July 12, 2015
How Music Got Free: The End of an Industry,the Turn of the Century, and the Patient Zero of Piracy by Stephen Witt
Published in June of 2015.
I thought that I knew the music industry disruption story. If you had asked me before I read the amazing How Music Got Free what killed the record labels and the record stores (remember Tower Records), I would have given a 3 part answer:
B. The iPod
And I would have been wrong.
Or at least incomplete.
What we learn in How Music Got Free is that the death of the incumbent music model did not begin with Shawn Fanning and Napster. Peer-to-peer file sharing played an important role in killing the CD, but the real dagger to the music industry was the leaking songs before they were even released on CD. Witt tracks down the employee of a North Carolina CD pressing factory, a factory that produced and packaged a huge percentage of all music sold in the US, who spent years smuggling unreleased CD’s out of the plant. This music pirate, operating for very little personal financial gain and not very much ideological conviction, would then collaborate with a dedicated group of rippers and file sharers to send unreleased tracks out into the digital world.
Once the unreleased music was on the Internet, the more familiar story Napster and the iPod takes over. Napster gave everyone a way to share all the music they had on either CD’s they had ripped, as well as the illegal files they had downloaded from the music pirates. The iPod gave everyone a way to carry all this music around in their pockets.
The other narrative in How Music Got Free is a detailed look at how the music industry incumbents reacted to the challenges of digital music and piracy.
This narrative is particularly important to all of us incumbents in the higher education industrial complex, as we don’t want to make the same mistakes as the record (or newspaper) executives. What happens to an industry built on managing scarcity when our core product is no longer scarce? Is open online learning our mp3? Is edX and Coursera our Napster? Is the residential education experience our compact discs? Does our business model depend on offering a bundled experience, where our customers would rather consume what we have à la carte?
Maybe. Maybe not.
The record industry traded physical dollars for digital dimes in their transition to downloads (and now streaming). An $18 dollar CD with 2 good songs is a good business for the record company, and a poor deal for the music buyer.
What is so great about How Music Got Free is that Witt takes us into the minds of the people running the record company’s. (And very deeply into the mind of Doug Morris, the guy who ran Universal Music Group). Perhaps no group of executives have ever been less prepared for the digital economy than the record executives. (Although newspaper people - and maybe even higher ed folks - may argue with that assertion).
Even if the music industry honchos had understood the new digital world, it is not clear to Witt that they could have done much differently. Beyond the colossally stupid and counterproductive idea to sue their own customers (remember the RIAA lawsuits), the record industry had very little answers to counteract the new economics of music. How do you create enough revenues to finance something as risky as a new artist if nobody wants to pay for your product? It is not clear that streaming fees from Spotify or Apple Music or Pandora will provide enough capital to discover, nurture, and promote the next Bruce Springsteen or 50 Cent. Today’s successful musician will make most of their money from touring, not music sales. How Music Got Free offers an insiders guide to the demise, and possible reinvention, of an industry.
When will someone like Stephen Witt turn their attention to higher education?
What should us higher ed incumbents learn from the story of the record industry?
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