Assessing the business opportunity for royalty-free music in public spaces targeting SMEs

Detta är en M1-uppsats från Lunds universitet/Produktionsekonomi

Sammanfattning: The digitalization of the music industry has meant a drastic increase of public accessibility of recorded music, which has transformed the way in which music is being consumed. From initially being restricted by the physical disposition of CDs and vinyl, the prospect of digital downloading and music streaming has rapidly transformed the music landscape as the world knows it. The music industry revolution has partly meant a legislative turmoil regarding direct licensing and unauthorized use of copyrighted material, but has also enabled several innovative business models to leverage the possibilities which the new industry conditions has set. For Company X, having established ownership of professionally produced and customized songs, the new industry environment has meant opportunities to bypass incumbent music distributors on multiple music markets. One of these music markets is the so-called In-Store Music (ISM) market, where businesses are approached with curated music in order to build brands and enhance customer experiences. The purpose of this master thesis has been to provide an explanation regarding the dynamics of the ISM market, to describe and understand its underlying key drivers, and evaluate the business opportunity for Company X to approach the market given its business model, capabilities and market position. The master thesis has further aimed to formulate how a software streaming service, a SaaS (Software-as-a-Service) solution, should be outlined and distributed to target SMEs (Small and Medium-sized Enterprises) on preferred ISM market segments. To investigate the business opportunity for an ISM software solution, comprehensive literature studies were applied to understand music consumption patterns, customer surveys were sent to strategic ISM service users to investigate user receptivity, and extensive competition analyses were completed in order to determine the level of market rivalry. When segmenting the ISM market in relation to both macroeconomic and industry-specific information, results showed that the countries deemed most attractive for a subscription-based SaaS solution were highly clustered around northern Europe, especially characterized by Sweden, Norway, and Denmark. Weighing in digital music consumption trends and market size as decisive parameters affecting ISM market potential, the Netherlands, Finland, the UK, and the US constitute further prime examples of profitable ISM market segments. For several emerging markets, e.g. Mexico and Spain, a freemium business model can be applied by Company X to leverage their royalty-free ISM business model and gain market presence. Compared to ISM alternatives offering commercial music, a royalty-free solution has competitive advantages especially in terms of cost structure and pricing strategy flexibility. The software streaming solution should be outlined to specifically suit SMEs, implying an increased need for a scalable solution maintaining a premium feel. Consequently, for a SaaS solution to gain ISM market traction, the necessity to include SME customer opinions in the design of the service is vital. In addition, a competitive ISM solution should take into consideration the offerings of competitors to adequately differentiate and emphasize its service. A go-to-market strategy aligned with the software streaming service should be highly customized to fit the market segment targeted, but increasingly dependent on organic SEO, i.e. content marketing, and strategic partnerships to gain market influence.

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