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A Classic Case Study
June 28, 2007
As you have probably known by now, I love music, all kinds of music. When life was good, I used to buy about 10 CDs a week. Indeed, there weren’t that many new releases to satisfy my appetite for music - I actually ended up buying the same CDs a few times or buying releases from artists whom I had never heard of. Crazy indeed. There are still some CDs hidden somewhere in my basement which I bought but to which I had never listen. Even when life wasn’t that good, I still bought CDs although very selectively - one CD would cost me 2 days’ wages.
Take a look at last.fm - merely a community for music lovers but is worth US$280 million. The money-making potential for the musical industry, needless to say, is immense. But the irony is that, despite its potential, the record industry has been on a rapid decline. CD sales have plummeted sixteen percent last year and that’s after seven years of near-constant erosion.
Every MBA student will have to learn about SWOT in their 2nd year’s Strategic Management course and the record industry provides a vivid example of how an industry, despite its immense potential, is going down the ditch simply because they fail so miserably to react to the environmental changes. They have resorted to suing their valuable customers (in the name of privacy protection) and even to the low-class act of poisoning torrents (again in the name of fighting privacy) in order to protect their profits. For nearly 10 years, they stubbornly refuse to acknowledge that the only problem is that there are simply too much money for the middleman. For every single dollar we pay for each CD, over 95% goes to the middleman. The artists? They are only useful when the middleman needs them for their ‘Fight Against Privacy’. Big labels fail. Independent labels flourish. The greed of the middleman. RIAA has recently sued 23 individuals for sharing their music over the internet in Ireland - it was not the first case and it wouldn’t be the last but would it really help the record industry.
The business model has changed. The artists can and will make money by working hard (in gigs) as any 3rd rated artists can make a perfect studio album given the technology we have. The record industry, instead of fighting the phony war against privacy should turn around and support music sharing as it will only improve ticket sales for concerts. The truth is: whether I have downloaded a CD has absolutely no bearing on whether I will eventually buy it.
Posted to General at June 28, 2007 07:22 PM :
Furl It!
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Comments
At a meager 400 hundred CD’s to my name, my passion for music may not be showing. So much is changing, and in the last year, I will admit I-Tunes has had my attention. I don’t mind this transitional relationship with Apple and the overlords of greed. For now I-Tunes helps me pick through the music and find tasty new directions from artists I do and do not know. Yes, I have added Last FM because it is another transitional platform that allows music and new and unknown to find me.
With artists,bands both good and terrible out there, we will still need a forum to shout out what is good and warn of posers. No one needs the record companies any more, but that alone will change how we make rock stars and divas. What will that forum be?
posted by: Driver8 ![[TypeKey Profile Page]](http://www.hollymolly.net/nav-commenters.gif)
at July 17, 2007 03:08 AM
“The Internet, and downloading, are here to stay… Anyone who thinks otherwise should prepare themselves to end up on the slagheap of history.” - Janis Ian
posted by: missgugu at July 25, 2007 07:04 PM
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