Music Business & the Boston Matrix

The matrix created by the Boston Consulting Group, visualizes the product/service cycle of a company in a vertical & horizontal axis divided in four quadrants. I came up with the morning impulse about relating this to the current state of the major music corporations around the world.

It is already known that these firms have been running into harsh financial problems due to the fact that technological advancements & the digital age are turning everything "upside down", forcing them to restructure their whole industrial organization. The latter established them profitable, viable & sustainable over the past years.

K(n)ow what? Now I am wondering if these firms experience hard times because they are running short in (short term) cash flows or because of (long term) failed capitalized assets (artists) or assets that don't work anymore due to massive changes in the industry. This signifies an overly poor negative cash flow portfolio, threatening their present survival while at the same making it difficult to create future value & profitability in the long run.

In plain words, the companies keep searching for upcoming stars (promising cash cows) for which they have to spend enormous marketing budgets for promotion at the same time when revenues & sales are decreasing in the music industry. The company expects its investment on stars to mature and generate big money.

What is being overlooked here is that the trend for producing hit songs, aims for a very short term goal at times when cash liquidity runs dry. Hits rise to fame and then wither and die fast, leaving space for the next promising song (or competitors) to run across all four stages of development, according to the Boston Matrix.

Impure Boston Matrix thoughts, under a rainy cloudy day in Sweden.


Δημοφιλείς αναρτήσεις