Market competition and media performance: An examination of popular music
industry in Taiwan
Shu-Chu Sarrina Li
Associate Professor
Institute of Communication Studies
National Chiao Tung University
1001 Ta Hsueh RD.
Hsinchu, Taiwan, 30050, ROC
E-Mail: [log in to unmask]
Peng-Hua Wang
Graduate Student
Institute of Communication Studies
National Chiao Tung University
Market competition and media performance: An examination of popular music
industry in Taiwan
Abstract
Two research questions were investigated in this study, one was to examine
the relationship between market competition and music diversity, the other the
organizational strategies adopted by the major record companies in Taiwan.
Content analysis and intensive interviews were used to explore the two research
questions. A negative relationship between market competition and music
diversity was only partially supported by the findings of the study.
Furthermore, this study also found that the open system adopted in the US was
very much employed by the major record companies in Taiwan. Several
implications were discussed in the paper.
Diversity and Media Performance
Media performance is considered as an important concept as both scholars
and the public use it as the best criterion to judge the suitability for the
existence of a mass medium in a society. Though the concept of media
performance has been used very much by scholars, its definition varies from
study to study. For example, some scholars define media performance as the
quality of mass media products, others consider the diversity of mass media as
the criterion of media performance, and still others look at the social
functions which media products provide to evaluate the performance of that mass
medium (Bagdikian, 1985; 1988; Compaigne et al., 1982; Dominick & Pearce, 1976;
Li & Chiang, 1998; Li et al., 1998; Lin, 1995; Litman, 1979; Rothenbuhler &
Dimmick, 1982). Among the various definitions of media performance, diversity
is the most frequently used indicator for media performance.
The reason that so much value is placed on diversity as a criterion for
media performance is that diversity has long been regarded as what constitutes a
modern society. To have diverse arrangements in mass media is seen as an
effective weapon in preventing undue centralized control and uniformity. From a
policy perspective, promoting diversity in mass media can perform two functions,
firstly it maximizes consumer choice, secondly it serves public interest by
giving adequate attention and access to various political groups and minority
views. From a progressive social change perspective, innovation, creativity and
originality in social life is impossible without the existence of diversity
within a society. Therefore, diversity is both the representative principle of
both democracy and the quality of social life (McQuail, 1992). Mass media are
viewed as tools to serve the public in a society, so it's no wonder that
diversity is regarded as the essential indicator for media performance.
Diversity has different dimensions. In the study by Hoffmann-Riem (1987),
he identifies four dimensions of diversity which are diversity of formats,
diversity of contents, diversity of persons and groups, and diversity of
geographical coverage and relevance. The diversity of formats refers to
different functions of mass media, hence entertainment and information formats
function differently. The diversity of contents is related to the issues and
opinions in the media content, and the diversity of persons and groups is about
the access and representation of various persons and groups. Finally, the
diversity of geographical coverage and relevance is in reference to various
locations covered by mass media. Of course, the classification of media
diversity by Hoffmann-Riem (1987) is not the only classification. Various
dimensions of media diversity have been proposed by various scholars. However,
it depends on the types of mass media and the nature of the study to decide the
dimensions of media diversity (McQuail, 1992).
Market Competition and Media Diversity
With diversity as the most important criterion to evaluate media
performance, scholars are interested in knowing what factors are conducive of
higher media diversity and what factors are not. One factor frequently
discovered to affect the degree of media diversity is market competition. Many
media economists believe that media diversity is determined by the degree of
market competition, therefore, these economists propose to make some changes in
the degree of market competition in order to increase media diversity (Adams,
1993; Burnett, 1992; Davis & Walker, 1990; Peterson & Berger, 1975). Numerous
studies have been conducted to examine the relationship between market
competition and media diversity. These studies observed the impact of market
competition on media diversity. However, there was no conclusive finding in
terms of the exact relationship between market competition and media diversity.
