Table of Contents Page

Number

Executive summary 2

Introduction 2-3

The music Industry 3

The key trends 3-4

Environmental scanning 4-5

Macro,Micro and SWOT analysis 5-9

Findings and Recommendations 10

Conclusion 11

Bibliography 11-12

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EMI
Executive summary

Nowadays the significant developments in technology have changed the consumer behavior
rapidly. And these developments have made the lifestyle of normal people very easy. However
the technological advancement has created a bad impact in some of the industrial sectors. Some
of the industry like music industry is affected by this advancement.

This is a report to analyze the present situation and identify the major trends impacting the music
industry and the factors affecting its structure. This report will include scanning the
environmental factors, market planning for EMI, micro, macro and SWOT analysis and
marketing strategies which EMI will adopt to grow its business in UK.

Introduction
The music business grew quickly; some recording companies dominate the world music
industry. They manufacture and distribute, supply music. Wholesalers and retailers with about
80% of the market. They are Warner music, Universal, Sony BMG and EMI music group. (Peter,
S., 2008).

EMI is one of the biggest music industries in the world and are well established in this sector. It
was establish by the merger of two companies running successfully in the nineteen century. In
1931, the gramophone company and the Columbia gramophone company merged together to
form what is called one of the biggest music industry now. The Electronic and Musical Industry
(EMI).History of EMI Available at:
<http://www.emi.com/page/emi/EMIHistory/0,,12641,00.html>[ Accessed 9
december2009].

The company was backed with experience and specialized person in this type of industry.EMI
was also backed with some powerful electronic devices. It was a really tough time when EMI

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started its journey as the music industry was in the slump and they had to bring it up. It was a big
challenge for the company.

The Music Industry

This is important to understand the concept of the music industry’s content and its structure.
According to the Standard Industrial Classification (SIC) description of the music industry
involving businesses and organisations that record, produce, publish, distribute and market
recorded music. In addition to these, four key stakeholders characterise the music industry- the
consumers, the artist, the distributors and the music agents. However, in seeking to define the
industry it is acknowledged that no one definition can capture its diverse nature in terms of
musical activities and commerce. Competencies and competition are increasingly distributed
around the world. (Yves, D., Kosonen, M., 2008).The global music industry “is a multibillion
dollar segment of the media industries in commercial terms” (Kozul .W., Z,Stanbury, L., 1998,
pp14) and has reached to a stage of maturity. However with the rise of the digital revolution, this
is the undergoing significant transformation.

With a core business sector comprising the record companies and music publishers, the global
music industry transcends the boundaries and “pervades virtually all culture and all society.

The Key Trends

The digital revolution has a huge impact on the global music industry market. The development of
information and communication technology is driving change and is affecting the industry’s business
operation and structure.

This improved technology has lead to innovation in the production and distribution of music and has huge
opportunity to create, consume and enjoy music. (Kozul-Wright and Stanbury, 1998, pp17) One
predominant development has been the convergence of mobile and portable music devices (I-Phone)
which has hugely expanded on-the-go music consumption.

Online distribution of music tracks has boomed in current year with the help of internet
becoming the most important medium for music distribution and promotion. Click and mortar e-
tailers are outperforming “brick and mortar” retailers, shifting patterns of music consumption

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from the physical to the virtual type. With this revolution traditional music- consumption became
back dated, reducing the sale of physical CDs.With consumers growing preference for single

music track over album, online, single music track downloads are rocketing, became most
popular worldwide music format in 2007-2008.(IFPI Digital music Report,2008)

Environmental scanning and why undertaking this type of activity is important for
marketing planners:

