Tag Archives: limewire

What’s the CD maker to do?

Nostalgia: We humans seem to be drawn to it. Most of us have a soft spot in our heart for the good old days. Remember when vinyl was in and you would sit around as a kid listening to your favorite bands, staring at the album cover, the inner liner, the record sleeve and so on?

CDs replaced vinyl records and the distribution of music on CDs reigned supreme in the 80s, 90s and first half of the 00s. Millions and millions of CDs were purchased each year by people of all ages in the $15 to $18 price range. The record (CD) labels actually took something away from us. Those of us in our 40s or older will remember the little 45 records we had when we were kids. The radio hit was on Side A and another less popular song was on Side B. In those days you were able to buy just two songs. The CD industry came along with a more profitable business model for themselves. Someone in a board room somewhere said, “we can’t make any money on two song CDs.” So choice was subverted for profits. The record industry bundled 10-15 songs on one disk and unabashedly charged us $15 to $18 per CD. You may have only wanted one or two songs but you were forced to buy 10 or 12. Great for the music companies, crappy for the consumers.

Along came this digital music format called MP3. The music industry brushed it off as “geekdom” fodder because MP3s had no distribution. That is until Napster came along. One guy, with an interest in sharing his music collection and allowing others to share their music on his server changed the music industry forever. The model evolved into peer-to-peer networks in an attempt to alleviate the issue of illegally distributing copyrighted content.

The music industry, instead of embracing the Internet and the revolutionary way it was completely changing business upon business decided to litigate instead of innovate. They chose to sue companies developing music distribution software like Napster and Limewire, as well users of digital music too. The press had a field day with this, describing music execs raiding college dorms to apprehend the music pirates who were illegally sharing content.

This was the beginning of the end for the highly profitable CD. Apple, along with Amazon, Rhapsody, Yahoo! and others struck deals with the content providers to legally distribute songs for $0.99 each. They unbundled the CD and allowed fans to download just the songs they wanted. For the first time the artists (especially new ones) had a choice. It was no longer paramount to get a band “signed” with a label. Musicians who embraced this technology gave their fans “choice”. Forward thinkers like Radiohead and Linkin Park let fans decide what to pay for their music. New fans just experimenting with these bands can download samples for free. Serious fans have more selection than what stores made available as bands packaged music downloads with concert tickets, videos, books, clothing, etc.

Most people know this story. There are a similar stories unfolding in many other industries, not the least of which is the newspaper industry. The Internet allows anyone to create content and distribute it in ways that were never possible before. This blog post is a good example of that.

So what’s happening in your industry and your business? Are you a content creator? Are you a distributor? Do you sell goods and services? What can we learn from the demise of the CD, your local bookstore and newsstands across the country?