Some studies discovered a positive relationship between oligopolistic market
structure and media diversity (Lin, 1995; Schumpeter, 1950), others found an
opposite relationship existing between oligopolistic market structure and media
diversity (Coser et al., 1982; Litman, 1979; Peterson & Berger, 1975;
Rothenbuhler & Dimmick, 1982; Ryan, 1985). An oligopolistic market structure is
a market in which a few firms control most of market shares, so the market
concentration in oligopolistic market structure is high and the degree of market
competition is low.
Competition and Higher Diversity
Empirical data about the relationship between market competition and media
diversity have not come up with any conclusive finding. Some studies indicate a
negative relationship between market competition and media diversity, while
other studies show a contrary trend (Burnett, 1992; Dominick & Pearce, 1976;
Peterson & Berger, 1975; Li & Chiang, 1998; Lin, 1995). However, the majority
of research points to a positive relationship between market competition and
media diversity. The economists who see a positive relationship between market
competition and media diversity argue that, when a market is dominated by a few
firms, they have little incentive to innovate because what each firm strives to
do is to gain the largest share of the mass market. In order to garner the
largest share of a market, each firm will try to manufacture products which
please most of the consumers while offending the fewest possible groups. This
process leads to homogeneity. Thus, the oligopolistic market structure reduces
the rate of innovation, making media products less diversified. The opposite
situation occurs when a market is open to many firms. With open competition
between many firms, a market is broken up into many segments, so gaining the
largest share is impossible. Under these conditions, the best strategy is to
differentiate one's products from others in order to create a specific niche for
themselves. Therefore, a market with many competitors induces innovation and
increases product diversity in mass media market (Coser et al., 1982; Litman,
1979; Peterson & Berger, 1975; Rothenbuhler & Dimmick, 1982; Ryan, 1985).
The empirical studies that examined the relationship between market
competition and media diversity have been applied to various media industries.
For example, Peterson and Berger (1975) studied market competition and its
relationship to diversity in popular music. They examined the twenty-six years
between 1948 and 1973 and divided the period into five eras. They analyzed the
number of hits, the average weeks of one song on the hits list, and the contents
of the hits' lyrics. The results of the study confirmed a positive relationship
between market competition and media diversity. They observed that when market
competition was intense, the number of hits was more, the average weeks of each
song on the hits list were short, and the diversity of lyrical themes was high.
Continuing the study by Peterson and Berger (1975), Rothenbuhler and Dimmick
(1982) examined the popular music industry from 1974 to 1980 in terms of the
relationship between competition and diversity. The results of the study showed
that, with decreasing market competition, more of the songs which reached the
top ten position were produced and distributed by a few firms, were released by
fewer producers, and the number of hit songs was greatly reduced. The study
discovered a positive link between market competition and media diversity.
The study by Rogers and Woodbury (1996) investigated the relationship
between competition and diversity in the radio industry and it also observed a
positive link between competition and diversity. This study hypothesized that
the number of radio stations could be positively associated with programming
diversity where programming diversity was defined as the number of formats in a
market. But, the study found that a ten percent increase in the number of radio
stations only produced a 1.88 percent increase in the number of formats. Thus,
the degree of programming diversity was not highly responsive to the number of
radio stations in the market. Yet the positive relationship between market
competition and media diversity was confirmed by the findings of the study.
The study by Dominick and Pearce (1976) examined network prime-time
programming from 1953 to 1974 and analyzed 2100 different programs. This study
found that the programming of the three networks were more alike than different,
and that the three would rather maintain the status quo than initiate any change
in the market. The findings of this study also supported a positive
relationship between competition and diversity. Another study that also
investigated the relationship between TV market competition and programming
diversity was conducted by Litman (1979). Litman took a specific event in 1976
to examine the competition-diversity relationship. In terms of ratings, ABC had
been in the third place for a long time. During the 1975-1976 season, ABC
improved the quality of its programming which raised ABC from the third place to
the first in the rating game. Litman took this chance to see how the three
networks, ABC, CBS, and NBC altered their programming strategies after the
surprise of 1976. This study found that there was a significant increase in
terms of programming expense by the three networks after 1976 and that the
schedules of NBC and CBS became more competitive because more original programs
and fewer repeat episodes were aired. Furthermore, Litman also discovered a
large increase of programming diversity after the shakeup of 1976. Therefore,
the results of the study suggested a positive link between competition and
diversity.