Environmental scanning is a method of gathering information and enhances understanding of the

environment. Environmental scanning is a key element of strategic planning. “Environmental
scanning has been defined as a metholodology for scanning with external social, economic and
technological issues that may be difficult to understand or predict but that cannot be
ignored”(Kerin.R., Hartley,S., Rudelinus,W., 2003). Business dictionary defined environmental
scanning as “Careful monitoring of a firm's internal and external environments for detecting
early signs of opportunities and threats that may influence its present and future plans. In
comparison,'surveillance' is confined to a specific objective”.Available at<
http://www.businessdictionary.com/definition/environmental-scanning.html>
[Accessed on 10 December 2009].Therefore, it is a process to identify, monitor and analyze
the current trends and issues in the environment, both external and internal, in which an
organization to set their goals and make strategic plans within its frame of future. Environmental
scanning is the process of assessing present and future condition in the external environment that
affect company’s performance. (Wade, D., Ronald.j. Recardo. 2001, p.38).Environmental
scanning leads to better information and using this better information organization can have
greater control and improved performance.(Scott,R.,2008). Scanning is an embedded behavior
and difficult to manage. (Brian,j., Paul, R., 2008)
It’s easy for anyone to listen to his favorite music track of his favorite artist. Just by searching the file and
download it from the internet site. Music lovers nowadays are listening their favorite songs just by
downloading their favorite music track and burn them in a CD and enjoy it with loud volume. There are
more than 50 million users who are using the music file sharing services via internet. The development in
IT has made a huge impact in the music industry. The Musician, recording companies like EMI, retail

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stores have been hit by this improvement and are on a downward scale. The development in IT has
changed the marketing environment totally.

If we can go further back we can see that music lovers used to buy CD’s from music stores rapped in a
plastic box, hard to open sometime and were tagged with a very high price on the other side of the case.
These made music lovers to find out things in a very easy way as the world was changing and everything
was becoming easy to get and find.EMI was one of the big music companies that was badly affected by
this technological development. The invention of file sharing made these huge changes, as it became
easier for anyone to download songs.

In the industry sector, two things should be considered, one is the broad and other is competitive
environment. In the past ten-fifteen years the traditional music has faced increasing pressure due
to emerging environmental trends.

Macro, Micro and SWOT analysis for EMI

There are two types of environment, the macro environment and micro environment.”The micro
environment consists with those elements which are very close to the company and have direct
influence over on performance with its markets. It includes the organisation, its distributers,
customers and competitors”. (Colin, G., MS Wilson, R., 2009, p82)

British music giant EMI is a private limited company competing in the single music industry
sector of world music. Based in United Kingdom, EMI operating an international business,
located in over fifty countries.EMI’s product range focuses on two main divisions, one is EMI
Music and the other one is EMI Publishing. Recording artists and catalogue of recorded music
with over three and half million tracks. By integrating vertically activities within the value chain,
The Company has held the competitive stage with its main competitors Universal, Warner, Sony,
and BMG. EMI’s one of the strategies is to “deliver music to consumers in any form, at any
time and in any place.

Available at<
http://www.emi.com/page/emi/AboutEMINewsIndex2009/0,,12641,00.html>.
[Accessed on 10 December 2008]. EMI is now focusing on restructuring and reshaping its

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internal factors to allow the stage to compete in the digital music track industry. It will change
the functions within

the organization in relation to diversification, resource allocation. The company strategy on the
other hand will gain competitive advantage on the basis of cost reduction.

EMI Music's Label Services division and Century Media Records, one of the world’s most
successful heavy metal labels, have further expanded their relationship around the globe.EMI is
trying to get the competitive advantages through increasing its relationship with its competitors.
(Available at www.emi.com).In July 22, 2009, EMI Music has announced to appoint number of
senior executive within EMI central marketing organization and in its regional marketing teams.
These executives whose backgrounds include experience in music, consumer brands like Google,
technology, Tesco and BSkyB, as well as with online retail and political campaigns to help EMI
Music connect artists with their fans, build value and increase digital consumption. The
company carries out its own physical distribution actions in a number of territories: Hong Kong,
UK, Ireland, US, Singapore and Thailand. In the other territories EMI music have entered into
distribution through joint venture arrangements with other music organization.

The Macro environment consist the elements which have great impact on organization including
economic, demographic, technological, political, legal, social and cultural factor. Together; these
elements of the environments mix to form what we can loosely refer to as the non controllable
elements of marketing. Which in different ways act as a series of constraints on the factors
within which the marketing planner is required to operate the task. (Colin, G., MS Wilson.,
2009). Macro environmental analysis is usually carried out through a PEST analysis containing
the main Political, economical, social and technological factors. (Joseph, G., Nellis and Devid,
P., 2006)

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 Social
Supply chain

Customer
Legislation

The
Competitors
organizat
Economic
ion
Suppliers
Political
Distributors

Technological

Source: Strategic marketing planning by colin Gilligan,Richard MS Wilson,2009.

