[Solar-general] negocios en la revolución digital: adaptación o muerte

Mar Feb 15 13:59:32 CET 2005

Lo mas interesante es como un ejecutivo de Sony admite que se quedaron afuera
del negocio de reproductores MP3 por una mentalidad demasiado "propietaria"
respecto de los derechos sobre la musica.

How Apple saved the music biz

John Naughton
Sunday February 13, 2005
The Observer

The Apple iTunes store has been selling a million tracks a day, it was announced
recently. And no, that is not a misprint: a million a day. This will come as no
surprise to readers of this column. Quite why the music industry didn't spot the
opportunity will be the subject of innumerable MBA dissertations in the years to
come.
But for now the significant thing to note is that it was a computer manufacturer
and not a record company that cracked the problem of providing legal music
downloads. On a global scale, you might say that the inadequacies of record (and
movie) companies is a trivial issue. They make a lot of noise and command much
public attention, but actually they are relatively small beer compared with,
say, computers, energy or cars.

But the case of online music is instructive because it illuminates a far more
interesting question, namely, why do large companies find change and innovation
so difficult? The official line, of course, is that they don't.
Listen to any chief executive in PR mode and you'll hear a lot of guff about
'new' products, 'progress' and innovation. This year's model has enhanced
features and superior performance. And next year's will be even better. This is
the process by which most cars now have air conditioning, power steering and
electric windows - features that used to be optional.
Or by which this year's PCs have 3 gigahertz processors rather than the 2.8GHz
standard last year.

This is innovation - of a sort; it's called 'incremental innovation' and
everybody does it if they want to stay in business. The only problem is that
it's not the most important kind of innovation: disruptive innovation - the kind
that creates new industries, new business models, new commercial realities. And
that's what established companies seem unable to do.

 Back to the music industry and the net. Why didn't record company executives
spot the revolutionary potential of the technology to distribute their product?
It was partly due to ignorance. Most of those who ran record companies in the
1990s knew little about the net They knew a lot about media and showbusiness,
but nothing about communications technology. And the people in their
organisations who did understand it were low-status techies with poor lines of
communication to board-level folks. So those at the top failed to spot what was
happening because it was going on in a universe they didn't inhabit.

The entire industry, in other words, suffered from a serious knowledge deficit.
This was fatally reinforced by the dominance of lawyers and accountants in large
media companies - especially in the US. The result was that when the net finally
burst onto the radar of the industry, it was seen purely as a threat to
intellectual property. The clear strategic imperative was then to try to stop
the technology by legal and legislative means (which inevitably turned out to be
futile).

Some fascinating light was shed on this recently when Ken Kutaragi, a very
senior Sony executive, broke ranks and spoke frankly about the whole issue of
online music. Kutaragi is president of Sony Computer Entertainment, but is
tipped to become the parent company's next chief executive. 'Sony missed out on
potential sales from MP3 players and other gadgets', he told the Foreign
Correspondents Club in Tokyo, 'because it was overly proprietary about music and
entertainment content'.

He went on to say that he and his colleagues have been frustrated for years with
their management's reluctance to introduce products like the Apple iPod, because
of the influence of Sony's music and movie divisions terrified about implicit
threats to intellectual property.

A third factor that rendered the record industry blind to the opportunity was
the incentive schemes under which executives were rewarded. As always, these
were couched in terms of the business model prevailing at the time of
appointment. In the 1990s, the music industry was built on doing what one
analyst described as 'shipping atoms in order to ship bits'. Music was
digitally encoded, but the way the industry transported bits from recording
studio to CD player was by stamping them on to bits of plastic and ferrying them
in containers to retail outlets. The economics of this meant, among other
things, that albums were more financially attractive than singles. So the
industry shipped albums and gave incentives to its executives to do just that.

The only problem was that many consumers wanted tracks, not albums. The industry
couldn't - or wouldn't - give them tracks. But Napster could, and did. In the
end, Napster was killed off but illicit file-sharing thrived. And still the
industry provided no workable legal alternative. Apple has saved them from
themselves. The real question is whether they deserved to be rescued.

john.naughton en observer.co.uk www.briefhistory.com/footnotes

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