BMG ? The Future of Music Distribution
The music industry has always been an evolving industry where new technology continually "breaks the frame" and changes old processes and business plans to accommodate new technology. In August 1999, CEO of BMG Entertainment Strauss Zelnick had to decide how to incorporate the Internet into his company. Should the new "digital customers" be part of the current process or a separate distribution entity? Should BMG change the current distribution process to meet the needs of the digital customers, create a new distribution process for them, or to limit their activities in the online arena until the online market is mature enough to support the necessary changes to the music recording industry.
Music Industry History
The music recording industry began with print sheet music, where the process and business model were similar to those utilized by the book publishing industry. The first major change to the industry occurred in 1877 when Thomas Edison invented the cylinder based talking machine. But competition came early from Alexander American Bell's American Graphaphone Company and Columbia, a maker of coin-operated talking machine. These two competed side-by-side until 1901 when Victor Talking Machine company launched of discs recordings. Victor's disc invented by Emil Berliner, quickly displaced cylinders and became the industry standard. Even though Thomas Edison invented a better disc later on called "Edison Diamond Disc" the industry and public had already switched to the Berliner discs. The lesson to be learned is that in the music industry, it is key to be on top of the new technology and develop strategies and processes that ensure the technology become the in ...