PEST Analysis

The analysis of the Colorado Creative Music aims at analyzing macro-environmental factors in the music business the company is committed. These factors can be divided into political, economic, social and technological groups (Pearce, Robinson, 2000).

Political factors, the world of music around and CCM in particular, a strong political stability in the United States, the regulatory and legal aspects of the world of musicSend Records, including copyright laws for the protection of copyright, music copyright and related legislation on the matter concerning the promotion and distribution of virtual internet, such as the Audio Home Recording Act (1992), Electronic Theft (NET) Act (1997), "The Digital Performance Right in Sound Recordings Act (DPRSRA) 1995, The Digital Millennium Copyright Act," Pending legislation: Music Online Competition Act and the Consumer Broadband and Television DigitalProtection Act (CBDTPA) "and others. Environmental regulations and labor demand have no impact on companies involved in the CCM. As regards fiscal policy in 2000, a total income of the company was $ 216,614.05 $ 4,744,97 of taxes to pay not high and amounted to just under 2 percent of total income. All of it should be noted that political factors are favorable for the recording industry and music especially for the JCC.

Economic factors are the indicesAffect macro-economy, the recording industry is possible. Here, too, macroeconomic factors such as economic growth, interest rates and inflation rate are favorable for CCM. Thus, the U.S. economy is growing steadily since 1995. CPI falls in 1997, 1998. The unemployment rate has fallen and lies between 1995 and 2000.

Social factors, for the demographic and cultural context outside of the music industry's rate of population growth, ageDistribution and settings of the carrier. Population growth in the United States age distribution is stable and also favors the music recording industry. It should be noted that the music industry as a whole, teenagers and 20-year-old primary customer segment, CCM, but aims to attract people of age group 40-60. To accommodate the large proportion of the American population and public sectors.

Technological advances in the field of recorded music, distribution andhave different effects on the music industry. One aspect of the problem is that musicians are no longer dependent on major labels to create or distribute their products. (Then & Viljoen, 2000), the alternative software for the MP3 CD becomes more popular, since 1998. Conventional space-12 audio can fit 15 audio tracks, software MP3 can store about 150 songs. "The trend to replace MP3 as the format of the new CD, as they replaced the CD, vinyl albumwas accelerated by the rush of new portable MP3 players on the market - some less than traditional Sony Discman. "(Then & Viljoen 2000, p. 173). On the other hand, new digital technologies that appeared in the late 20th century, not only to facilitate the process of recording music, but make it much cheaper there is the possibility for companies more limited resources go to the market. So, if in 1980, professional recording studio, with all equipment, work --on vinyl or tape carrier, the cost was several million dollars and then a domain of 5 or 6 major record companies in 2000, bringing together a professional recording studio can be made at a cost of only $ 5,000. All equipment and installations, because of advances in technology worldwide, which are much cheaper for the average artist or businessman.

SWOT analysis

Strengths

* Cost advantages of new technology by the digital revolution. Not only the assembly ofStudy of all equipment and material needed is cheaper, but duplication of CDs, storage and shipping are less expensive. Low production cost, duplication (duplication of 500 CDs ranges from $ 1.90 to $ 3.63, duplication of CDs will cost about 2000 of a dollar per CD), transportation and storage makes the end product cheaper and cheaper customers and to extend the scope and extent of the target market.

* Positioning of CCM in a distinctive niche. CCMis the independent record label specializing in micro classical music and traditional instruments.

* The growing customer base and customer loyalty within target. Growth of customer base through expansion of product lines (4 already incurred each year 2 new product lines), and the geographical coverage of the laptop.

* Good customer service through direct contact between Darren and showed his fans.

Weaknesses

* N. clear strategic vision: CCM needs a longlong-term vision that includes all sectors of society including marketing, sales and administration and human resources. The company now faces a dilemma, strategic development, is (for the improvement and development of the record or more active promotion and marketing of products through the ability of other companies, the company is currently before the 'Administration will focus on the potential for the acquisition or investment)

*Competitive disadvantages: CCM is not in a position of retail market for its current level of turnover in force. Competitors, such as major labels have the advantage because they have market power and influence. These companies can specify that their music should be played on the radio, and negotiate contracts with major distributors and retail outlets in order to give everyone.

* Limited distribution channels: the company today is based largely on theseDistribution of sources, such as direct sales, sale for the concert, the mall distribution and sale includes the back-end (number 800 in order to ensure the site) the processing and packing houses. These channels are important sources of profit for the company. However, expand their consumer, the company must obtain a formal way, as sales through traditional music and distribution networks.

