In Part 1, Justin outlined the novel business model of music-streaming services.
The picture of the music industry painted so far is rather bleak—it’s difficult for an artist to earn money.
Last year, Taylor Swift took a stance against the rapid rise in music-streaming services and pulled her immensely popular albums from Spotify, signalling that streaming music services weren’t sustainable for artists.
Economics 101 is that a monopoly is fundamentally any enterprise with substantial ‘market power’ – that is, the capacity to set prices and cut back on quantity with little, if any, response from customers. While most monopolies arise through natural monopoly conditions (for example, essential services including water and electricity distribution), others simply develop when circumstances facilitate their entrenched establishment. Such conditions include high barriers to entry for potential competitors, legislative encouragement and context-specific advancement.
If you look across today’s media, discussion about the level of modern competition appears to be everywhere. Headed by Coles and Woolworths, Australians are slowly seeing numerous facets of their everyday lives taken over by the large conglomerates – petrol, insurance, let alone the (decreasing number of) brands that can be physically purchased when heading to the supermarket.
An interesting question for consideration, at least in my view, is how our legal and enforcement systems actually deal with changes in competition, and how ‘economic’ their motives behind their decisions really are. How does the judiciary impose law onto what would otherwise be the free market – and, for those of us with a piqued interest in the subject, where do economic advisers fit in?
Every Victorian knows who Lance ‘Buddy’ Franklin is, who Nathan Buckley is, and who James Hird is. Even non-supporters know these names, because AFL is so ingrained in Victorian culture and lifestyle that is almost impossible to avoid them. However if you ask an average Victorian who James Horwill is, there is a good chance that you will be given a blank expression as a response.
The history of Coles and Woolworths in Australia has been an impressive one. Both being around with us since our nation’s infancy, they still remain with us today as the two major supermarkets in modern Australia. In many ways, they are a part of our national identity.
At long last our arduous obligation as students are temporarily over! Following up from the previous article, I will introduce some empirical findings in the literature that help us better understand ‘advertising’. I am going to split the summary of empirical findings into two articles and here we will look at advertising’s effect on a firm’s sales. The next article will look at empirical findings of advertising’s effect on market share stability.
It is important to recognize the different effects that advertising could have on sales. Firstly, is there a positive relationship between present period advertising and present and future period sales? If the answer to this question was ‘yes’ then it would support some sort of goodwill building mechanism of advertising. Secondly, we need to look at whether advertising impacts the market’s demand or if it is simply a form of competition between firms within the market.