Competition and Less Diversity
Though many research findings showed a positive link between competition
and diversity, some studies discovered just the opposite, finding that higher
competition led to less diversity in the media market. The scholars taking such
a view believe that only in a highly concentrated market, can firms have
sufficient financial resources to test different products, develop new products
and pass the costs of innovation to the consumers. Thus, they claim that a
highly concentrated market increases the rate of innovation and leads to higher
media diversity (Burnett, 1992; Schumpeter, 1950). For example, the study by
Burnett (1992) found a negative relationship between competition and diversity
in the popular music industry. He discovered that the market competition of the
record industry from 1981 to 1989 hit an historical high point, but diversity in
popular music also increased substantially. The study by Lin (1995) on TV
programming also showed a negative relationship between market competition and
media diversity. Lin's study analyzed a ten-year period of prime-time programs
aired by three TV networks from 1980 to 1990 to examine the variation of
diversity in the programming. The logic of the study was that, compared to the
1970s, the 1980s presented great turbulence for the three TV networks in terms
of external competition from alternative video media such as cable TV or VCRs,
so this study predicted that the diversity of the three TV networks' programming
would increase from 1980 to 1989. Contrary to the prediction of the study, the
results of the study showed that programming diversity decreased as the market
concentration increased. Therefore, a negative relationship between competition
and diversity was found in this study.
Two studies examining TV market in Taiwan also discovered a negative
association between market competition and programming diversity. The first
study which was conducted by Li and Chiang (1998) analyzed the programs of the
three TV networks in Taiwan from 1991 to 1997 as wellas 1986. Taiwan's TV
market was under rigid regulation for more than twenty years with only three
networks dominating the market. However, with the booming Asia-Pacific
satellite TV industry, the oligopolistic market has been transformed. The
earliest change was brought about by the opening of the five Star TV channels
here in Asia. Star TV launched its free TV service in October, 1991 with one
channel broadcasting in Mandarin Chinese. However, the onset of Star TV did not
bring much competition into Taiwan's domestic TV market because cable TV was not
legalized in Taiwan until 1993. The fiercest competition came after
legalization, when satellite signals could directly enter homes by way of cable.
In addition to Star TV, many other Chinese satellite channels targeted Taiwan
after the legalization of cable TV. The study by Li and Chiang took this
opportunity to examine the relationship between market competition and
programming diversity. They analyzed 44472 programs in seven years and found
that the increasing market competition in Taiwan was associated with a
decreasing diversity on the three networks' programming. The second study that
also examined TV programming diversity in Taiwan was conducted by Liu (1997).
Liu collected prime-time TV programs of the three networks from 1990 to 1996 to
examine the relationship between competition and programming diversity. The
findings of her study were similar to those of Li and Chiang, that is, she
discovered that the degree of programming diversity in Taiwan reduced with
increasing market competition from 1990 to 1996.
Organizational Factors and Diversity
Though most scholars believe that market competition is the critical
determinant for media diversity, some researchers don't take such a view,
arguing that media diversity depends more directly on the organizational process
of that specific media industry rather than on the degree of market competition
(Burnett, 1992; Burnett & Weber, 1989;Denisoff, 1986; Garofalo, 1987; Lopes,
1992 Sanjek, 1988). Burnett and Weber (1989) reasoned that , with the
traditional model, high market concentration led to low media diversity because
when the market was dominated by a few firms, these firms would try to control
the production system and manufacture products which pleased the largest group
of people without offending any minor groups of consumers. Burnett and Weber
observed that this situation was no longer true since the larger firms did not
pursue such a policy. Instead, they gave sufficient freedom to contracting
companies to handle the production part of the records. Each contracting
company had enough autonomy to design the specific records it needed to meet the
taste of its local market. The higher the concentration of the market, the
higher the number of contracting companies each firm had. Therefore, when the
market was more concentrated, a higher diversity of the records was found.