Strengths of the company

The company possesses one of the strongest and most identifiable brands in the music market
and also has one of the most vital music catalogues and collection in the world. EMI Music has a
catalogue of over three and half million tracks and the world’s largest catalogue of musical
preparations with more than one million copyrights owned. So many artist and songwriters, who
are found and nurtured by the A&R, is another key strength of the company. Guy Moot, former
EMI Music Publishing managing director commented, “Music and great songs remain the
foundation on which everything is built in this quickly changing digital world”.(
www.emigroup.com) EMI Group is identifying, signing and retaining talented artists and
songwriters, composer whose music helps the company to generate huge revenues. Therefore,
EMI continue to put in a great deal of money in discovering the best musical talent from the
world. Another key capability of EMI is marketing know-how, which enables the company to set
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their music where their fans are. The group allocates a great number of their resources for
marketing and promotion because EMI Music relies on its marketing strategy nearly as much as
the musical talent it promotes.

The Company launched a new premium download product which provides music with good
sound quality and without any restrictions of digital rights management (DRM) to the customer
in April 2007. EMI music continue to create innovative partnerships with various digital industry
like Yahoo, Napster in Germany, or New York Daily News where news readers are offered free
music downloads from EMI’s music catalogue. Such innovative products and partnerships help
EMI to expose their talented artists to the large new audience.EMI’s IT panel with the help of
Avanade Company, implemented cutting-edge web marketing infrastructure. It enables EMI’s
labels to center their marketing efforts on inventive business opportunities than data and hosting
management.The Company has global marketing teams, who manage major releases from
various artists; on the other hand global catalogue marketing function handles catalogue
campaigns across the globe.

Weaknesses of the company

One of the weaknesses of the company is Management system which company is experiencing
now. At the same time as the company have well policies in place they are very often overlooked
by a number of employees through the total management system. Nowadays, Terra Firma is
planning a major reformation of company’s internal structure

With the increasing levels of uncertainty, the company is facing big challenges in recent year.
The world music industry attributable in core to the digital revolution and the subsequent decline
in CD sales. Music file sharing is also another reason for declining its sales. As a result the
company’s performance has deteriorated with pre tax losses of 263.6million in 2007-2008.
(www.emigroup.com). In August 2007 the private equity, the investment company Terra Firma
acquired EMI company with the aim of “unlocking hidden value of the company”. In 2008,
despite, there were hopes that the British Music Industry was “Turning the cover” after fighting a losing
battle against piracy. (Asa, B., Peter, B., 2009)

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Opportunities

The EMI Music frequently conducts research and development to develop new products in the
form of artist and repertoire (A&R) to launch new artist.EMI trying to develop new technology
to give a new shape to its product formats, such as subscriptions, ringtones. EMI Music Plc plans
to promoting single tracks than concentrating on the production of full music albums. Wastages,
inefficiency in management and unprofitability have become main concerns for EMI, as a result
cost control is another key part of the restructuring strategy. Staff and supporting functions will
be made more centralized. ‘EMI will split into two main divisions, one handling the creative part
of the firm and one dealing with back office. It will make sure greater control over simplified
processes and waste will be reduced as there is less chance of duplications.

Threats

The threat from new entrants has increased with the growth of the internet. Lower capital
investment and operational costs for online distribution has opened the entry barriers for new
record companies. New company competes on a huge level playing field, where size is not a
factor to determine the success or failure within the internet market. With the increasing
demands, new companies have the opportunity to achieve target through the marketing. Investing
in a new artist may involve sunk costs.

Internal competition within the industry is increasing day by day between Sony BMG Universal,
Warner and EMI. Nowadays large and small companies are now competing to get artists and
improve their market share through physical and online markets. As a result decisions made by
one company can influence others because of nature of this competition.

