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The Future of the Record Label
Generator Research Limited, May 2006, Pages: 14
Gathering Clouds or Clearing Skies?
Recorded Music: '97 – '11
Importance of Scale
Both major and indie record labels are experiencing strong growth in digital revenues. If this trend continues, we could soon see growth returning to the whole industry as the transition to a digital format accelerates. Sounds great, but will things be that simple for the record labels, especially the majors?
This issue of Digital Music InSight is focussed on how a record label's business model and its raison d'etre could be different in a mostly digital environment.
For example, in the past scale has mattered: whether the requirement was for marketing or distribution, bigger was better. But what is the benefit of scale in a digital setting and where is scale important?
As another example, the majority of industry revenues were enjoyed by the majors while the remainder was shared amongst thousands of indies. Perhaps this lob-sided structure will prevail in a digital setting? After all, other categories like online auctions and internet search are dominated by small number of players.
This report addresses these questions and a range of others by using a number of techniques such as identifying and reviewing the three core competencies of a record label and analysing under which conditions these functions are best performed internally by the label and when they might be best performed by external agents.