The study by Lopes (1992) which analyzed the popular industry of the US
from 1969 to 1990 supported Burnett and Weber's argument. In this study, Lopes
found that the closed system adopted by the major record companies before 1980
was no longer the organizational strategy in the 1980s. The then contemporary
major record companies developed a new organizational strategy to produce
popular music where instead of the closed system which put a tight control on
the production process of popular music, major record companies employed an open
system for manufacturing popular music. An open system gives the contracting
companies enough autonomy to decide the production of music and the major record
companies are just the financial and distribution institutions. Therefore, the
more concentrated the music market is, more number of producers will be involved
in the production of music, and hence the greater potential for innovation and
diversity. However, Lopes found that though the major record companies during
1983 to 1990 had been consolidated, the diversity in the popular music increased
during this period. Therefore, Lopes' study confirmed that media diversity was
not very much dependent on the degree of market competition, but on the specific
organizational process of that industry. Similar findings regarding the popular
music industry in the US were obtained by Burnett (1992), Denisoff (1986),
Garofalo (1987), and Sanjek (1988). So, in conclusion, the existing literature
in terms of the popular music industry in the US demonstrates that market
competition is not as important as the organizational process of the industry in
inducing innovation and diversity.
The Popular Music Industry In Taiwan
With the growing economy, intensified protection of copyright, and the
encouragement of the government, the popular music industry in Taiwan developed
rapidly in the 1980s. As media organizations become increasingly
internationalized, the 1990s witnesses the domination of the popular music
industry of Taiwan by the six largest transnational record companies. According
to a survey of 1994, Taiwan only accounts for 0.4 % of the world's population,
but the sales of its popular music have reached 1 % of the world's sales, which
constitutes 17.1 % of the Asia's sales (Chi, 1996). The Chinese market has been
a major target by many transnational record companies because there are more
than 1.2 billion Chinese in Asia. Taiwan with a long history of developing
Mandarin Chinese popular music is an attractive base for transnational record
companies for entering the Asian Chinese market. The world's six largest record
companies, Warner Music Group, Sony Music Entertainment, Polygram, Bertelsmann,
EMI, and MCA have already established their branches in Taiwan. With their
better distribution channels and strong financial ability, these transnational
record companies are able to outperform the local companies in Taiwan. Many
local record companies had to merge with these transnational companies in order
to survive in Taiwan. Like the major record companies in the US, these
transnational record companies try to have contracts with as many local
companies as possible to manufacture popular music for the Asia market. In the
1990s, with many local companies merging with the transnational majors, the
concentration of the popular music in Taiwan is growing higher year by year.
More than 40 record companies are operating in Taiwan, but the first sixteen
companies account for 85 % of the total sales in Taiwan. With such a high
market concentration, this study attempts to investigate the relationship
between competition and music diversity in Taiwan (Chi, 1996; Wang, 1999).
The Purpose of the Study
As demonstrated in the literature review, most studies discovered that
media diversity could be attributed to the degree of market competition of that
industry, while recent studies in the record industry found that the specific
organizational process rather than market competition was accountable for
diversity of popular music. The popular music industry has been a fast-growing
industry in Taiwan. With many local record companies having merged with the
transnational majors, Taiwan's market concentration is getting higher in the
90s. This study investigates two questions regarding diversity in the popular
music industry of Taiwan:
R1: Is there any relationship between market competition and diversity in the
popular
music industry of Taiwan ?
R2: Is the open system which was adopted by the major record companies of the
US,
employed by the majors in Taiwan also ?
