Every industry will go through periods of instability. It’s during these periods of instability that market leaders are re-established and the “New Order” is established. Once the “New Order” is established moving market share significantly is extremely difficult.
One industry in the middle of turmoil right now is the music industry. The internet and the downloading of music has upended the current business model.
In a futile attempt to block the future, the industry started suing on-line competitors like Napster. Now the industry is trying to copy them but is clearly playing catch up to the market leader, iTunes. Apple, a non player in the music industry a decade ago, has quickly become the legitimate leader allowing users to download music to their iPods for 99 cents a tune. iTunes allows limited file copying so users can have their favorite songs on several devices but limits the amount of copies so file sharing amongst large user groups is all but impossible.
Another emerging model in the internet friendly world is the subscription model where subscribers sign up for a music service receiving new songs every month for a recurring fee. Throw in Satellite Radio and the industry is struggling to find a new direction.
For music executives the development of the internet as a force in the industry is a major upheaval to which they have not adapted well. In the past the music industry has done well as it changed from 45’s to LP’s to cassette tapes to CD’s. However this change in music format is different. No longer do customers need to go to a store for their music, and file sharing is easy.
How can successful companies like Sony and Vivendi’s Universal Music Group etc. get caught so off guard and what can one do to prevent or at the very least react positively to market changes? Whatever strategy they adopt to survive, the result will be very different than just a few years ago when everyone went to a store and purchased their CD’s.
No matter if your industry is stable or in turmoil some questions to consider are:
- Is there technology available that can enhance the experience or value of using your product or service? If so embrace it and enhance it.
- Do your people regularly use and review the competitors’ offerings? Highlight the features and benefits that add customer value and improve upon them.
- What percent of your resources are focused on creating the future vs marginal improvements of the status quo? Manage the present but create the future!
- Are there key management groups within your company that can’t see the market change? Ask key managers to use your technology and compare it to competitor offerings. (Segment your internal market and find the internal opinion leaders who support needed changes).
Only time will tell how the music industry will emerge from this period of turmoil. Will Apple be the next Sony or will a new leader emerge with something completely different? One can either fight to retain the past or plan to create the future – be creative!