business-growth-and-objectives

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Growth strategies

Digital transformation and platform expansion
- UK retailers and distributors have increasingly moved online to reach consumers through streaming, digital downloads and direct-to-consumer (D2C) platforms
  - HMV focuses on a vinyl-heavy product mix and event-based experiences in its stores, promoted through HMV Live
  - Its website is the number one online vinyl retailer in the UK
  - Amazon.co.uk allows customers to access purchased music on its Amazon Music subscription platform
- Businesses like Spotify and Apple Music have invested heavily in developing their global presence
  - For example, Spotify is now active in over 180 countries
Mergers and takeovers
- UK-based indie labels are often acquired by larger distributors or labels
  - For example, Warner Music Group bought UK indie label 300 Entertainment and Universal Music Group regularly acquires rights to high-profile artist catalogues (e.g. Queen, Bob Dylan)
- Mergers and takeovers increase the market share of record labels, strengthen their catalogues and give them more negotiating power with digital platforms such as Spotify
Vertical integration and diversification
- Record labels are increasingly involved in areas such as merchandise, ticketing and social media content production
  - For example, Sony Music and Universal Music have launched their own in-house branding and creative services to support artists
Niche market growth and localisation
- Growth has also come from the resurgence of niche products, especially vinyl.
- The UK saw over 5.9 million vinyl records sold in 2023, the highest in 30 years
- Independent record shops (like Gatefield Sounds and Rough Trade) contribute to growth by targeting specific demographics and creating experiences rather than competing on price

Key business objectives

Increase in market share
- For global platforms like Spotify, growing the number of users (free and premium) is critical
  - In the UK, Spotify holds a leading share of the streaming market (around 58% in 2023)
- Record labels aim to expand shelf space in major retailers such as HMV or increase artist placements on streaming playlists
Profitability and sustainable revenue
- Streaming offers recurring revenue through subscriptions but lower revenue per stream
- Record stores look to increase profitability through bundling (album + event), exclusive vinyl releases and participation in events such as Record Store Day
Customer retention and brand loyalty
- Subscription models (e.g., Spotify Premium, Amazon Music) depend on customer retention
- They invest in user experience such as personalised playlists and artist exclusives
- Independents focus on loyalty through community events, knowledgeable staff and strong branding (e.g. Banquet Records’ integration with local gigs)
Artist development and catalogue expansion
- Labels pursue growth by signing emerging artists and acquiring back catalogues
  - This fuels long-term streaming revenue and licensing potential, such as Netflix/TV deals
- For example, Beggars Group, a UK indie label collective, invests heavily in long-term artist development over short-term hits

Challenges to growth

Even though the music industry is growing, especially with streaming, there are still many problems that can make it harder for music businesses to grow
These are some of the biggest challenges

Challenge	Explanation	Example
Too many competitors (market saturation)	There are already lots of companies offering music in the UK, like Spotify, Apple Music, Amazon Music and YouTube Music Most people who want to stream music already have an account, so companies are now fighting over the same customers It’s harder for new businesses to enter the market or for small firms to grow	Spotify is the most used music app in the UK Smaller streaming services like Deezer or Tidal struggle to compete
Changes in how music is consumed	People don’t buy CDs as much anymore and often listen to short clips on social media (like TikTok or Instagram Reels) Younger listeners might hear just 15 seconds of a song before deciding if they like it This means artists and music businesses must promote songs differently, and it’s harder to keep fans’ attention	The song “Old Town Road” by Lil Nas X became famous on TikTok before it was played on radio or sold in shops
Artists not being paid fairly (low royalties)	Musicians earn very little each time someone streams their song Most of the money goes to the big platforms or record labels This causes arguments in the industry, and some artists feel they are being treated unfairly	A UK campaign called Broken Record is asking for artists to be paid more fairly from streaming In 2022, the UK’s Competition & Markets Authority announced a study into the structure of the music streaming market
Illegal downloading and stream ripping	Even though more people use legal services like Spotify, some still use illegal websites to download or copy songs for free This means the music business loses money and can’t invest as much in new music or artists	In the past, websites like LimeWire or Pirate Bay were very popular for free music downloads Nowadays ‘stream ripping’ from YouTube is a significant problem
Harder for small shops to survive	Independent record shops (like Gatefield Sounds or Spillers Records) have to compete with big online stores like Amazon Rent, wages and bills are rising, and not all small shops can afford to keep going without local support	In 2023, Faversham’s Creekside Vinyl closed down because of rising costs and fewer customers after COVID-19

Business_A-level_Edexcel

1-marketing-and-people

business-growth-and-objectives

Growth strategies

Key business objectives

Challenges to growth

Responses