Research Procedures
Music Diversity
Following the studies by Peterson & Berger (1975) and Rothenbuhler &
Dimmick (1982), this study uses five indicators to define music diversity. The
five indicators are the number of albums on the top ten, the number of new
artists, the number of producers, the number of collections, and the number of
producing companies. The number of albums on the top ten refers to the albums
on the top ten list of Dragon & Tiger Board for each year. There are several
media organizations in Taiwan having the list of top albums for each week,
however, Dragon & Tiger Board supported by Mean Shan Daily is regarded as the
most reliable one. Two lists of top albums are provided by Dragon & Tiger
Board, one is the list of top sales, the other top sales and top votes. This
study uses the list of top sales because the credibility of the list of top
sales and top votes has been frequently questioned. Each week, Dragon & Tiger
Board randomly selects 200 retail stores and calculates the amount of sales for
all albums to finalize the list of top ten albums (China Times, 1996,12,29; Lin,
1995). Greater number of albums on the top list in one year means a higher
diversity in the popular music industry. Unlike Billboard in the US, there are
no lists for singles in Taiwan.
The second indicator of diversity is the number of new artists in the
top-ten lists for each year. New artists are defined as those singers who reach
the top list for the first time. Having more new artists on the top list
indicates a greater diversity of popular music. The literature of popular music
reveals that styles of records are affected very much by their producers,
therefore, the number of producers for each year should be capable of measuring
the diversity of popular music. This study uses the number of producers on the
top list of each year as the third indicator of diversity.
The fourth indicator of diversity in this study is the number of collections.
Collections are republished songs with minor revisions. Collections are the
frequent products during any recession period in Taiwan (Lin, 1995; Wang, 1999).
Therefore, the more collections are published, the less diversity of popular
music will be found. The last indicator of diversity is the number of producing
companies for all the albums reaching the top list of one year. As mentioned in
the literature review, the contemporary major record companies in the US adopt
an open system for the production of popular music. With an open system, the
majors will contract as many publishing companies as they can to do the
production part of records. Innovation and diversity are more likely as there
are different companies for producing music (Burnett, 1990; Lopes, 1992).
Therefore, more producing companies should be associated with higher diversity
of popular music. Furthermore, this indicator will allow the researcher to
measure whether the open system used in the US is also employed in the popular
music industry of Taiwan.
Research Methods
Two research methods were adopted for this study: content analysis and
intensive interviews. Content analysis was employed to examine the diversity of
the albums reaching the top list of Dragon & Tiger Board. Dragon & Tiger Board
started its list of top-ten albums in 1989, so this study collected all the
albums in the top lists from 1990 to 1997 and came up with a sample of 550
albums. The unit of analysis was one album with the five indicators of diversity
as the coding categories. Market competition was calculated by how many albums
were published by the first four and eight companies (CR4 and CR8) in one year.
The results of the five indicators of diversity were compared to find the
relationship between market competition and music diversity.
The second research method of the study was intensive interviews which
provided data to gain more understanding about the results of content analysis.
The focus of intensive interviews was on the relationship between the
transnational majors and their branches in Taiwan. The purpose of the
interviews was to understand how much control the transnational majors had on
their branches and whether the open system mentioned in the literature review
was employed by the major record companies in Taiwan. Six intensive interviews
were conducted with three professional producers and three production managers
in record companies. Among the three production managers, two of them were
working in transnational record companies, and the remaining one in a large
local record company. Of the three producers, the first one was the owner of an
independent production company, the second a freelance producer, and the third a
producer for a branch of a transnational major. The researcher deliberately
selected people with different backgrounds for interviews in order to get a
clearer picture about the organizational process of the record companies in
Taiwan.
Research Findings
Findings of Content Analysis
Five indicators were employed by this study to measure the diversity of
the popular music industry in Taiwan. The first of them is the number of albums
which entered the top-ten lists of Dragon & Tiger Board. Table 1 summarizes the
results of content analysis for this indicator. The data of table 1 shows that
the number of firms producing the albums on the top lists was fluctuating before
1995. However, the number reduced to less than 10 after 1995. In terms of
market concentration, the data of table 1 demonstrate that the ratios of CR4 and
of CR8 also fluctuated before 1993, but they show a steady increase after 1993.
