Services Marketing: CRM and the Music Industry
Introduction
Not many industries have seen such a dramatic change and decline in their traditional business model like the music industry has seen it in the last 15 years. The internet hugely damaged CD sales, along with the rise of MP3 Players that allow consumers to store entire record collections into a device the size of their pockets. If you look at the industry in 2013, one can clearly see that the traditional business model of record labels is about to vanish and market analysts even predict a further decline. Subsequently record labels begin to redevelop their role as a service provider that sells emotions instead of only planning the logistics behind the delivery of physical discs. The labels now try to move their customers from CD’s to other products.
I. CD and Digital Music Sales with forecast (Mulligan, 2012)
The answer on how to do this seems to be in customer relationships between labels/artists and their customers and selling their content as an experience through their web outlets and remaining servicescapes, hence broadening their range of products from only music to merchandise and concerts. They hereby acknowledge the fact that they are selling mostly intangible products (excitement, pleasure etc.), sometimes using tangible products such as T-Shirts and concert tickets as a means to deliver and are therefore more on the intangible dominant side of the service spectrum (Wilson et al, 2012). After all, fans buy a band shirt not because it is a T-Shirt, but rather because it is from the musicians they admire and because they want to belong to and be identified as a member of a social circle.
Universal Music Group (from here on referred to as UMG) is the biggest music company in the world, having a market share of 32,8% (Christman, 2013) of all music sold worldwide. They have been investing heavily in digital content delivery and 360 degree deals, which means they sell the entire artist experience from concert
Not many industries have seen such a dramatic change and decline in their traditional business model like the music industry has seen it in the last 15 years. The internet hugely damaged CD sales, along with the rise of MP3 Players that allow consumers to store entire record collections into a device the size of their pockets. If you look at the industry in 2013, one can clearly see that the traditional business model of record labels is about to vanish and market analysts even predict a further decline. Subsequently record labels begin to redevelop their role as a service provider that sells emotions instead of only planning the logistics behind the delivery of physical discs. The labels now try to move their customers from CD’s to other products.
I. CD and Digital Music Sales with forecast (Mulligan, 2012)
The answer on how to do this seems to be in customer relationships between labels/artists and their customers and selling their content as an experience through their web outlets and remaining servicescapes, hence broadening their range of products from only music to merchandise and concerts. They hereby acknowledge the fact that they are selling mostly intangible products (excitement, pleasure etc.), sometimes using tangible products such as T-Shirts and concert tickets as a means to deliver and are therefore more on the intangible dominant side of the service spectrum (Wilson et al, 2012). After all, fans buy a band shirt not because it is a T-Shirt, but rather because it is from the musicians they admire and because they want to belong to and be identified as a member of a social circle.
Universal Music Group (from here on referred to as UMG) is the biggest music company in the world, having a market share of 32,8% (Christman, 2013) of all music sold worldwide. They have been investing heavily in digital content delivery and 360 degree deals, which means they sell the entire artist experience from concert