Sunday, June 30, 2013

And the Band Played On

Understanding how changes in an industry lead to changes firm profitability, and hence strategy, is often difficult to detect. Even when drastic changes occur within a decade, as in the music industry, it takes a careful eye to uncover these effects. In Joel Waldfogel's recent paper, "And the Bands Played On: Digital Disintermediation and the Quality of New Recorded Music," he brings together a number of different analyses that document the evolution of this industry. Some findings are:

  • While the number of major-label album releases fell, the total number is up.
  • This has been accompanied by less concentration of sales in the top albums. 
  • Internet radio and online criticism have altered how consumers get product information. 
  • Albums are finding commercial success without traditional radio airplay. 
  • Albums from independent labels account for a growing share of successes.
These changes are likely to have undermined the profitability of major labels and top radio stations, much to the benefit of musicians.

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