( 8.) Music Industry Fighting Back

It used to be that record labels made money by signing up artist with iron clad contracts. Record companies provided the space, technology, distribution, promotion while artists created the content. In return, musicians received 3% to 6% in royalty payments from the sales of records, and the rest of the time they had to go on endless tours to earn money from concert tickets. All of this changed with Napster.
It introduced the concept of P2P file sharing through the use of the Internet technology. People around the world could log on the Napster community of users, share their music library with the community and freely exchange files at the speed of their connection. Napster had caught the music industry napping and the Internet technology enabled communities to create their own way of finding and receiving music, albeit illegally.
Record labels are now fighting back on numerous fronts using legal and creative means. On the creative side, they are offering artist alternative ways to earn a living through ring tones agreements with major telecom companies, concerts, promotions and Web 2.0 sales/marketing. Parts of the music industry, namely music stores, have disappeared forever. The rest is trying to survive.
I think that in the software industry can learn a lot from the changing landscape of the music business and avoid their mistakes. First and foremost, the youngsters, who are growing up accustomed to receiving intellectual property for free from their peers in their community, are our future customers. Second, we need to look at the new and successful players in the music industry to analyze their ways. I am mainly thinking about Apple with its I-Pod platform through which the company offers numerous products. Last but not least, we need to adapt to our new economy which is fueled by knowledge, interest based networks, collaboration and speed.
In the near future, it will become harder and harder to sell proprietary software solutions to a generation of people who are not accustomed to paying for intellectual property. Software companies who rely on open source business model will be better positioned to tap into the buying habits of this new generation. All open source companies, regardless of their business model, rely on revenues to stay afloat or grow. The key to success, now and in the future, is to offer choices to the customers. We need to provide our software offerings in deployment options that users desire. We also need to create platforms that enable the exchange of knowledge and products with ease. Lastly, we need to leverage the new economy by taping into the collective knowledge of people globally. Citizens of this world are now more and more motivated to participate in narrowly defined interest groups in order to collaborate with their peers and create value faster than ever before. I am afraid that companies failing to adapt to the realities of our new economy are destined to end up in the Software Hall of Fame.