When the Music’s Over…Decline of the Record Industry


Michael Jackson’s death reminded me of the crucial role his mega album Thriller played in saving the recording industry in the 1980s.  Only no one knew at the time that Thriller only delivered a musical Prague Spring, postponing the inevitable decline of a once powerful and very profitable industry.

Appetite for Self-Destruction, delivers an excellent study in how new technologies can disrupt traditional industries and how management hubris can blind them to effectively respond. The author, Steve Knopper, convincingly and breezily documents the decline of the music industry from the golden age of the CD through the rapid adoption of illegal file sharing and digital downloads to where we are today:  Big Music on life support.

It is now cliché that traditionally-minded executives in static markets rarely “get” technology making them vulnerable to disruptive technologies and business models like Napster, Craigslist and iTunes.  This may be true but the real lessons are more subtle than that.  Knopper points out that many executives did get “it” and substantially funded new digital investments and considered strategic links with the likes of Apple.  Furthermore, in the early stages of the digital revolutions, Big Music launched competing models to iTunes and Napster. Finally, some of the most impressive technology talent around in the 1990s was in the music business so there was no lack of great minds about.

So why did seemingly good intentions, early market entry and significant investment not translate into winning execution? Likely, many recording executives fell victim to a lethal combination of rich compensation incentives and career risk, if they did not meet aggressive corporate goals. In other cases, an industry drunk on 30 years of success would find it very difficult to rapidly evolve its strategy, business model and culture in the face of threats by twenty-something year old dot commers and while still continuing to bank significant profit.   More prosaically, some failure could be attributed to a weak understanding of emerging customer needs and poor product development.  Regardless, until corporations learn how to build in the capability and impetus to change as well as figure out how to design compensation plans and goals to balance short and long term needs, Appetite for Destruction will be repeated in other industries.

For more information on our services and work, please visit us at www.quantaconsulting.com

Advertisements

No comments yet

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: