A SWOT analysis is a business technique that describes the current strengths, weaknesses, opportunities and threats related to a product and its market. Business analysts often use SWOT to help them understand issues and navigate their industry’s target markets. In some cases, a SWOT analysis can uncover unexplored product and marketing options in the music industry.
General strengths uncovered in a SWOT analysis could include the artist’s or label’s ability to produce, and the quality of their productions. Similarly, marketing capability, working capital, management and proper use of information technology can all be industry strengths. Music is an irreplaceable commodity for fans, and specific genres and artists have fan bases that will accept no substitution. The free online promotion afforded by the Internet is a boost to musicians just starting out, and paid online advertisements spread the word for established and emerging artists. Other strengths include the income generated from tours and merchandising.
Bad- and low-quality production, poor marketing, low capital and mismanagement could all be weaknesses for individual artists and labels. Overbooking is a music industry weakness that happens when there are too many concerts in an area; the fan base gets stretched thin and the bands don’t make as much as they could for their live shows. Music’s major labels were slow to change from CD format to digital format, a massive weakness that almost devastated the industry. Digital and concert overbooking losses lead to a deficiency in support from music’s secondary markets, like ticket scalpers and vendors. Finally, some artists are happy with the fan base they have and they don’t strive to reach new followers. This ends up hurting the whole industry.
General opportunities include the growth of niche markets, new customer segments, retiring competitors, cultural movements and new technology. Artists are pushing for royalties from online radio stations similar to the royalties they receive from regular radio stations and live music venues. Many major labels are partnering with independent labels for mutual gain. The independent labels get infusions of working capital and the major labels gain access to trending new music.
Anything that interferes with a musician or label’s strategy is a threat. Threats are also known as risks, and risk analysis is its own discipline. Risks include events or trends that increase the need for resources or reduce expected business gains. Online music piracy is the most destructive threat since thousands of people obtain music illegally -- for free -- instead of paying the artist and label for it. Another threat comes from both artists and fans who strike out against high concert ticket prices by shutting down or boycotting shows.