MUSB Students Abroad Report on Global Music Trends & Make Expansion Proposals

During the Fall 2013 semester, five study abroad students participated in an independent study led by Program Director Catherine Moore. Students were in three cities on three continents, literally spanning the world: Prague, Shanghai and Buenos Aires.

As the final assignment for the course, each student proposed to a music company of their choice expansion into the territory in which they were based for the semester. Their proposals describe the opportunity for the company that the students saw in the country they were located. Based on their research and observations over the semester, students justify their choices of opportunity with specific reference to the company’s current situation and explain how the expansion will benefit the company. Furthermore, the reports provide details of a plan for the company to enter the new market.

Students covered a wide range of company types, and the companies originate from many parts of the world. Here are excerpts from the five student reports:

Adam Pyarali (UG ’15): Spotify, based in Sweden, to Czech Republic

Our first year in the Czech Republic will be dedicated to establishing ourselves amongst said target market as the “go to” music service. Continuing on, we will shift our dedication on pushing subscriptions much harder to ultimately accomplish our primary goal of having 15% of Spotify users in the Czech Republic as paying subscribers.

Spotify is a well-known international brand which carries much stature in the majority of the world’s biggest markets. Its introduction to the Czech Republic needs to be pushed hard through an integrated marketing campaign. While almost everyone consumes music on a daily basis, the entire population will not be interested in a digital music streaming service. To avoid overspending on promotion, we will focus solely on our target markets to build a consumer base in the Czech Republic.

To create buzz, Spotify will allow bloggers and journalists early access to the service to publish their thoughts on the company moving to the Czech Republic. These “early adopter” articles will create an initial interest in the service amongst web-friendly consumers. To connect with the Czech youth, Spotify will partner with local high schools and colleges to teach the ins and outs of the music streaming service focusing on four main points: it is cheap, unlimited, legal, and supports your favorite artists. There has been a disconnect with streaming services in the Czech Republic in the past few years with companies failing to make much impact, but we feel Spotify has the means to educate the Czech people.

Editor’s note: In December 2013, just after Adam finished his report, Spotify announced that they will be opening in the Czech Republic.

Nick Kohler (UG ’15): Ultra Music, based in the US, to China

It’s surprising that, with the seemingly rapid expansion of the Ultra Music brand, especially in the festival circuit, China has been left alone. China’s unparalleled economic growth isn’t just helping its powerful government, as it is also reflected in the upwardly mobile middle class who, for the first time, has a disposable income to spend on leisure and entertainment. It’s downright shocking to see that almost every single club in Shanghai is filled every day of the week, and the people filling them aren’t just the old money crowd, but also the young, hip crowd who have found their way in this ever increasing economy of opportunity. These “new-money” young adults are more than willing to spend a sizeable chunk of change, as the frugal stereotype of the Chinese is slowly but surely fading with each passing year. Combine this new wealth with the newfound Chinese love of the global EDM phenomenon, and an entry for Ultra is primed for success.

Expanding into China has distinct benefits for Ultra Music that span beyond profit. As there are currently no labels dedicated solely to electronic dance music in China, Ultra will possess a first mover advantage that will likely ensure its top stake over the other labels that are most certainly going to expand to China later in the game due to its growth. The addition of one of the fastest growing sectors in the nightlife market to this new global EDM empire will certainly solidify Ultra’s position as the largest and most influential firm in all of Electronic Dance Music. Ultra will have the help of Sony’s network as well as the west-obsessed culture of China to minimize the risk of such a major advancement, thus making China the most logical and beneficial location to proceed.

Forrest Durell (UG ’15): The Bowery Presents, based in the US, to Argentina

Argentina has one of the fastest growing economies in the world and as a country moves from the second to first world status, they widen the middle class and citizens are able to spend more money on entertainment. In Argentina, the main clubs are full every night with people dancing – no just moving their hips to the music but actually dancing. They have a vibrant culture full of long conversations, late meals and a recently rich musical history.

Aside from booking some of the bands that have played/are going to play in Buenos Aires, Argentina, the Bowery Presents has no relation to this South American city. Buenos Aires is one of the most affluent cities in South America but, unlike Rio de Janeiro, Santiago or Sao Paulo, they don’t have a solid live music scene. Argentines themselves are into music – going out to clubs and dancing to electronic hits, going to small bars and listening to Cumbia or Reggae music and even selling out most every show that comes to their bigger live music venues like Teatro Vorterix (1700 capacity) and Luna Park (5000-8000 capacity). There may be live music infrastructure for when huge acts like Bruce Springsteen and Stevie Wonder or even buzzing indie bands like Tame Impala and Beach House come to Buenos Aires but there’s no system in place to help nurture organic live performance growth for bands from the city/country. If a company like the Bowery Presents could come to Argentina with their business strategy, they could be the catalyst the live music culture in Buenos Aires needs.

