Why The Record Labels Are Still Confused: The Difference Between Transformative And Incremental Change
from the the-innovator's-dilemma dept
The invention of cassettes, and 8-track cartridges was an incremental change - suddenly there were more ways of selling hard copies of recorded music. More places to play them, new machines needed, new possibilities for the length of music that could be issued in a single entity (90 minute cassettes were pretty standard, and some enterprising labels took to reissuing 2 albums as one on cassette, thus breathing new life into back catalogue.)But, of course, what we're seeing now is totally different. The internet presents a disruptive or transformative change.
The same happened again with CDs - more incremental change - the chance to pretend it was higher resolution than vinyl (a lie) that it was indestructable (a lie) and that you could take it anywhere with you (true). CDs were a breath of life to a fairly static industry - suddenly, all the people who were teenagers in the 70s at the dawn of stadium rock were now successful 30-somethings with disposable cash and a deeply fragile sense of self.
When you take an industry that has 4 big costs - recording, manufacture, distribution, promotion - and remove 3 of them, that changes everything. All of the assumptions about how much it costs to make a record, what infrastructure is needed to make a sales team effective, who needs to own the trucks and delivery guys who take your product to shops - they all disappear. They are all now choices that you make, not assumptions.The problem for the industry is that it structured its entire business around the idea that those four big costs are a big problem that any musician needs help with -- and they're willing to sign their lives away to get that help. But the transformative change that occurs with the internet is that much of that becomes significantly less expensive, and the need to sign your life away becomes not a need, but a choice -- and the businesses that were built to only work if musicians signed their lives away suddenly find themselves in trouble.
As in the innovator's dilemma, however, the labels still don't recognize this. They can only think in terms of the incremental change of "how can we sell more units of music." That's the only change they've ever really known. They're not prepared for a situation where the selling of music may not even make sense, and the level of control over an artist has changed dramatically. But they still view -- as is often the case in the innovator's dilemma -- as something to be dismissed. The fact that musicians can record for less money... well, it's not as good as having a record label bankroll you hundreds of thousands of dollars. True, but it's pretty damn good and getting better. The fact that you don't have to go through an expensive processing plant to print CDs? Well, it may not look quite as nice, but the technology again gets better and cheaper everyday. The fact that the music can be distributed and promoted for free online? The labels really still don't quite get that part of it, but it's been working great for musicians who know how to use it to their advantage.