This was a PEST analysis I did for the music industry. It focuses on the music industry before 1999 and how it had to change through the years.

1. EBM Assignment 2: Trends, PEST Analysis
Britteny Muniz
Entertainment Business Models-Online
Instructor: Carol Wonsavage
September 12, 2021

2. Why did I choose the music industry?
Music has helped me since I was a kid and it still does as an adult, so that is why I wanted
to focus on the industry for this assignment. I don’t drink or smoke to help me relax when I am
stressed, so I had to find another outlet to help me, and I found out that music helps me. I listen
to a variety of music that ranges from pop to heavy metal, so I know what genre helps me
depending on my mood. I was born in 1990, so I got to experience the changes in the industry
from owning CD’s, owning an MP3 player, and using music streaming services.
Pre-digital music industry
Music was distributed through physical forms including CD, vinyl records, and cassettes.
CDs were among the most popular forms when it was introduced in 1980 and over 200 million
CDs were sold by 2007 (BBC, 2019). CDs were more popular than vinyl records since vinyl
record were fragile and could scratch easily. Since 2008, the sales have started to decrease and in
2020, only 31.6 million CDs have sold (Richter, 2018). For ways to promote music, some of the
most popular ways were radio, word of mouth, and magazine ads. Billboard magazine started to
publish a chart in 1956 that showed the top 100 albums, which also promoted the albums at the
time (Peacock, 2021). Word of mouth was the best way to promote bands that did not have the
money for ads and did not have their music played on the radio. For anticipated songs, the radio
stations would announce the day and time the song would be premiering on that station.
Two companies
• SONY Music Entertainment: Sony Music started out as American Record Corporation
in 1929 and was acquired by Colombia Broadcasting System in 1938. CBS was bought

3. for $200 billion by Sony in 1987 (Sony Music Entertainment, 2020). The recording
company was named Sony Music Entertainment in 1991. Sony Music Entertainment is
still a dominate force in 2021 with artists liked Travis Scott, Adele, and Pharrell
Williams. The company has also acquired other labels such as AWAL which is a record
label in the UK, though the CMA has raised concerns about the purchase. The purchase
raises concerns over competition between labels. There is evidence saying that the two
companies would have competed strongly with each if the deal did not go through (ICT
Monitor Worldwide, 2021).
• Universal Music Group: Universal Music Group started in 1962 when MCA Inc., which
is known as Universal Pictures now, merged with American Deeca. In 1990, the company
was sold to Japan’s Matsushita Electric for $6.59 billion (Universal Music Group, 2020).
MCA was renamed as Universal Music Group in 1996. UMG is still a dominated force in
the music industry with artists like ABBA, Kanye West, and Lady Gaga. The have
ventures in other countries like China where they have a multi-year license agreement
with Tencent Music Entertainment Group, which is the leading music platform there.
With the extension of the agreement, TME will continue to distribute music from UMG
on their platform and music will be added to karaoke machines (PR Newswire, 2020).
PEST Analysis
Political
• Music Modernization Act: Before this act was signed, any records made before February
15, 1972, were not covered by federal copyright and had to rely on state copyright which
provided a small level of copyright protection (Ladas Parry LLP, 2019). The act created

4. the Mechanical Licensing Collective, which will help with timely and efficient payment
to songwriters from digital streaming services like Spotify. This also allows legacy
artists (pre-1972), record producers, and engineers who originally could not collect
royalties to now collect royalties.
• Protecting Lawful Streaming Act of 2020: This act increases penalties who willfully
stream copyrighted material for commercial advantage or financial gain. Before this was
signed, illegal streaming was a misdemeanor, but not could be raised to a felony
(Protecting Lawful Streaming Act of 2020, n.d.).
Economic
• COVID-19-: When the lockdowns first started to happen last year because of the
pandemic, music streaming decreased. It decreased by 12.5% when the World Health
Organization declared lockdowns in March 2020 (University, 2021). Streaming using
services like YouTube increased compared to services like Spotify since many could
not leave their homes and could focus on streaming services that require more
concentration.
• Streaming services: With the introduction of high-speed internet which allowed video
and music to be streamed more easily introduced services like Pandora and Spotify.
Pandora launched in 2000 and Spotify launched in 2008 and these are two of the most
popular music streaming services. Pandora currently has more monthly users at 238
million (Pandora - monthly active users 2018 | Statistic, 2021), compared to Spotify
who has 165 million (Statista, 2021).

