, and promotional downloads.

Rather, they focused on promotion. Peeps, for instance, began to publicize pop sensation Britney Spears eight months before her first album was released. Getmusic not only served as an umbrella for the genre sites but also included an online store comparable to CDNow or Amazon. Links on the genre sites directed surfers who wanted to buy an album to the Getmusic store. In June , BMG announced that it would begin selling music directly over the Internet by late in the year.

It did not make public which artists and works it would sell, what technology it would use, or what prices it would charge. As a result, they had hundreds of due-diligence files on potential deals. In May , Sony publicized plans to sell singles directly over the Internet using compression and copyright-protection technology from Microsoft.

Review Please. Next Previous. Related Questions. Needs to be plagiarism free! The Internet has had a profound impact in many areas of life but one of the earliest and greatest of the cultural and business Supply of Music after the Introduction of Internet Marketing Internet allows the labels to make the distribution directly to the customers bypassing the retailers.

Internet eliminates the necessity of the retailers and by this way the recording What is required for the airline industry to continue its profitability? Explain what the major network airlines should do to minimize the competitive threat posed by the low-cost airlines. Why does the airline industry continue to dominate Contrary to popular opinion, CEOs of major U.

What does this fact tell you about sources of power and Create an Account and Get the Solution. Log into your existing Transtutors account. Have an account already? Not teaching at a university? Register as a student Register as an individual. Details Pub Date: Jan 1, Discipline: Strategy.

Source: Harvard Business School. Duration: 10 minutes.