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Music recordings |
Films |
Game Software |
Pharmaceuticals |
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Development |
Composers&Publishers , Artists, Producers - all with revenue shares |
Producer, Photography, Actors Directors, Music composition rights + music recording rights .. some with revenue share |
all kinds of parts including media rights .. some with revenue share |
development teams (employed) usually no revenue share .. but in some cases (co-operation with Universities and labs) even with revenue share |
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Meta-brands |
"Labels" (Verve, WEA, Blue Note, Epic) etc. - used to be selling factor, today very low influence on consumer |
Production studio, distribution company - used to be a selling factor , today almost not relevant for consumer |
Production studio - still relevant |
company , relativley low relevance with consumer except in some OTC and self-medication products (vitamins etc.) |
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Brands (relevant for consumer today) |
Artist |
Star-Actor, sometimes director or producer, sometimes Product name (James Bond, Karate Tiger) |
Game name (Quake etc.) with sequels |
Product name |
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Main income through |
CD sales |
theatrical (movie-house) shows |
software sale on CD |
sale for consumable direct use |
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Secondary income |
Broadcast, use in other products (film, games software, advertising), Artist and composer also through live concerts |
broadcast, DVD and VHS sales |
Online-gaming revenue |
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Distribution network |
Right owner (label) sells to distributor, selling to retailer - still based mainly on hardware delivery (CD) |
Right owner (label) sells to theatrical distributor, casettes and DVD sold to distributors, selling to retailer - already mainly software based |
Right owner (label) sells to distributor, selling to retailer |
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Special cost factors for international business |
none (with english language or instrumental product) |
localisation necessary (synchron. translation , subtitles etc..) |
sometimes localisation necessary |
regulatory approval and registration (costly) |
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Cost part of development in comparison to marketing |
very low - marketing cost are main factor .. often a factor of 100 and more for worldwide market introduction |
marketing costs worldwide are usually between 3 and 10 times development costs |
often between 3 and 50 times development costs |
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Cost development foreseen in coming years: |
Product development constant (after big fall in past years through technological advances), marketing costs rising because of fragmentation of media reach |
Product development cost falling strongly because of cheaper equipment (new video technology and stronger computerisation) will also result in more products and higher marketing costs |
similar to music |
with new smaller labs and more efficient computer technology, similar to films (but milder effect, since testing costs are steady) |
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Income potential in coming years |
strongly rising, growth mainly in secondary income area (broadcast, use by film and games) for good brands (Artists, specific recordings etc.), pay per listen becoming possible with high revenue potential |
rising for top products, falling for weakly marketed or local products, bigger demand for established brands because of groth of broadcast distribution |
rising for strong brands |
rising for very original niche products, otherwise limited because of cheaper manufacturing and development costs which lead to a rise in competition |
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Current problems: |
low income from broadcast (will change), inefficient distribution (changing through Internet), Piracy, low valuation through public in many cases because of free consumption via radio at same time as sales start |
rising competition , piracy becoming stronger (DVD recordable) |
piracy |
regulatory approval costs, limited patent proetection and health cost control by some countries |
Music shares one big strenght with computer games, which is not shared by films and other content (e.g. news, most information and texts) - once a consumer likes a specific recording (or game), he/she will want to hear or play it very often - and not just two or three times within several years.
c 1999 Alex Merck