Thus, all the data point to that market concentration was growing higher and
higher during the period of 1990-1997. As for the number of albums reaching the
top-ten position, table 1 shows that the number varies from one year to another
without having any relationship with the degree of market concentration. In
order to make sure that market concentration was not related to the number of
albums, the statistic of Pearson Correlation was conducted to test their
relationship. As expected, no significant relationship was found between market
concentration and the number of albums. Therefore, table 1 displays that market
competition is not correlated with the number of albums which reached the
top-ten position.
Table 1. Number of Albums and Market Concentration
Year 1990 1991 1992 1993 1994 1995 1996 1997
CR4 57.6% 72.6% 67.9% 64.9% 71.4% 75.6% 81.0% 75.0%
CR8 78.8% 90.4% 86.4% 88.3% 91.7% 91.0% 100% 95.2%
Firms 14 12 13 13 15 12 8 9
Albums 66 68 66 70 72 65 71 72
The second indicator of diversity is the number of new artists among the
artists of the top-ten albums. Table 2 has the results of content analysis on
this indicator. As shown by table 2, the number of new artists varies from one
year to another with the number centering on 50s. No increase or decrease in
the number during the period of 1990-1997 was observed. The statistic of
Pearson Correlation was again conducted to ensure that no relationship existed
between new artists and market concentration. The result of statistical
analysis indicated that the number of new artists was not related to the degree
of market concentration.
Table 2. Number of New Artists and Market Concentration
Year 1990 1991 1992 1993 1994 1995 1996 1997
CR4 57.6% 72.6% 67.9% 64.9% 71.4% 75.6% 81.0% 75.0%
CR8 78.8% 90.4% 86.4% 88.3% 91.7% 91.0% 100% 95.2%
Firms 14 12 13 13 15 12 8 9
Artists 59 53 56 51 55 53 53 54
Table 3. Number of Producers and Market Concentration
Year 1990 1991 1992 1993 1994 1995 1996 1997
CR4 57.6% 72.6% 67.9% 64.9% 71.4% 75.6% 81.0% 75.0%
CR8 78.8% 90.4% 86.4% 88.3% 91.7% 91.0% 100% 95.2%
Firms 14 12 13 13 15 12 8 9
Producers114 120 107 106 136 145 196 235
Average 1.73 1.85 1.75 1.66 1.94 2.30 3.02 3.26
The third indicator of diversity is the number of producers for the albums
which reach the top-ten lists. Table 3 reports the results of content analysis
of this indicator. As demonstrated in table 3, the number of producers for the
top-ten albums increased rapidly from 1993 to 1997 with the 1997 having 235
producers. In order to better understand the relationship between the number of
producers and market concentration, this study calculated the average number of
producers for each album in one year. The average number of producers also
showed a steady increase from 1993 to 1997. The statistic of Pearson
Correlation was conducted to examine the relationship between the two variables.
The results found that CR4 was significantly correlated with the average number
of producers with R value = .737 and P < .05. Furthermore, CR8 was discovered
to be significantly related both with the number of producers (R = .742, P <
.05) and with the average number of producers (R = .775, P < .05). The
findings
of this indicator suggest that the more concentrated the market is, the more the
number of producers for the top-ten albums.
The fourth indicator of diversity is the number of collections.
Collections are the albums which are reproduced by the publishing companies with
minor revisions. In theory, when more collections are produced in one year,
there will be less diversity in the music diversity.
Table 4. Number of Collections and Market Concentration
Year 1990 1991 1992 1993 1994 1995 1996 1997
CR4 57.6% 72.6% 67.9% 64.9% 71.4% 75.6% 81.0% 75.0%
CR8 78.8% 90.4% 86.4% 88.3% 91.7% 91.0% 100% 95.2%
Firms 14 12 13 13 15 12 8 9
Collections
12.1% 7.4% 21.2% 7.1% 18.1% 16.9% 11.3% 16.7%
Table 4 summarizes the data of this indicator. This study used the number
of collections of each year and divided it with the number of the albums
reaching the top-ten lists and came up with the percentage of collections for
each year. As shown in table 4, there was no specific pattern for the
percentage of collections from 1990 to 1997. The statistical analysis of
Pearson Correlation also indicated that no significant relationship was found
between market concentration and the percentage of collections.
