Music Business
MUSIC INDUSTRY
In the face of current economic slowdown, no industry is likely to survive if it sticks with its old business models and refuse to adapt to change. Besides economic problems, there are some other factors, which are forcing corporations to adopt new and better business strategies and discard old ones since they are not producing positive results. These factors include political conditions in the country, global rise in terrorist activities and rapid development of technology, most specifically the Internet. With American households and corporations getting wired at lightening speed, it is only logical to incorporate this technology in a new business model to make business strategies produce desired results.
Apart from technological change, companies are also required to focus more on pricing models. It has been noticed that with consumer spending shrinking, only those corporations that have a viable pricing model are likely to stay afloat. In other words, we can no longer offer products at old prices since money supply has decreased considerably in the past two years. Now we are left with two options, either reduce prices or offer more at current prices. Value addition is therefore no longer an option.
These are some of the strategies that airlines and software industries are rapidly incorporating in their business model to increase revenues during this economically tough period. We have noticed that despite all problems and deep financial troubles, airline industry has not only managed to stay afloat but is gradually recovering too. Similarly software industry has also managed to drag itself out of its miserable financial state to finally make a profit. But while these industries have been able to emerge out of trouble, music industry with relatively fewer problems has not recovered as yet and appears uncertain of its future. In this paper, we shall focus on the strategies that helped both airline and software industries adapt to change and improve their performance. The paper will also take into account the causes of music industry's miserable performance and suggest strategies that might help music industry recover. These strategies are based on the lessons learnt from the response of airline and software industry to various kinds of problems that they faced recently and are still encountering.
After September 11 most industries were hit badly and many of them ran for Chapter 11 protection. While every business suffered, it was the airline and tourism industry that was hit the hardest. Many major airlines in the country were either forced to cut their flights schedules to half or operate as per the old schedule but with lesser passengers per flight.. The hardest hit was of course the American airline, which was the primary player in the attacks. The company then announced huge cuts in its flight schedules and also laid-off many of its workers. But it is not just the American Airlines, all other airline companies in the industry faced similar problems with the exception of Southwest. Many were of the view that the airline industry would not be able to recover even after the government announced a $15 billion bailout package for the industry.
But airline and travel industry has not only managed to stay afloat by winning back consumer confidence and is also clearly headed in the right direction. Recovery is now imminent with airlines witnessing a rise in load factors. How did this industry manage to attract passengers and persuade them to travel despite security fears is an open secret. By reducing its profit margin, airlines were able to make generous offers to their passengers and lower their prices per ticket. The load factor has not yet reached the pre-September 11 level, still FAA and major airlines are hopeful that aggressive price cuts would help put a halt to losses and negative performance. This Business model has so far worked better than expected even though full recovery would take at least three more years. However it is clear that lower prices have enabled airlines to successfully entice travelers to fly...
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