Business growth and objectives (Edexcel A Level Business) : Revision Note

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

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

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