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Q.A Labels entering US

Chinese market for record labels has been very fruitful for Q. A Records. Q. A now decides to enter US market. This would be the expansion of business as US is a huge market with lot of potential and competition. The size of US market for music is growing for music of all forms. The major players in US who dominate the industry are Universal Music Group, Sony Music Entertainment, Warner Music Group and EMI. These companies own several small labels to keep access to different markets.

These four major players account for 81.87 percent of US music market in 2006. Globally Sony Music Entertainment dominate with approximately 31 percent and Universal Music Group following. These labels have the most business in US and the top artists on board. Giving them competition would be difficult as their reach is everywhere. This was US market from competition side. The consumer side of US music industry is growing at a fast pace. Teenagers and office goers are a major chunk. The product which is booming the music scene is digital music.

It is approximately 18 percent as of December 2008 and is expected to be reach 41 percent in another five years according to Forrester Research. In digital music picture Apple is the market leader with 70 percent of US sales. If we analyze US market as a potential expansion location for Q. A Labels, we foresee that the US market would grow immensely but this growth would be a result of an increase in digital music customers. According to research it is predicted that in 2013 (assuming that by this time Q.

A will be in early phase of business in US as a record label company) 55 percent of US online customers would be willing to pay to get download music. Another stat revealed by Jupiter Research says that CD sales are almost half of total sales. Elaborating on this shows us that 64 percent of online subscribers and around 57 percent of free music download customers have purchased a CD in past year. This means that if Q. A US it could develop further on its product albums and try to get into digital music picture as well.

Cultural aspect of US is pretty much in favor of music entrants. People love music and take out time to go to Discos’ and pubs. Apart from this a good piece of music with good vocals is appreciated given that the song is launched properly among the masses. Good talent is easily found in hangout places like pubs. However, selection is subjective and may differ from person to person. Q. A is highly successful in China. China is a high-context culture country and US is low-context culture country. However the music lovers do not differ in the two countries.

Therefore getting good artists would be the key to success and the only issue would be of management. Low context countries need a different style of management; they may fail due to different leading style. Legal aspect of the music industry has its rules and regulations which do not differ much from international rules and regulations. The most important consideration in rules is copyrights and protection of artist’s composition. There are organizations in US which take care of licensing, copyrights and royalty issues for you if you become its member.

ASCAP (American Society of Composers, Authors and Publishers), Broadcast Music, Inc (BMI) and SESAC are a few organizations which have hold on music market. These make life easy as far as regulations are concerned. However, their fee and charges are a lot if we compare it with Q. A doing things itself. Else for licensing the business in which the music is made has the responsibility of getting licenses. The American Copyright Law governs the music in US and again the most important regulation on intellectual property. The political environment of US is different from what it was in Bush’s era.

Obama’s regime is incorporating music in bringing change and inspiring people. This means that music industry in US may not have specific support but is not even over shadowed in political and governmental issues. To enter US market Q. A has many options like wholly owned subsidiary, partnering with a firm in US, a joint venture or becoming a sublabel. The option of sublabel is that you trade under a different name from a larger record company (Wikipedea). Considering the investment required opening a wholly owned subsidiary it would not be a feasible option if finances are low or Q.

A does not want to invest heavily. Partnering with one of the big labels or becoming a sublabel is a better option for Q. A. this way they would be able to establish business in US, get business and good popular artists on board. The regulations would be little compared to opening a wholly owned subsidiary. The market knowledge would be available from the parent company therefore research investment could be saved. However it has one con that they would have to share profits with the big label. Profits would be shared.

A joint venture is also an option which would reduce the profit sharing to some extent as both companies would be investing in setting up business. The decision does not only depend on finances, it also depends on the qualitative aspect of current management and Q. A’s organizational goals, objectives and organizational hierarchy. Q. A has four product lines and these are recording artists, recorded music (albums), live performances and licensed/ associated products such as concerts and t-shirts. Focusing on US the digital music is growing at very fast pace so Q.

A should focus more on distributing music digitally rather than CDs. Live performances happen all over US and the turnout is always good if the performers are famous and liked by people. Recordings are also growing since new singers are coming in. in the end Q. A should not just focus on one product but a product portfolio which should have live performances, recording artists and then albums in order of ascending expected revenue generation. The albums are the last because digital music is selling quantum times the album music s the statistics show in the introduction paragraph.

CDs sales will definitely fall sue to increase in digital music selling. Another point is that technology is progressing and growing. US is a developed country and one of the early adopters of every new technology. This is will eventually be transferred to US people and due to good internet and educational literacy rate technology would be adopted fast. The inventions like 8GB cell phones, ipod, and music cell phones are the drivers which are providing pace to digital music. As far as the performances are concerned as a product, they will do well if you have good artists.

Michael Jackson’s death was a loss to US music industry and the emotions the fans are going through they would not mind paying and attending a concert which is a tribute to Michael Jackson. These are the sentiments US people have so it would be perfect for Q. A to start with such events and gain popularity among industry people and market. This also leads us to the next point of mitigating risks and threats to Q. A after launch in US. The biggest threat to Q. A apart from tough competition from the major labels and the existing labels is the management of Q.

A a Chinese origin firm in US. The styles of two countries differ and it the attitude towards employees also differs. As this would be one new and major step of Q. A going global so it would have complications. The Chinese management may not work as efficiently as it worked in China. So they would have to adjust and understand the US style of leadership by employing US citizens. The organizational hierarchy also needs to look at. Chinese pay a lot respect to seniority whereas US respects talent irrespective of age and gender.

So such issues may affect Q.A’s performance. The risk like tough competition from existing labels could be mitigated to some extent by supporting upcoming Chinese singers in US and bringing these with US; to create a fusion of melodies from China and US. This would project a socially responsible image of Q. A in new country and provide Q. A business too.

References:

1. US Music Market Share. Retrieved July 8, 2009, from http://www. usatoday. com/tech/products/2008-10-10-367143278_x. htm . 2. By the Associated Press. Retrieved July 8, 2009, from http://www. bbb. org/us/music-copyright-laws/

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