Nowadays digital technologies are affecting the music industry’s structure because of re-shuffle
of the value chain. It changed the role of many key companies. Distributors can sell online
avoiding high costs of physical stores. The companies are experiencing a huge change in the
entire environment as a result they are potentially being usurped from the music market, and
reducing their perceived value. Artists are able to sell directly to consumers through internet; this
may reduce the sales of the company. Some artists are by- passing the record companies by
implication of this to setting up their own independent business, using the internet as a tool for
marketing, communication and distribution.

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Findings and Recommendation

The following Finding and recommendations for EMI.

EMI Group revenue has gone down in 2007, 2008 and in 2009 compared to the last four years,
the figures are 1909, 1459 and 1563 million.EMI have low gross profit, and ROCE ratios. It is
essential for EMI to steadiness the decline in CD sales and adapt to the changes in the new
competitive market to remain being attractive to investors and to the artists.

With the growing internet and music technologies, the management may concentrate into e-
commerce marketing than continuing with the traditional marketing methods. It is also essential
to understand that gaining market share in the digital music industry should be highly prioritized
as the tendency of the music market is moving towards the technological area.

On the other hand music piracy has become a big issue in this industry with the fast development
of technology. It is highly advisable for EMI music to collaborate with other competitors to
target piracy. Because achieving a satisfactory result against piracy is high with the dominant
power in the music industry to protect revenues.

There are other income generating activities such as merchandise, concerts, event management
and sponsorship.EMI can conduct all those activities to increase its sales. EMI developing its key
strengths to adjust its strategy to the challenging environment. The quality of music produced is
the core of the business; EMI should try to keep successful artist as well as new artists with
potential to growth of the company.

Although management is highly qualified and experienced within the music industry, there
appears a lack of coherent direction in the company. Traditional marketing techniques no longer
effective because of the rise of internet marketing.

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Conclusion

The Report on EMI music industry was undertaken to assess the appropriate marketing strategies
for EMI to adopt to ensure growth in the future by environmental scanning and macro, micro and
SWOT analysis.

The all data and information have been collected from Academic books, journals and from
internet to find out the related information.

All in all, the EMI music has been responding to the changing needs and preferences of
customers and has been introducing new services. It is hoped that the findings and
recommendations will prove useful.

Bibliography

Book references:

1. Corporate performance management, David wade, Ronald.j.,Recardo.,2001.p.38,BH

publication.

2. Creating market insight, Brian, S., Paul, R., 2008.John wiley and Sons Ltd, The Atrium,
Southern gate, Chichester. West Sussex PO19 8SQ, England.

3. Energy, Risk and competitive advantages, Scott, R., 2008.Pennwell corporation.1421

south Sheridan road. Tulsa, Oklahoma 74112-6600 USA.

4. Marketing-The core Roger A Kerin, Steven William Hartley, William

Rudelinus,2003,page-62.published by Mc Graw-hill/Irwin, a businee unit of Mc Graw-
hill companies.inc.1221 avenue, America, New York,NY-10020.

5. Principles of Business Economics, Joseph,G.,Nellis and David Parker. Pearson education

ltd, Edinburgh Gate.Harlow, Essex CM20 2JE, England.

6. Strategic marketing planning by colin Gilligan, Richard MS Wilson,2009,p-82

Publisher-Butterworth-heinemann. An imprint of Elsevier.

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 Linacre House, Jordan Hill, Oxford OX2 8DP,first published 2003.

Journals:

1. Strategies for Independent Music Success, Petter Spellman. 2008. Published by Berklee
press.

2. The Media.ASA Briggs and Peter, B., 2009.published by polity press. Polity press,65
bridge street, Cambridge CB2 1UR,UK.

Online information:

1. Kozul Wright and Stanbury, L. (1998). Becoming a Globally Competitive Player: Available at
<http://ideas.repec.org/e/pko166.html?ref=kasshop.com>.

2. www.businessdictionary.com.

<http://www.businessdictionary.com/definition/environmental-scanning.html>

3. www.avanade.com

4. www.businessdictionary.com

5. www.emi.com

6. www.terrafirma.com

7. www.timesonline.co.uk.

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