Table 5. Number of Producing Companies and Market Concentration
Year 1990 1991 1992 1993 1994 1995 1996 1997
CR4 57.6% 72.6% 67.9% 64.9% 71.4% 75.6% 81.0% 75.0%
CR8 78.8% 90.4% 86.4% 88.3% 91.7% 91.0% 100% 95.2%
Firms 14 12 13 13 15 12 8 9
Producing Companies
36 29 33 35 41 35 34 38
Ratio 2.57 2.42 2.54 2.69 2.73 2.92 4.25 4.22
The last indicator of diversity is the number of producing companies for
each year. Table 5 reports the data of this indicator. The data of table 5
indicate that the number of producing companies fluctuated from year to year
without a concrete pattern. In order to obtain a better picture of this
indicator, the researcher used the number of producing companies and divided it
with the number of firms to get the ratio between the firms and the producing
companies. With this ratio, a clear pattern appeared from 1990 to 1997 for the
producing companies. Although the number of the firms publishing the top-ten
albums showed a gradual decrease from 1990 to 1997, an opposite pattern appeared
for the number of producing companies which actually produced these top-ten
albums. The statistical analysis of Pearson Correlation discovered that the
ratio between the producing companies and the firms was significantly correlated
both with CR4 (R = 0.662, P < .05) and with CR8 (R = 0.763, P < .05). The ratio
between the producing companies and the firms was gradually increasing from 1990
to 1997, indicating that with an increasing market concentration, more companies
were involved for the production of the records. This finding implies that maybe
the open system adopted by the majors in the US is also used by the record
companies in Taiwan.
Findings of Intensive Interviews
Six intensive interviews were conducted with a focus on the relationship
between the publishing firms and their contracting companies. The data of
intensive interviews point to two factors which most affect the diversity of the
popular music industry in Taiwan. According to these interviewees, the two
factors are the legalization of cable TV in Taiwan and the arrival of
transnational record companies.
Legalization of Cable TV. Promotions are one of the critical steps for the
records to be accepted by the public. Before 1993 when cable TV was not legal
in Taiwan, the popular music industry had to rely heavily on the three TV
networks for the promotions of their newly produced records. Since the slots of
the three networks were limited, it was difficult for all the newly produced
records to be on TV. All the record companies competed very fiercely for the
slots on the three networks. In addition to commercials, these record companies
tried to have their singers sing in the variety shows of the three TV stations
in order to display their new songs. To sing in variety shows is an effective
way for the newly produced records to be accepted by the public since the
variety shows receive high viewing ratings in Taiwan. Before the legalization
of cable TV, all the record companies paid a lot of money to have their singers
in the variety shows, so the promotions became very expensive. All the record
companies had to be very selective in what had to be promoted. The media
environment of Taiwan underwent great transformation after the legalization of
cable TV in 1993. Right now, more than 60 TV channels are available to the
viewing public, among which three of them are music channels. The three music
channels are V channel of Star TV, MTV, and The Music Channel of Chinese
Satellite TV, the first two of which come from the transnational media
organizations. Furthermore, the penetration rate of cable TV in Taiwan is very
high. Cable TV reaches more than 75 percent of TV homes (Li & Chiang, 1998;
Chiang, 1998), therefore, promoting records on cable TV is very effective and
much less expensive. With more channels available, more records are produced
and promoted, thus, more choices are offered to the public. In addition, with
many international satellite TV channels appearing on cable TV, a great deal of
foreign records are displayed through TV, providing stimulation for the
domestic record companies. According to the interviewees, the popular music
industry of Taiwan became prosperous after 1993 with many more types of records
produced, indicating the increase in the diversity of popular music after 1993.
