¶ 1 Leave a comment on paragraph 1 0 One of the most enduring myths about the “digital music revolution” concerns the level of technological cluelessness and absence of foresight within the music industry at the close of the 20th Century. Whether you see them as victims or villains, canaries in the coalmine or endangered dinosaurs, you probably believe, as most do, that the major record labels were taken unawares by the new century’s innovations, and that the unforeseeable consequences of digital sharing are at the root of any problems the industry faces today.
¶ 2 Leave a comment on paragraph 2 0 If so, you’re in good company. Most journalists, academics, and other chroniclers of the Internet age have repeated this myth so frequently over the past 15 years that it’s become common knowledge. The industry was “unprepared” and “surprised” by MP3 and peer-to-peer file sharing technology, even “blindsided” by it (a term I myself have invoked in prior publications). This myth functions primarily to generate sympathy and support for the decisions the major labels and other institutions have made in the wake of these innovations; after all, we may reason, they did the best they could on short notice under difficult and unprecedented circumstances. Had they seen the potentially transformative effects of digital technologies on the horizon, they could have made adequate preparations, and spared themselves and us a lot of trouble.
¶ 3 Leave a comment on paragraph 3 0 The problem is, this myth has very little basis in fact. In reality, the record industry knew better than anyone what the potential effects of digital and networked technologies would be, and still failed to act in a proactive and responsible manner. RIAA head Hilary Rosen acknowledged this much as early as 1999, a few months after the launch of pioneering peer-to-peer file sharing service Napster and subsequent to the record labels’ defeat in a suit against MP3 device manufacturer Diamond Multimedia. In Rosen’s words, “[I]t’s not like MP3s caught us by surprise or anything. We’ve been talking about this for more than 10 years.” Even in retrospect, record industry executives have conceded that they suffered not from a lack of foresight, but rather from a lack of vision. As Doug Morris, then the CEO of Universal Music Group, told Wired magazine in 2007, there’s “a misconception writers make all the time, that the record industry missed this. They didn’t. They just didn’t know what to do.”
¶ 4 Leave a comment on paragraph 4 0 Yet, if Morris’s account is descriptively accurate, it doesn’t provide much in the way of analytical self-reflection. Why did the industry fail to act proactively on its market intelligence? Was is simply, as Morris suggested in his Wired interview, that “there’s no one in the record company that’s a technologist” and “we didn’t know who to hire”? This seems unlikely. First of all, as I argued in Chapter 2, technological innovation was hardly an unfamiliar force within the music industry; to the contrary, it is a constitutive element of the business, and music distribution technology has always been in flux. Secondly, it is a matter of public record (and a fact to which I can personally attest, having known them) that the major labels employed a number of celebrated technologists and tech strategists during this period in time, including inventors and innovators such as Albhy Galuten, Ted Cohen and Larry Kenswil.
¶ 5 Leave a comment on paragraph 5 0 If we rule out ignorance and inexperience, then, a far more likely explanation of the music industry’s failure to meet the challenges of digital media head on can be found in its institutional culture and practices, or what we might metaphorically understand as the “psychology” of the companies involved. In public discussions of these matters, I’ve often used the framework of Elisabeth Kübler-Ross’s famous “five stages of grief,” which describes the process whereby grieving individuals deal with death and other forms of serious loss. This is not a flippant comparison; having advised, researched and reported on the music industry as an analyst, journalist and academic between 1997 and the present day, I believe that it was precisely the sheer scope of potential market transformation implied by digital and networked technologies that provoked the music industry’s strategic paralysis.
¶ 8 Leave a comment on paragraph 8 0  Bhatia, G. K., Gay, R. C., & Honey, W. R. (2001). Windows into the future: How lessons from Hollywood will shape the music industry. Booz Allen & Hamilton. Downloaded from http://www.boozallen.com/media/file/76799.pdf
¶ 9 Leave a comment on paragraph 9 0  Mann, C. C. (1999). The MP3 revolution. The Atlantic; Hughes, J. (2005). On the Logic of Suing One’s Customers and the Dilemma of Infringement-Based Business Models. Cardozo Arts & Entertainment Law Journal, Vol. 20; Lefsetz, B. (2011). Tone-deaf businessman. The Lefsetz Letter. Downloaded from: http://lefsetz.com/wordpress/index.php/archives/2011/12/30/tone-deaf-businessmen/
¶ 12 Leave a comment on paragraph 12 0  Mnookin, S. (2007). Universal’s CEO once called iPod users thieves. Now he’s giving songs away. Wired, Nov. 27, 2007. Downloaded from http://www.wired.com/entertainment/music/magazine/15-12/mf_morris
¶ 15 Leave a comment on paragraph 15 0  Other commentators have used this framework as well, including Silver (2009) http://www.youtube.com/watch?v=2RA6pAk7n88; and McEmber (2011). The publishing industry, the recording industry and the five stages of grief. Xavier Journal of Politics, II(1); pp. 20-32. To my knowledge, I was the first to make this comparison publicly, in presentations I gave as keynote speaker at the Halifax Pop Music Explosion in 2008 and elsewhere between 2006-2010. A copy of this presentation can be found at http://www.slideshare.net/originalsinn/opposite-day-music-in-the-network-age.