Technology Giveth, Technology Taketh Away

Published: April 29, 2007

Author: David Rodnitzky

Few industries have benefited more from technological advances than the music industry. What, you say, nothing could be further from the truth! The music industry is reeling – CDs sales are dropping 20% per year and record chains are closing by the thousands – mostly thanks to consumers who continue to use the Internet (technology) to download music for free, despite the industry’s best legal efforts to stop them.

Well, yes, this is all true, but to understand the relationship between technology and the music industry, you have to step back and take a longer viewpoint.

Consider the industry in, say, 1870. At that time, there were only two ways to hear music – go to a concert hall, or play it yourself. Realistically, to hear professional musicians, you had to travel to a major city – probably in Europe but perhaps occasionally in New York as well – to see an opera or a great symphony. Of course, few people outside of these world capitals would ever dream of making such a trip. and 99% of the people who lived nearby couldn’t afford the price of admission anyway.

Then, in 1877, Thomas Edison invented the record player. Suddenly, you could hear the London Philharmonic in Detroit – in your own home no less. Of course, only those who could afford a record player could take advantage of such technology, but this single invention certainly expanded the listening audience for music massively.

Only a few years later, around 1900, Nikola Tesla (who later formed a popular hair-band in the 1980s), invented the radio. Suddenly, musicians had three options for plying their wares – concert halls, records, and radio.

In 1927, the Jazz Singer was released, the first “talkie”, or movie with sound. The first car radio was commercially available in 1930 (though not until the 1950s with FM). Early television broadcasts began in 1935. By the 1950s, department stores and elevators were filled with 24 hour a day with Muzak. In the late 1970s, cassette tapes made it possible to listen to recorded music in your car or even while walking around (the invention of the walkman). By the 1990s, however, cassettes and records had been replaced by compact discs.

Now think for a moment about the impact of all of these inventions. In 1870, the only ways to profit from the music industry were to either play it (a local and therefore limited business opportunity) or to publish it (sheet music). By 1990, technology had broadened the reach of the music industry immensely: records, cassettes, CDs, radio, car radio, tv, movies, and even elevators made the music industry ubiquitous an also highly profitable.

So you would expect that any head of a music label in 1990 would have been feeling pretty good about the future (if for no other reason than the fact that consumers were trading in their records and cassettes for CDs, or basically buying the same music all over again. Brilliant).

But what’s happened 17 years on? Well, in a word, technology killed the video star. Recordable CDs, peer-to-peer file sharing (like Napster), and Digital Rights Management (DRM) hacks, have enabled consumers to get whatever music they want, for free, with little danger of being caught by the music industry.

As a result, records stores are closing fast, sales are down, concert tickets are down, and suddenly the music industry is on its heels. Technology quickly gave birth to a myriad of opportunities for the music industry, but (as Moore’s Law would predict) even more quickly drove it to destruction.

Insofar as this is a blog about online advertising, let me know try to tie this to our beloved industry. Right now, we online advertisers generally feel rather high and mighty as we think of the “offline advertising world.” The old guard of marketing – yellow pages, Madison Avenue branding, newspapers – are all struggling as us 20 and 30-something newbies basically eat their lunch.

Companies like Google (and, in theory, Yahoo) are on top of the world. So much so that the old guard is starting to panic, with copyright infringement suits and allegations of anti-trust violations. And let’s keep in mind that online advertising was really only born around 1996, and didn’t hit its hay day until maybe 2003. So we’re talking about an industry that is at most 11 years old and has already become a multi-billion dollar business.

Which begs the question – is today our 1930, with years or new uses for online advertising ahead of us, or are we at 1990, at the precipice of a decline that we could never see coming, usurped by technology that somehow makes all of us obsolete?

Technology giveth, technology taketh away. Rest on your laurels at your own peril.

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