“The recording industry has developed immensely over the past hundred years through emerging technologies, cultural trends and changes in consumer behavior. For the past fifty years, the industry has had a tendency towards a higher market concentration. Currently, the industry is led by three conglomerates referred to as the ‘majors’ who operate throughout the industry’s value chain. The recording industry is classified as a highly concentrated market and as a result, gaining competitive advantage in an oligopolistic setting is next to impossible. “
Back in January 2016, as part of my double Bachelor’s degree, I was required to write a thesis on a topic related to international business. Prior to writing my bachelor’s thesis I had studied two years at Metropolia Business School in Helsinki, Finland and another two years at the Berlin School of Economics and Law.
Having always been interested in the recording industry, I saw this as an opportunity to combine my passion for the industry and academia. It is no secret that the industry has changed radically over the past hundred years or even in the past ten years. At one time the recording industry was filled with successful small and medium-sized enterprises (SMEs).
My initial research plan <insert link> was very broad. It is very usual as part of the initial stages of writing an academic paper to be overwhelmed with the overflowing amount of information. Finding an angle to your paper is sometimes harder than one might think. My initial research question was “How has the recording industry’s development changed the competitive conditions? (Through new technologies, M&As, change of income streams etc.)” Realizing the research question would be too broad, I narrowed it down to study the change in competition throughout the years and market structure directly affects the level of competition.
There is a lot of information available on the music industry. However, most of it is current information and sales statistics. The majority of the Internet’s sources talk about the Internet’s development in relation with the industry. After realizing this it became apparent that the research gap lied in the change of competitiveness in the recording industry. By combining empirical data available on the industry with my own gathered data I could provide the reader with an insight look at recording industry.
After going back and forth with my thesis supervisor, we settled on the competitive angle. Competition, in general has been a topic of interest for several academics Chamberlin (1933), Bain (1956), Stigler (1968) & Porter (1980). These academic developed frameworks though which any industry could be examined. In addition to academic frameworks, analytical tools were used to exhibit the historical changes in the industry’s formation. To compare the change in market concentration, the Herfindahl-Hirschman index and four-firm concentration ratio were used as analytical tools to explain the change.
In the future chapters to come we will go through the change in competitiveness starting from the 1890 all the way up till present day.