Sony Case Study
...need to
address several issues including piracy of Sony music assets, organisational structure
and artist management policies. However, the issue that arguably will impact Sony’s
performance longer term is how they deal with the challenges and opportunities
presented by digital music distribution.
Legal digital music distribution promises a very low cost way of selling music to
consumers. If Sony Music was able to control the entire supply chain, from artist
direct to consumer, the already considerable opportunities presented by digital
distribution would be increased.
Problem Analysis
Sony Germany has just experienced a 12.7% fall in sales, seemingly from the
expanding problem of on-line piracy. Why have they encountered this problem? Are
they problems that could be foreseeable or avoidable? Peter Drucker developed a
concept of ‘Five Deadly Business Sins’ that should be avoided. Using this framework,
we might be able to analyse what has gone wrong and how repeating these sins can be
avoided in the future regarding digital music distribution.
Peter Drucker’s Five Deadly Business Sins
Some of Drucker’s theories may not be applicable to businesses of varying sizes and
circumstances but in this case they offer a good indicator of the source of some
current problems that have the potential to get bigger in the future. While they
illuminate some of the problems facing Sony, this analysis also proves useful in
suggesting some directions for the future.
- ‘The worship of high profit margins and premium prices’
It is quite possible that Sony’s approach to both CD pricing and on-line music pricing
commits this sin. CD prices have remained the same in the face of competing
products such as DVDs and video games that arguably have a superior value
proposition to music in the perceptions of some consumers. (see discussion of value
proposition below) If...
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