Porter’s Five Forces and the Taylor Swift Cinematic Universe

Porter’s Five Forces is a model for assessing profitability in a market.

People always ask how this can be applied in real life. I’ve found it to be super helpful when developing a category strategy or planning a new, large project. It can seem quite abstract until you apply it to real life situations, so here it is in the music industry: Porter’s Five Forces and the Taylor Swift Cinematic Universe (TSCU).

Buyer Power

Most artists’ income comes from live shows and sales of merchandise. This means Taylor’s customers are the individuals who listen to her music and who are likely to spend money on concerts etc.

This means Taylor has millions of small customers and no single customer has any power to influence pricing. For example, I can’t call up Ticketmaster and negotiate the price of my Eras Tour ticket (I wish I could!).

However, each of these individual customers can switch easily between suppliers of music. There are thousands of artists to listen to and lots of demands on their personal disposable income.

Overall, Buyer Power in the industry is small and means Taylor has the power to set prices according to market trends and customer demand.

Supplier Power (Taylor’s Version)

The suppliers of musical artists are companies who publish and promote music for listeners. These suppliers have an iron grip on music publication and it’s difficult for an artist to reach listeners without them.

Think of how you consume music: Can you do it without Spotify, Apple Music or a record label that sells physical vinyls and CDs?

Artists such as Prince, Def Leppard and Bowling For Soup have tried to take control of their own music but it has taken an artist with the influence of Taylor Swift to make re-recording their records notable and profitable.

Similarly, streaming platforms such as Spotify and Apple Music dictate the revenues given to artists per stream.

In the TSCU, suppliers are hugely powerful.

(P.S. The set up of Taylor show’s is always incredible, if the team ever need some help procuring it, I’m definitely ready for it…)

Threats of Substitutes

We’ve pinpointed that an artist’s customers are the individual listeners and the next question to ask is what substitutes there are to listening to their music.

When considering the Threat of Substitutes in Porter’s Five Forces model, we have to consider direct substitutes and substitutes from other industries. For example, a substitute for owning a car is a good public transport network.

In which case, the substitutes for listening to Taylor’s music include:

·       Music from other pop artists

·       Music from other genres

·       Radio

·       Podcasts

·       Audiobooks

As the customers are consumers, there’s a large range of ways that they could be spending their time and money.

This is Taylor Swift looking DIRECTLY IN BETH’S EYES and you can’t convince her otherwise

Threats of New Entrants

This part of the model asks us to consider whether it’s easy for new competitors to enter the market. If it’s difficult, it’s because there are lots of barriers to entry. Barriers to entry normally include factors like a high set up cost, customer loyalty and lots of regulations.

If we look at the history of pop acts, it would be easy to assume that popstars are replaced regularly, suggesting that there’s a high threat of new entrants.

New technology such as streaming platforms and social media sites like TikTok are making it easier for artists to reach listeners all over the world. Additionally, AI technology has been used to generate music, threatening the livelihoods of artists.

Perhaps that’s why Taylor has built high levels of loyalty from her fans, which can be seen by the quantity of fans who have supported the re-releasing of old music.

Even with that loyalty, I’d still argue that there is a high threat of new entrants to the market.

“Remember: If you get asked in an exam, Porter’s Five Forces is used to analyse the micro environment. STEEPLE is used to assess the macro environment.”

Competitive Rivalry

The fifth and final Force is the level of competitive rivalry in the market. This force asks us to analyse how much each organisation in the market is fighting against each other, causing them to lower prices to keep customers.

An example of a market with high competitive rivalry is supermarkets in the UK. Supermarkets are constantly fighting for each and every customer with claims of lower prices or higher quality than their rivals. This forces down prices in the industry.

If we look at the Pop music industry, we can see that the artists are not competing in this way. They will collaborate on songs together and attend each others’ live shows, showing support for their music rather than competing for the same customers.

Putting it all together

So overall, how profitable is it to be Taylor Swift?

There’s a lot of factors pushing down profits for individual artists in the industry: high supplier power, threats from new entrants and lots of substitutes. However, successful artists have been able to leverage their fans to build up high customer loyalty and they don’t have high rivalry with their competitors, allowing them to sell high volumes of content.

 What do you think, which of these forces have enabled Taylor to be so profitable and dominate the industry? 

How do our short courses benefit employers?

I haven’t met a Procurement professional that doesn’t want to keep learning and keep expanding their ideas on how to approach the supply chain. One of the problems that they encounter though is having low training budgets and needing to convince their senior leaders to pay for CPD.

We’re lucky enough to be a small part of Broadway Colours’ success story and we’d like to share to help you to convince budget holders of the value of procurement CPD to the whole company.

