Bargaining power of suppliers:Here I came to in my opinion, to one of the most important threats that SME is facing.
The declining dependency of the musicians on the label. Some of big names such us Madona, U2, Shakira and lot of others*5 signed comprehensive deals with live nation what emerged a new competition in the field of concerts and venues promoters. The market had emerged for musicians also another alternative to the labels. Players such us VibeDec, SounDay etc.
are providing services which allowed musicians to manage their own careers. Has SME still the strong power to keep interest of musicians? The musicians have now more power to negotiate better conditions.Bargaining power of Buyers:Bargaining power of customers is aspect which is helping by assessing the industry attractiveness. In this force we could split the customers in two, individual and corporate.
The bargaining power of corporate buyers will be relevant to musicians that will be represented by SME. What should be taken into account is, that the power of internet sellers is growing based on the importance of the internet marketing. They are able to turn the interest of customers to music which could be more intersting for them from profit point of view. This factor will not have a significant impact on the big names which have loyal fans. The bargaining power of individual customers is growing through internet piracy which the industry is facing.
The customers can define the price level by which they are turning to the ilegal sources of music.Threats of substitute products and services:A substitute can be identified as a substitute product or service which meets the same customers needs, in the same way as the product or service of the SME. For purchases of the music can be identified to be substitution free streaming music, P2P downloads and the online TV or Radio channels. Willingly payment for album, crowdfunding services such as VibeDec, this could be identified to be substitutution for SME in field of producing and publishing of music.Threat of new entrants:The potential of new entrants is bounded with the ability of new competitors to struggle with the entry barriers such us lobing and contacts, experts and contacts with distrubution networks.
The Internet is very dynamic and it is possible that todays buyer could be for SME tomorrows competitor. New entrants could emerge and should be expected. Anybody who has an important influence to the internet audience could be dangerous competitor.Industry competitors:Universal Music Group 32,41%+EMI6,78%, Warner Music Group 19,15%*5.
SMG is also challenging for resources with others of SONY Group divisions.