Arrival of Transnational Majors. As mentioned previously, transnational record
companies started their investments in Taiwan from 1990. At the early 1990s
when these transnational record companies first came to Taiwan, they ran their
branches with a tight control. Later, these transnational companies discovered
it to be ineffective since the popular music of Taiwan is very much localized.
Unfamiliar with the unique tastes of the public in Taiwan, these transnational
companies could not respond to the changing needs of the market very quickly.
With an eye to gaining profits, these transnational companies found that the
best way was to have a contract with many local companies and to give them
sufficient autonomy for the production of the records. In this way, these
transnational companies were able to both maximize their profits and respond to
the changing market quickly. With this realization, these transnational majors
tried to have contracts with many local companies used them as their labels.
They also supplied enough freedom for them to design the records for publishing.
What these transnational majors did was to establish a common goal with their
contracting companies regarding how much profits was to be made in each year.
With many companies under contract, the market concentration has increased, but
the competition has not decreased because these companies compete with each
other. Therefore, the open system adopted in the US is also being employed in
Taiwan. Furthermore, these interviewees pointed out that with increasing market
competition in Taiwan, the record companies are trying to get more people
involved in the decision making process of the popular music. In the past,
using single producers for albums was the norm in the popular music industry.
With more uncertainty existing in the market, the present practice is to get
more than one producer for one album in order to reduce the risk. Using these
strategies for risk reduction, these interviewees suggested that more diversity
of music must have been produced after 1993 since these strategies were and are
favorable for innovation and diversity.
Discussions and Conclusions
Two research questions were investigated in this study, one was to examine
the relationship between market competition and music diversity, the other the
organizational strategies adopted by the major record companies in Taiwan.
Content analysis and intensive interviews were used to explore the two research
questions. The findings from content analysis show that only two of the five
indicators of diversity were discovered to have significant relationships with
market competition. The two indicators are the number of producers, and the
number of producing companies. The number of producers, in particular, the
average number of producers of one album was discovered to be negatively
correlated with the degree of market competition. In other words, with fewer
companies controlling the market, more producers were involved in the production
of popular music. In addition, this study also discovered a negative
relationship between the number of producing companies and the degree of market
competition. When the market was taken over by a few big organizations, more
companies were found to be responsible for the production of popular music.
However, the remaining three indicators of diversity did not show any
relationship with market competition. Therefore, it can be concluded that a
negative relationship between market competition and music diversity was
discovered by the study, but this negative relationship was only partially
supported by the findings of the study. In terms of the organizational
strategies used by the major record companies in Taiwan, this study found that
the open system adopted in the US was very much employed by the major record
companies in Taiwan as the findings of content analysis and of intensive
interviews provided a positive answer to this question. As for the relationship
between market competition and music diversity, all the interviewees were
positive that more music diversity was brought about by the higher market
concentration after 1990. However, these interviewees also pointed to other
factors which were crucial factors for the increase in the diversity of popular
music. These factors are the law environment of Taiwan and the organizational
strategies used by the record companies.
Two implications are suggested by the findings of the study: One is the
inadequacy of the dimensions of music diversity used in this study. The results
of content analysis indicated a negative relationship between market competition
and music diversity, but only two of the five indicators confirm this
relationship. Therefore, it may be not enough to measure music diversity by the
five indicators of this study. More indicators should be adopted to get a
clearer picture about the relationship between market competition and music
diversity. For example, the theme of each album may be an important indicator
for music diversity. The data of the popular music are not systematically kept
in Taiwan, so this study was unable to do this kind of analysis. The other
implication suggested by the study is that there are more factors affecting the
diversity of popular music. In addition to the degree of market concentration,
this study finds that other factors such as environmental elements or
organizational process have crucial impact on the degree of music diversity.
Therefore, future studies should try to explore more factors rather than
concentrating on the factor of market competition to understand the issue of
music diversity.
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