Broadway Colours is a manufacturer of colour and effect masterbatches, plastic compounds and rotational moulding powders. They’re an SME based in Suffolk and the team is so passionate about leaving a good impact on the world and reducing their environmental impact. We delivered a sustainability short course on site with their Procurement team.

It was a full day course and covered topics such as measuring Scope 1, 2 and 3, engaging and motivating key stakeholders and practical steps to incorporating sustainable procurement into sourcing processes.

We had great discussions on how to make an impact as an SME and what risk factors there might be in the supply chain.

Since then, they have been awarded EcoVadis Gold!! A fantastic achievement that shows the commitment of the whole organisation to sustainability principles.

Whilst we can’t take credit for their success, we hope that this inspires you to keep learning, keep improving your procurement processes and to take on challenges. We love our community of Procurement professionals and East Anglian businesses, especially Broadway (even if they are over the border in Suffolk).

ABA has joined the Norfolk Anti-Slavery Network!

We’ve joined the Norfolk Anti-Slavery Network (NASN)’s Business Group. The group is led by the Police & Crime Commissioner’s Office under the ‘hidden victims’ fund.

The business group exists to raise awareness of modern slavery and share best practice for how to identify, tackle and prevent modern slavery in Norfolk.

There are four types of modern slavery:

• Forced labour - When victims are controlled in where and how they work, with the money being taken by another

• Bonded labour - When victims are forced to take on some kind of debt which restricts their ability to leave a workplace

• Child labour - Children who are forced to work

• Human trafficking - The forced movement of people from one location to another

There are an estimated 49.6 million people in modern slavery across the world.[1] High risk areas include agriculture, mining for precious metals and textiles.

It’s easy to assume that slavery is a problem for further down the tiers of our supply chain, but it happens here in the UK, too. In 2023, there were 17,004 potential victims of modern slavery were referred to the Home Office. Of these, 25% were British nationals and 76% were male.[2] 

In Norfolk, 269 victims were identified between July 2022 and June 2023 and half of the victims were young people.[3]

Procurement professionals are in a really important place in our organisation because we have a view of our whole supply chain and make real changes to try and reduce the world’s dependence on modern slavery.

Procurement professionals are in a really important place in our organisation because we have a view of our whole supply chain and make real changes to try and reduce the world’s dependence on modern slavery.

The objectives of the NASN are to:

• Identify, support, protect and empower victims of modern slavery and human trafficking.

• Support agencies, the business community and local organisations who are tackling MSHT (modern slavery and human trafficking) by ensuring the right skills, knowledge and processes are in place.

• Promote collaboration and joint working amongst partner organisations and community-based agencies.

• Increase reporting of suspected MSHT.

• Raise awareness of MSHT within the communities of Norfolk

“In Norfolk, 269 victims were identified between July 2022 and June 2023 and half of the victims were young people.”

— Norfolk Anti-Slavery Network

Some signs of modern slavery include:

• Being reluctant to interact with others

• Appearing frightened or withdrawn

• Working excessively long hours

• Fear of authorities

• Limited opportunities to move freely

• Wearing the same clothes all the time

CIPS Programme and Modern Slavery

In the CIPS course, Procurement professionals are also pointed towards international bodies who are working to reduce modern slavery across the globe. One of these is the International Labour Organisation, which is an arm of the UN devoted to promoting social justice and human rights. It brings together governments, employers and workers and recognises that no single organisation can stop exploitation.

Many British businesses with global supply chains are part of the Ethical Trading Initiative. These include Sainsburys, Primark, M&S and TfL. You will come across the ETI Base Code in your CIPS studies, which has nine principles, including:

• Freedom of association (trade unions)

• Safe working conditions

• Paying a living wage

Closer to home, we’re looking for other businesses in Norfolk who would like to join the business group. In particular, if you operate in high risk industries such as agriculture and food production. Get in touch with Beth who can pass you on to the right people or contact NASN directly through their website.

What to Do if You’re Concerned About Modern Slavery

If you are worried about a potential victim of modern slavery and they are in immediate danger, always call 999 and speak to the police.

Other useful contacts include:

Modern Slavery Helpline (open 24/7) 08000 121700

GLAA - Gangmasters Labour and Abuse Authority Tel: 0800 432 0804

EAS - Employment Agency Standards Tel: 020 7215 4477

Email: eas@beis.gov.uk

[1] Hope for Justice https://hopeforjustice.org/modern-slavery/

[2] Modern Slavery: National Referral Mechanism and Duty to Notify statistics UK, end of year summary 2023 https://www.gov.uk/government/statistics/modern-slavery-nrm-and-dtn-statistics-end-of-year-summary-2023/modern-slavery-national-referral-mechanism-and-duty-to-notify-statistics-uk-end-of-year-summary-2023

[3] https://www.norfolkantislavery.org/