5. Social
• Millennials: The age of millennials range from 25-40, so they grew up with the changing
landscape in the music industry. They saw when listening to CDs was the dominate way
to listen before their sales started to decrease in 2008, to when music streaming service
started in 2000.
• Money conscious: The minimum wage around the US has not changed and continues to
stay at $7.25 which makes many Americans focus on where their money is going. 78% of
US workers work paycheck to paycheck, so this requires many to budget of where every
cent goes (Friedman, 2019). Music streaming on average is $8 a month or they will have
a variety of options such as a family bundle to help its users to save money.
Technological
• iPod: The first iPod was released in 2001 and allowed users to add the music from
their computers to the iPod so they could listen wherever they wanted. Apple
launched their music store, iTunes, the same year and allowed users to buy songs for
$0.99 instead of buying whole albums. Even though most users have a smartphone,
Apple still does make the iPod touch since it is simple for kids to use.
• Spotify and Pandora: Spotify and Pandora are two of the top music streaming services
and allows users to pay for a subscription and listen to any artist that is on the service.
This was a change from iTunes were users had to pay for individual songs, where
these services give them access to all songs for one price. Spotify and Pandora also
have free accounts, but users will have to deal with ads. The services can be accessed
on smartphones, game consoles, and smart TVs.

6. Conclusion
I discovered that the music industry has changed quickly especially over the last 12 years.
Physical forms such as records and CDs were important since it allowed music to be recorded
and played in various places such as homes and car, but you had to switch them out when you
wanted to listen to a different artist or just one song. It could get expensive to buy physical
copies of albums and sadly could break easily. Streaming services has allowed people to listen to
music wherever they are and allows millennials and Gen Z to save money and not produce waste
from CDs and records. Users can now listen to music on their phones, computers, and game
consoles. Laws have also changed since streaming has become the main way of listening to
music and one allows old artists to gain royalties from music dated before 1972 and another law
could make illegal streaming of copyrighted material a more serious crime. The music industry is
a fast-moving industry and will continue to be in the future.
References
BBC. (2019, March 12). History of the CD: 40 Years of the Compact Disc - CBBC Newsround.
Bbc.co.uk. https://www.bbc.co.uk/newsround/47441962
Friedman, Z. (2019, January 11). 78% Of Workers Live Paycheck To Paycheck. Forbes.
https://www.forbes.com/sites/zackfriedman/2019/01/11/live-paycheck-to-paycheck-
government-shutdown/?sh=5304ad664f10

7. ICT Monitor Worldwide. (2021, September 8). ICT Monitor Worldwide Sony’s purchase of
AWAL raises competition concerns. NexusUni. https://advance-lexis-
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Ladas Parry LLP. (2019, September 10). The Music Modernization Act: A Primer For Copyright
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Pandora - monthly active users 2018 | Statistic. (2021, February). Statista; Statista.
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Peacock, T. (2018, October 18). Cover Stars: A History Of Music Magazines | uDiscover.
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PR Newswire. (2020, August 10). Tencent Music Entertainment Group and Universal Music
Group Agree to Multi-Year Licensing Agreement Extension and Establishment of New
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8. Protecting Lawful Streaming Act of 2020. (n.d.). Www.uspto.gov. Retrieved September 12,
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Richter, F. (2021, May 5). Infographic: The Rise and Fall of the Compact Disc. Statista
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