The music industry exists in a highly saturated market. Most of the money is made either by highly skilled independent labels, or by large corporate record companies who control much of what is heard in popular music.
The Universal Music Group (UMG), for example, is the world’s largest record company. Let’s say we want to determine the market share of UMG. Our first step is to recognize their competition. To keep things simple, I am only going to select the second and third largest labels who fit the same category, which are Sony Music Entertainment and Warner Music Group. These are the competitors.
Once you recognize your market, in this case major record companies, and identify your competitors, which are Sony and Warner, you are now able to calculate your market share. In order to calculate this important number there a few keys things you need to know. How much volume (or revenue) your company has sold, and how much volume (or revenue) your competitors have sold.
These numbers will help us develop a corporate strategy for UMG against their competitors. In our example, we are going to use revenue to estimate market shares for sales in 2019, however, you could just as easily use the volume of units sold. According to Statista.com, Universal Music Group made $8.48 billion, Sony Music Entertainment made $7.82 billion, and Warner Music Group earned $4.47 billion in U.S. Dollars. Imagining for a moment that these three companies are the only ones in the industry, let’s find out their market share. Collectively, the total market value is $20.77. In order to calculate each company’s market value, we must divine the revenue by the revenue of all competitors. Doing the math, this would mean that Universal Music Group has a 40.6% market share, Sony Music Entertainment has a 37.7% market share, and Warner Music Group owns a 21.5% overall market share.
These numbers will help each company put things in perspective relative to their competitors, helping them to better determine factors that might have affected their sales, both positively and negatively. Understanding their market share may influence how Universal Music Group develops future marketing campaigns, engages in CRM, and develops strategies to both increase and retain their current share.