Colorado Creative Music Case Study Part 2

The STEP analysis of the Colorado Creative pskovmusic.ru aims at analyzing macro-environmental factors of the music business the company is engaged into. These factors fall into political, economical, social and technological groups (Pearce, Robinson, 2000).

Political factors affecting music business in whole and CCM in particular: strong political stability in the United States; regulatory and legal issues concerning music business including copyright laws for copyright protection of both music writing and recording, copyright-related legislation touching upon the issue of virtual internet promotion and distribution, such as The Audio Home Recording Act (1992), No Electronic Theft (NET) Act (1997), “The Digital Performance Right in Sound Recordings Act (DPRSRA) 1995, The Digital Millennium Copyright Act, “Pending legislation: Music Online Competition Act and the Consumer Broadband and Digital Television Protection Act (CBDTPA)” and others. Environmental regulations and employment requirement do not affect business CCM is engaged into. As for the tax policy, in 2000, from total income of $216,614.05 the company had to pay $4,744,97 of taxes, which is not high rate and amounts to nearly 2 percent from the total income. In whole, it should be noticed that political factors are favorable for music recording industry and for CCM particularly.

Economic factors include indexes in the macro economy that can affect music recording industry. Here also, macroeconomic factors, such as economic growth, interest rates and inflation rate are favorable for CCM. Thus, the U.S economy kept growing steadily since 1995. CPI falls down in 1997, 1998. Unemployment rate decreased gradually from 1995 to 2000.

Social factors, covering demographic and cultural aspects of the environment external to music recording industry are rate of population growth, age distribution and carrier attitudes. The population growth in the United States is steady and age distribution also favors the music recording industry. It should be noted that for music industry in whole, teenagers and 20-years-olds are primary customer segment, but CCM aims at attracting people of 40-60 age range. Thus, the considerable share of American population fits this target market.

Technological advancements in music recording, promotion and distribution have several effects on the recording industry. One aspect of the issue is that musicians are no longer dependent on major recording labels to create or distribute their products. (Viljoen & Dann, 2000) The MP3 software alternative to the CD becomes more popular since 1998. In the space traditional audio can fit 12 to 15 audio tracks; MP3 software can store approximately 150 music tracks. “The move towards MP3 as the new format to replace CD just as the CD replaced vinyl albums have been accelerated by the rush of new portable MP3 players on the market – some for less than conventional Sony Discmans.” (Viljoen & Dann 2000, p. 173). On the other hand, new digital technologies which appeared in late 20 century not only facilitate the process of music recording, but make it considerably cheaper, providing the possibility for multiple firms with limited resources to enter the market. Thus, if in 1980s, professional recording studio with all recording equipment, working on vinyl or tape carriers, cost several million dollars and therefore was a domain of 5 or 6 major recording companies, in 2000, assembling professional recording studio could be carried out at cost of only $5,000. All the equipment and hardware, due to the global advancements in technology, are much more affordable for an average artist or businessman.