Bmg Case Brief

The music industry is under transformation. For BMG this is an opportunity to be the leaders in the industry. The internet has emerged as what will undoubtedly be the new distribution format for music. There is a new definition of value for music consumers. The goal for BMG must be to deliver that new kind of value while sticking to the business we are in.   Consumers want simplified user interfaces, high variety/selection, and a simple to use player for digital content.   BMG is not a software company or manufacturer of music players. Therefore the strategic position of BMG should be to capture a significant share of all downloaded music in the next five to ten years. Creating a specific percentage goal for the company to strive for unite the company into the future of record labels. This can be done by continuing to sign and promote artists (ongoing utilization of the internet as a platform) and making deals with as many distributors as would like to attempt to break into the business of digital downloading.
Piracy is the new rival in the game and being hesitant to make deals with other competition is futile.   Consumers are looking for options when they purchase their music. The online distribution channel that has all the artists they are looking for and is compatible with their player will win high market share. With the emergence of content available to users for free as a substitute, we must view rivals as complements in providing customers with all the choices they seek in artist content. Taking game theory into account creating a price war within the major record companies is not beneficial to the industry. With the emergence of more online content, variable costs will decline. Due to declining CD production and digital content duplication being essentially free, creating a non-price mix of value is ideal for BMG. This will be the case for all major record companies. Leave the price war to be fought at the retail level due to low switching costs of buyers...