* CCM is in terms of financial resources to pursue a new shortOpportunities. Profits are thin, which means new opportunities for reaching and long-term improvements, we can not afford because of initial costs. To make a contract with major labels that provide the company with access to the distribution of traditional products would lead to the conclusion that the company needs to sell at least 15,000 copies of its products each year. On the other hand, high sales figures are impossible without getting a good traditional distribution channels.

* CCM loses ground againstlarger firms are not significant. CCM currently do not reach the audience on a global or national level, as independent labels and old. CCM needs to broaden its reach and broaden their customer base.

Opportunities

* Serve additional customer groups that speak of collaboration with other artists and the extension of Acoustic Therapy and other product lines with new marketing strategies.

* Internet through increased e-commerce and as MP3 parties.

* The expansion of the distributionAt the national level.

* To obtain the acquisition of traditional distribution channels for exposure broader customer base

* Development of new technologies to address the driving forces in the industry.

* Releasing compilations with other artists, has proved very popular. One strategy would be assembling the songs (as Accoustictherapy) in the studio, and sell the finished disc at a discounted rate for artists in their hometowns. This method would cost upfirst and give players a financial incentive to push a product.

* Not Pushing revenues in traditional sectors such as weddings, shopping centers, music, etc.

Threats

* A high number of new entrants and the growth of other smaller labels, the digital revolution. In addition, the major labels or independent labels could decide to enter into national markets, CCM and to try to push the small labels from the market.

* Many of the sales of substitutesuch as MP3, or files downloaded from the Internet

* The vulnerability of industrial motors due to the weak position of the CCM in its field, taking into account that the company takes micro label segment of the market and the profitability is mainly due to the low cost of digital recording.

Five forces model of competition

Michael Porter's model of competition (Porter, 1980), when the music used recoding industry includes the following components: the rivalry betweenSuppliers of phonograms (competition for a better market position and competitive advantage), production artists and other music providers or sell phonograms, distributors, retailers and individual customers in the music, the competitive pressure from customer acquisition and replacement of Phonograms against the threat of new entrants in the field of documents.

Perhaps the strongest competitor in thisFactor of rivalry between the producers and suppliers of musical products. 'S music industry has 4 clearly identifiable segments: major studios, independent labels, labels, labels, micro and vanity.

Major top-level business or large quantities of artists under contract and has reached the figure of 100, specialize in different kinds of music - rock, country, jazz, classical, traditional and others, and formal and reliable national and internationalDistribution channels. Examples of such companies are Columbia, Sony Music, EMI, GMG, Warner Brothers, Atlantic Records and some others. As the Mater of fact, companies that are not numerous, and their equipment is quite expensive for an amount not less than two million dollars, as the music recording studio, not with analog and digital devices, so obtain three-dimensional, saturated, rich sound, instead of the correct level, but digitalSound.

Independent labels have 10-100 artists under contract to focus on the inclusion of one or two main styles of music and are national or regional channels of distribution. Examples of the independents are: Higher Octave, Metal Blade Records, Rhino Records, WAR, Windhan Hill, Soundings of the planet. These companies are more numerous than first class society, and can analog and digital devices. In general, independent labels tend to grow larger, butfor which they need to invest huge sums in upgrading equipment.

Labels Micro has fewer than 10 artists under contract and are heavily concentrated on certain types of music. They are characterized by small staff and managers in implementing a leading artist of the study. Micro labels rarely formal distribution system and rely on direct sales to fans and clubs and wholesale dealers. American market are presented with labels microEtherian, Evol Egg Nart, Cuneiform Records, CCM and many others. In general, survival, competition from companies because of the low cost of digital recording.

Vanity labels are the fourth, the last and the specialized segment of recorded music. They are created by independent artists for recording and selling their products. Examples of labels vanity are Bob Culbertson, Watson and Company, Lao Tizer, Esteban Ramirez and many others. (Darren & Winn, 2003). ToCurrently, CCM is micro label that tends to convert to independent label.

First and foremost, the competition between the competitors is based on the popularity of performers and songs recorded by their companies run. Intense competition to win the famous recording studio promising artists to sign contracts with them. If the songs or artists are very popular, the price is a secondary factor that may affect competition. However, if the lesser known artists or songsrecorded are not very popular, is to play the role of price in relation to competition and the level of strategy. In the process of division rival, which is especially important since it has access to the traditional channels of distribution of music, such as retail music stores in the annex, large chain of record stores, independent record stores and Internet retailers like Amazon. com. These funds are very important for the sale of CDs by artists, apart from the direct sale of their services. OtherFactor of great influence on the sales of CDs is the promotion of songs and radio promotion and transfer.

