are other reasons for this vertical integration besides increased
market share. These mammoth conglomerates create a tightly secured
network by purchasing forwards and backwards in the supply chain,
buying new labels, manufacturing companies, and distributing companies.
Their established distribution systems have become highly elaborate
and expensive creating a barrier to entry within the industry.
No small firms can enter and compete because it is too difficult
to establish themselves to compete against the giants. Therefore,
the giants maintain a competitive advantage by being able to dominate
and sometimes even manipulate the industry.
then, would these giants also seek to horizontally integrate if
they already own more than 80% of the industry? We have to consider
that these large companies are also competing against each other.
To do this, they must each find an unconquered niche within the
music industry and try to secure it for themselves. They might
do this by specializing in one genre of music such as country
music or by conquering a new market in a new country. By buying
all the labels in a certain genre or by establishing another distribution
channel in a rising market, these huge companies can maintain
a competitive advantage over their competitors.