Module 5 - SLP

Mergers and acquisitions

Module 5 - SLP

Mergers and acquisitions

1- Picking a choice company for an SLP company merger I have selected Napster. With the ever growing popularity of Napster the Record Industry Association of America (RIAA), which represents five major record labels and a host of smaller labels felt something must be done to combat the Napster revolution. They stated "We love the idea of using technology to build artist communities, but that's not what Napster is all about. Napster is about facilitating piracy, and trying to build a business on the backs of artists and copyright owners," They claimed that the threat Napster formed would inevitably make music sales drop as people could simply download songs from their favourite artists for free. Napster has caused a great stir in the music industry and with this came the attempted merging of Warner Music Group and EMI, two of the major players in the music industry. This attempted merger was rejected by authorities on the grounds it would great too great of a market power and lead to many undesirable results. (Massey 2007)

2- Napster is in the music industry and at the time the music industry was in a mature stage. There were five big companies who dominated the market and accounted for 90% of an estimated $38.5 billion a year in sales. Records show the industry was continuing to grow annually.I think the main thing that explains the extraordinary growth if Napster was the monopoly of the Music industry and the unwillingness of people to pay excessive prices for music they deemed not good valur for money.

3- What would your second and third choices be for a merger with your SLP company? Again, explain your reasoning for wanting to merge with these companies, and why they would be second or third choices rather than your first choice.

My choices would not differ for in all cases my first, second and third choice would be Napster. A record company that can pay up to $1Million dollars to launch and promote an act and more often than not the act is not financially viable. About 7,000 CD's are produced each year by the mahor record labels and the success rate is very low.

For the artists if you're relatively unknown you usually get a pretty bad recording contract, one that earns you about 35 cents for each CD sold. A big-name ...