For CCM, rivalry is by far the most important source of competitive pressure. The strong competition from rival producers and sellers of music is the fact that the actors of the CCM for the general public, in relation to the artists of the first level and independent labels will be announced explains.

The competitive threat of new entry position, the opposite is, by far theweaker competitive factor is between weak and moderate ranking. Barriers to entry are low for new producers of phonograms, in particular small segment of market orientation of cheap labor and technology of digital recording. CCM can serve the brightest example of such entry. But the cheap digital technology can not now more than $ 5000 are mounted. However, expensive analog technologies to keep costs hundreds of thousands or even millions. TechnologyEmployed by the company to automatically determine its resources and position in the field of recorded music. In addition to costs for equipment, the main theme of the competition for new entrants to share different market and revenue. Significant revenue, which in turn depends on the ability of new entrants to the famous, popular and well known for attracting artists and singers, whose songs are able to reach the top of the ladder of popularity. Given the fact that virtually all majorThe artists have already signed contracts with major studios, this is a significant barrier to new entrants. Another major obstacle distribution channel is getting impressive. Are generally accepted large distribution centers and retailers in selling music CD of the music of famous painter, and not willing to products of relatively unknown artists involved. For the CCM, is the threat of new entry is not very strong, as the company aims to market rather narrowSegment. Although, if the entrant uses the same recording technology, distribution channels and targets the same niche in the market, the fact on an issue of great importance.

Competition from substitute products are considered moderate competitor in the field of music. These products are available as parts of supply to consumers are presented with the opportunity to listen to music with others, that the CD media such as radio, cable TV with music,Live concerts, bars and clubs with live entertainment or recorded music and the Internet. Replacing Internet Buy is far more important and more powerful for a traditional CD, like music on the Web are available in most cases it is cheaper or even free of charge and is not much worse than in terms of quality. CD in WMA format. Therefore, for some people, these funds serve as an effective substitute, but for the music lover, my official CD is required. IfColorado Creative Music, people can enjoy the power of live concerts of these artists, and decide not to purchase the CD. Accordingly, from the perspective of CCM, can be regarded as fairly important competitors.

Forces have left the bargaining power of suppliers and the bargaining power of buyers and sellers buyers cooperative relations, which are both very competitive.

The first bargaining power of suppliers depends on the popularity and fame of the artist.Those that are popular and sell their records as well to have a strong bargaining position, they can choose from many recording studios. CCM specializes on recordings of famous artists, and therefore the weak bargaining position enjoyed, like the artists involved with the CCM are not many alternatives for the recording studio and CD distribution.

Bargaining power of buyers and collaborative buyer seller relationship is very very competitive. Largest distributors of recorded music CDs Supplyleading music stores and other retailers of music, this leading distributor with over 40,000 copies of a CD and work 60-90 hours to maintain the privilege of total investment return for unsold copies. So-called "one-stop" are the distributors of products for independent music stores in small quantities before and very often with a limited range of types of music. In general, these traders would have preferred CD for taking highpopular artists or at least well-known artists, and often there are no pending sales of CDs with unsigned artists involved. Therefore, CCM is great difficulty in acquiring distribution decent and formal, and more particularly its products through music stores like Sam Goody, Tower Records, Borders Books and Music, and Barnes and Noble sold.

In addition, an important role in the sale process will be heard by music played by people, so thatwould be more willing to buy the CD. These include the reproduction of music from radio stations, TV music channels and even on movie soundtracks. As long as performers and artists of CCM is so famous that they are placed in retail music stores, the company has little chance of significant representation from major CD retailers. The manager of the company, Darren Skanson has contacted some retailers own and discovered that it is veryto achieve in terms of time and hard work of his CDs distributed by retailers in its vicinity. People have taken to resolve the problem had little luck. CCM has some experience with the sale of the CDs through one-stop distributors had, but has not had much success with high honors, which the dealer taxes CD CCM. In the long term planning of its product lines, as Darren Curtis Darren Skanson, candles and music for other artists, popular enough to have his CDdistributed through major music stores. But at this moment, the majority of sales CCM results of direct selling at the concert, such as sales, marketing and purchasing on the Internet, e-mail and telephone orders for CDs of the musicians.

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