The business challenge
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- Albert Clark
- 6 years ago
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2 Universal Music Group can trace its history almost as far back as recorded music has been offered for sale to the public. Great music, then and now, has always been central to the company s success proven by an artist roster that is an authentic who s who of music through the decades. Today, Universal Music Group leads the industry, with a one-third share of the global market. It s maintained that leading position by being able to change its business model to accommodate the needs of consumers as they have evolved. And how consumers want their music today has changed music business models out of all recognition. Global digital music revenues to record companies are growing at an ever faster rate up 8% to USD5.2bn in And as the digital revolution proceeds, it has driven major change and innovation in the way that Universal Music manages and distributes its content to a growing range of business partners, retailers and direct to consumers. The business challenge As early as 2007, Universal Music recognized a growing challenge with its digital supply chain. With a fast-developing range of partners requiring digital content, the spread of mp3 players, and ceaseless innovation creating new channels to market, the company needed to find a way to manage all of its digital assets without incurring significant additional costs in meeting new and emerging demand. Their systems were at that point geared towards physical products. Managing digital assets on those required significant manual interventions and ad hoc workarounds. That inevitably led to inefficient workflows and inconsistent data. Underlying systems also presented a complex and challenging barrier to navigating into the new digital era. Numerous applications around the globe had to be maintained and as any one system changed it inevitably generated impacts elsewhere, adding to cost and complexity. A complex data model made it hard for anyone to achieve a clear view of assets and their associated rights and as product types, formats and digital rights management continued to multiply, the strains on the existing supply chain began to tell. These multiple challenges led Universal Music to conclude that it needed to make a decisive shift to a digital supply chain solution that could continuously adapt to consumer preferences as they evolved. The decision to change generated a number of key questions principally whether to make the major investments in hardware and software to build a platform in-house, or to find an alternative approach with a partner. 2 Turning up digital music: Universal Music s platform powers ahead Turning up digital music: Universal Music s platform powers ahead 3
3 Accenture managed the roll out of the Digital Supply Chain platform (DSC), providing Universal Music with a sophisticated platform that provides total transparency into all of the activities taking place across its entire digital operations at any one time. The system comprises of four key elements, focused on collating and storing Universal Music s audio and video content, artwork and metadata and distributing it to Universal Music s digital business partners: 1 The DSC interfaces with many of Universal Music s business systems to ingest all types of content audio, video and graphics and consolidate source media with relevant metadata (such as title, artist and label). How Accenture helped Having assessed the capabilities and assets required to make the successful transition to a flexible and agile digital supply chain, Universal Music selected Accenture as its long-term outsourcing partner. We needed to find the right partner that could build the platform rapidly and to be able to understand our business requirements to support it going forward. We quickly realized that Accenture had the solution and the skills that were required to build that platform. Stephan Garandet VP systems & strategy and VP digital operations Universal Music Group International A number of factors proved decisive in that choice. Accenture s expertise and the scale and experience of its resources were key considerations, as was its then recent acquisition of Digiplug a digital services company working with a number of music majors. Partnering with Accenture offered some key commercial benefits, including the ability to avoid major capital investment in a new platform along with the conversion of what had been fixed costs to a variable cost model. And by outsourcing the operation of its digital supply chain, Universal Music is able to focus on its core business spotting, developing and marketing the world s leading recording artists Rights, pricing, and scheduling information associated with all digital assets and products are managed through a single repository. As well as storing the contractual rights associated with each piece of content, the DSC enables users to add more restrictions and set up sales campaigns, thereby creating an additional level of marketing rights. The DSC makes all the required media available in the right format at the right time. These processes include a number of quality assurance checks to ensure standards are always met. The provisioning engine is instructed through a suite of ordering options so business partners can cherry pick particular products or choose to receive all new products that meet their defined parameters automatically. Content can be transcoded into a variety of different codecs and bit rates depending on its intended use. The DSC ships content to over 1,000 business partners in 200 territories around the world through a variety of distribution protocols and delivery models. Standard business partners can obtain content through push and pull models, and a connected (or hosted ) model enables content to be delivered directly to consumers through direct-to-consumer and promotional services. Accenture and Universal Music continue to work together to develop and improve the platform and what it offers in line with changes in consumer and business demand. Recent developments include creating direct to consumer capabilities providing a retail environment that generates a more direct connection between the company s artists and their fans. In addition, the platform is also able to make a considerable back catalogue available as well as other forms of previously unused material and formats such as artist interviews, electronic press kits and high-definition video content that are now enabling new ways to generate revenues and increase the appeal of Universal Music s content. 4 Turning up digital music: Universal Music s platform powers ahead Turning up digital music: Universal Music s platform powers ahead 5
4 In the DSC, Accenture has delivered and operates a dynamic platform that continues to adapt as the market changes and Universal Music responds accordingly to capitalize on new and different opportunities. High performance delivered Today, the DSC enables Universal Music to serve 1,000 business partners in 200 territories across the globe. If required, this platform can ramp up quickly to meet demand and can deliver 1,000,000 products to Universal Music s business partners in a day. In addition, in 2012, it enabled the distribution of 25,000 new product releases. The DSC delivers a compelling value proposition that consists of five pillars. First, through greater automation and consolidation, numerous manual tasks have been replaced. Streamlined digital-only processes ensure products are now packaged and delivered automatically supported by a single digital inventory of all available content. One of the key benefits is around automation. We now have a single dashboard where we know the exact status of every single product in our platform. That makes a massive difference for us centrally but also locally for all of our territories around the world. Stephan Garandet. Secondly, the DSC offers Universal Music flexibility. The platform supports advanced distribution campaigns (including content exclusives), which are all easy to manage through an intuitive user interface. Third: greater visibility and transparency. The status of assets and products is captured at every stage of processing, with monitoring and reporting available throughout the digital supply chain. The fourth pillar is scalability. On average the DSC ingests 80,000 products each month, with a peak of up to 11,000 in a single day. There are five million tracks stored in the DSC, although the storage infrastructure means it would be easy to increase this amount at short notice. In terms of processing products, the DSC manufactures 5.5 million files and delivers 1.6 million products each month and experience has shown that the DSC is capable of handling significant peaks within those capacities. Many of the deliveries actually consist of an update to the metadata or rights the DSC boasts a close relationship with each product as each one is updated 300 times per year on average. And finally, based on increasing volume Universal Music s cost to serve is now three times cheaper per product than it was prior to the implementation of the DSC. With the demand for digital music growing at an unprecedented rate, the DSC continues to provide a platform for growth and innovation that will position Universal Music for high performance well into the future of the digital music industry. Now I can shift my focus from dealing with problems to look at what needs to be built in the system to serve future needs. We need flexibility now more than ever and we need Accenture to complete our mission. Stephan Garandet VP systems & strategy and VP digital operations Universal Music Group International 6 Turning up digital music: Universal Music s platform powers ahead The Digital Future of Media and Entertainment 9
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