How Music Works

Takeaway #1: Create quality and value for the consumer

Music, the intellectual property of recording artists, was work that sold for a substantial price. The industry sold CDs produced for a dollar, for a retail price of $16.95 (or more). The artists and the industry would profit considerably even if the consumer bought the CD for one good song. The industry benefited from offering little value to the customer. They recognized trends in music, but ignored young patrons financial limitations and had an indifference and ignorance when it came to the emerging power of the internet.

This corporate profit-driven perspective often results in tunnel vision. We become attached to what drives profits and ignore the point of view of the consumer. When we resist technology that reduces profit and ignore innovators, we may lose our customers. Be aware of the early adopters—new technology often fails, but if we recognize innovation that improves lives, saves money, or makes life more convenient or enjoyable, we can identify new opportunities. It is important to understand not only the interest of our customers but also their worldview. If people feel taken advantage of, they easily justify actions they know are wrong. Sometimes moral judgement depends as much on fact as it depends on individual understanding and perspective.

Takeaway #2: Be open to exchange of ideas and technology

Those who started file-sharing and music piracy were culturally opposed to selling the pirated music, movies, or software—their mission was driven by an ideological desire for community, not profits. Many people spent their money and time on purchasing and uploading files with no financial gain. Their goal was to archive music or share information and connect with a community as often as it was to disrupt the unreasonably affluent entertainment industry. The average person did not understand why something amazing that was accessible, convenient, available and shareable for free should be illegal.

People are wired to think about themselves, yet focusing on the wants and needs of the customer is the best way to protect your business and help it flourish. The more open we are to free exchange of ideas the more aware we become of developing technology and the changing perspectives of our customers.

The internet has connected us as we have never been connected before. We can exchange ideas, information, programs, and files, with anyone with an internet connection. The internet eliminated many gatekeepers of the past—the record labels, publishers, etc. who ensured the creators of intellectual property profited from their work, and who chose who would profit and how much. The open exchange of information allows ideas to win instead of people—meritocracy, not politics, determine earnings. Consumers have the same amount of disposable income whether or not we restrict their choices. With more options and information available, people invest in the most useful ideas and products. If we can move beyond gatekeeping to facilitate connections, we open up more possibilities for significant innovation.

Takeaway #3: Recognize the opportunity in every crisis

Now, music is almost entirely digital, and piracy is largely a problem of the past. Advertisers pay for exposure on music videos previously produced to sell albums. The videos are now a source of free music to the public. The public willingly pays for quality streaming and downloaded mp3s. The cost of a single CD exceeds most monthly subscriptions to music, movies, books, software, and even classes. These are all affordable and widely available online. The music industry is not as prosperous as it once was, but the industry has found new ways to provide the consumer with what it wants while making a profit.

The Chinese character for crisis includes the character for “danger” then the character for “opportunity.” Often in a crisis, we sense the danger and forget to look for the opportunity. Our reaction may be denial and avoidance, like the music industry’s response to piracy. The public at large saw the opportunity and ignored the danger. The law protected the music industry, but people did not understand the law or identify with extravagant riches flaunted in the entertainment industry. Understanding the customer’s perspective and recognizing new opportunities has facilitated change that benefits both the consumer and the industry.