Small Firm Start-up in the Record Industry
JEL Classification L82, L30, M13
Andrew E. Burke
Department of Economics, Trinity College, Dublin 2, Ireland
Abstract
This paper examines new record company formation by musicians.
In particular, it addresses the decision by composers to release a record i.e.
either to contract their music to record companies or to start their own
company. In so doing, the research entails the collection and analysis of new
data on the behaviour of musicians in the intermediate market for music. The
research finds that musicians regard incumbent record companies to have a first
mover advantage and generally aspire to secure a record contract than to set up
their own company. Composers who start their own company usually do so because
of "push" rather than "pull" factors so that such new firm formation is mainly
artistic enterprise rejected by incumbent firms. In this manner, new firm
formation by composers does not generally represent the seeds of future industry
growth.
Acknowledgements
The author would like to thank the Irish Music Rights
Organisation for financial support. He would also like to thank Ian Minch for
research assistance and Mark Casson, Charles Feinstein, James Foreman-Peck, and
Joep Konings for useful comments. A disclaimer applies.