Convergence of Ownership
- Although the media appears diverse, in reality ownership is centralised
- Big companies buy out the smaller ones
- By these mergers and acquisitions they swallow up competition
- Becoming vast global / multinational companies which dominate the market
- Sony is one of the Big 4 record labels (along with Warner, Universal and EMI)
Sony as a multinational conglomerate
- Sony is an electronics and media empire
- It has signed hundreds of major artists e.g. Chris Brown and Adam Lambert
- It employs thousands all over the world
- It owns the labels Arista, Columbia, RCA, Epic and many more (convergence of ownership)
- They own or work with (synergy) hundreds of media and distribution company’s worldwide (globalisation)
- Film and TV Production - Trivia and Columbia
- Electronics - Bravia and Sony Erricsson
- Gaming - Play Station and Guitar Hero
- Music Consumption - X Factor
- Music - Record labels including Columbia and Epic
Economy of scale: Horizontal Integration
- Linking together different companies in a conglomerate’s portfolio to promote their products
- This might include plugging music from the film you own on your company’s TV show, using it in a game you make or featuring the artist in the magazine or book you publish. All these are ways of getting the money back from the initial investment, and are more effective as they all advertise each other for example, Sony Artists promoting on X Factor.
Economy of scale: Vertical Integration
- Vertical integration is when a company owns its upstream suppliers and its
- This might include owning the company that makes the music, distributes it, the shops or download that it sell in and the TV or radio station that plays it. Sony Example:
- Owns film production companies
- Owns distributors like paramount
- Owns cinemas: UCL
- Owns retail i.e. Blockbuster
- Owns “Movie Channel”
- Synergy means working together.
- Companies work together to support and promote each other’s’ operations for mutual benefit.
- Columbia Records releases the album AC/DC: Iron Man 2. Features 15 classic songs ranging from 1976 to 2008!
- (Promotes back catalogue) Collaboration with Marvel Studios (synergy)
- Columbia Records and AC/DC both owned by Sony (horizontal integration)
- Marshall McLuhan, media theorist from the 60’s, coined the phrases “the medium is the message” (which lead to “media”) and “the global village”.
- By definition multinationals are global. Today globalisation means new markets are tapped.
- Benefits of scale are reaped.
- Local competition crushed.
Advantage of being a major record company like Son
- Dominate the market through convergence.
- Lots of popular artists on its books.
- Able to spend lots of money on promotion, advertising and marketing:
websites, videos, tours, TV appearances for artists.
- Benefits / economies of scale.
- Make use of horizontal and vertical integration to save money and promote
- Global reach.
- Big enough to work with other companies for mutual benefit (synergy).