Leon Hill (Digital Dept, Universal Music Group) talks about how Universal Music is turning a threat into opportunity by developing income streams which make the most of digital and streaming revolutions in the music industry.
In 2008, facing a year on year drop in traditional revenue streams of about 20% Universal, the largest record company in the world, was experiencing huge problems – piracy is decimating sales, record shops are disappearing and the majority of sales are online … shifting the job of manufacture and distribution away from Universal and into the hands of the artists and consumers.
This convergence of development in hardware, software and distribution means Universal has to react to fundamental changes in its marketplace. Here’s what they are doing about it:
A clear example of how freemium is tough to change on a B2C level but via B2B deals with the likes of mobile phone companies they can be paid indirectly. Add to this strategic marketing partnerships with companies who have a subscriber base e.g. phone networks and they can combine production, distribution and play of music to create new and solid sales channels. When combined with a consideration of the payment routes and exchange of content for equity then the convergence that caused a narrowing of income opportunities can be turned into a delta of new routes to market.
Investment Matters, British Embassy, Brussels, 2008 – courtesy of CIDA and the ECCE programme