Duvall & Associates, Inc.
BUSINESS ADVISOR NEWSLETTER
 

Business Download on the Net

- by Alan Duvall 

October 28, 2007

“I want my MTV.”  Dire Straits 

The mercurial metamorphosis of technology has undeniably forced entrepreneurs into an adaptive mode necessarily requiring systemic flexibility.  And perhaps no segment has witnessed a greater assault on its basic business model than the music industry. 

For decades, music relied upon a distribution network largely relegated to retail stores and mail-order houses.   

In 1999, a seemingly innocuous college student created Napster and led barbarian hordes on a frontal assault on the establishment.  Presenting a means to file-share songs, Napster was soon registering a purported 2.8 billion traded songs per month. 

Seriously outflanked, the music industry rallied behind such luminary groups as Metallica to petition courts to shut Napster down on the premise of copyright violations.  The Napster juggernaut was temporarily thwarted, but the internet threat morphed and surged forward. 

Alternative music sites proliferated, enabling free file-sharing at peril of legal retaliation.  Download songs and roll the dice became the norm. 

Enter Apple, which introduced the revolutionary iTunes internet store in 2003.  Forging alliances with music providers, Apple legally sells songs to the music-buying public, and swiftly captured a reported 75 percent of the internet sales market. 

The impact on traditional retail stores has been devastating and distribution channels forever altered.  Even public tastes shifted as consumers focus on singular songs versus full-length LP’s. 

Free spirited artists have proven resilient.  Prince recently gave away millions of free “Planet Earth” LP’s to enhance tour sales.  Radiohead posted its “In Rainbows” LP on the web to be downloaded at will for a cost of your own choosing.  And Sir Paul McCartney signed on with Starbucks as sole distributor of his future recordings.     

The message is clear – businesses can embrace internet changes to advantage – or construct dark-age fortresses at their peril. 

“Building castles by the sea, he dares the tardy tide to wash them all aside.”  Jethro Tull 

Alan Duvall is a certified public accountant in Dayton.  Contact him at Alan@Duvallcpa.com.  Previous articles archived at www.duvallcpa.com.