Alex Blanton (Stern ’15):  The Pacha Group, based in Spain, to China

Pacha’s opportunity is not only to usurp attention and patrons from Shanghai’s mediocre to poorly managed current clubs, but to also take a leading role in Shanghai’s continued cultural growth. Unlike a saturated market such as New York, Shanghai still has plenty of room for expansion. While most Chinese are already large consumers of entertainment in the form of music, movies, and tv shows streamed over the internet, most are not wealthy enough to enjoy most forms of live entertainment. Currently, most local patrons of nightclubs are of the upper class. China is a nation of great income inequality, and only the very wealthy have the resources and the time to enjoy late nights of drink, dance, and general revelry. However, as China’s middle class continues to grow, more and more Chinese will thirst for live entertainment on which to spend their hard earned renminbi. Another key implication of Shanghai’s growth is that the city’s expat population, which already boasts nearly 200,000 people, will also grow. Expats are the other major group that frequents the clubs of Shanghai, and the city’s economic emergence will only impel more foreigners to move here.

So where’s the opportunity of Pacha in this odd and sometimes confusing landscape? Pacha can find its niche in the city by appealing westerners who thirst for quality music and a participatory, dancefriendly atmosphere, and Chinese to desire big nights out associated with famous brands. The key difference is that Pacha itself will be the brand of celebrity people are attracted to, rather than the international artists who get booked there. It is inevitable that some international club brand will eventually take this approach to succeed in Shanghai. The tablebased, big name artist business model the current big clubs employ is not sustainable and something will have to change eventually. Some entrepreneurs are attempting a new approach by bringing festivals to Shanghai that feature a few big names, but mainly showcase up and coming and underground acts. Eric Zho, organizer of the recent Storm Music Festival in Shanghai, has said “we believe Shanghai’s live music scene is missing the midtier artist shows. Most Chinese are still only exposed to major pop stars from the West. It is still mainly driven by celebrity culture, rather than strictly music.” Pacha could certainly find a niche by pioneering the midtier artist space. By establishing the Pacha lifestyle brand successfully in the city, people will instinctively trust Pacha with providing a fantastic night out even if they haven’t heard of a particular artist playing that evening. That dynamic will not only be financially beneficial for Pacha, but will help increase the music IQ of Shanghai in general.

Michael Chrupcala (UG ’15): C3 Presents, based in the US, to Czech Republic

Prague, certainly a robust music market, has room to grow before matching Chicago or Buenos Aires. Market research shows that the Czech Republic “accounts for 0.8% of European consumer electronics market value” which is comprised of CD and MP3 players, among other devices. As such, C3 would encounter little competition upon expansion. Prague Spring International Music Festival is the sole annual music festival in the city, and it focuses on symphony and chamber music.

To grow brand recognition, C3 Presents is advised to produce an annual festival held in the venues of Prague with capacities ranging from 300-1,000. Styled after CMJ Music Marathon and South By Southwest, a multitude of medium-sized stages would form the bulk of festival programming, since most Czechs will be unfamiliar with indie and alternative Western artists such as Local Natives and Foals. As Lollapalooza is renowned for its headliners, the O2 Arena in Prague 9 (capacity: 17,360) would showcase the likes of Mumford and Sons, The Killers, and Ellie Goulding. Such an approach is necessary; festival attendance will likely meet 20,000, which will only grow along with the long-term development of the market. This figure is determined from the draw of other festivals in the Czech Republic: notably, Colours of Ostrava (30,000) and Mighty Sounds (12,000).

Market entry in 2014 would be highly effective. As mentioned above, the Czech Republic is influenced by the alternative rock that followed grunge, which Lollapalooza seems to currently showcase. To follow our past example, partnership with a local promoter is ideal. Pairing with GEO in Brazil, Lotus Productions in Chile, and Fenix Entertainment Group in Argentina has proved that the expertise of a company immersed in the target location is priceless. Charm Music — the Czech division of Istanbul-based production company Charmenko — may be an effective partner, as they have recently booked the likes of Yo La Tengo and My Bloody Valentine in Prague.