Why the RIAA will Fall

The record industry, in its heyday, was the largest entertainment industry, bigger than sports and film. As the saying goes, big tree fall hard. In Politico’s morning tech roundup,

Cary Sherman won’t take over the reins of the Recording Industry Association of America until Sept. 1, but the newly minted chief executive officer and chairman of the powerful music lobby already has a clear idea of what policy areas he wants to tackle right out of the gate. One of Sherman’s top priorities after being named the organization’s head honcho Monday is urging Congress to pass legislation that clamps down on online infringement of copyrighted digital music and other entertainment content.

For decades, record companies faced paltry competition. Product and process innovation were nearly non-existent. Then we had a change in the late 90s that began to upturn it all. With increasing bandwidth, echo boomers, who were digital natives, began to get their music from sources other than stores (process innovation). Coupled with the iPod (product innovation), the traditional behavior of music acquisition changed. Increasingly these consumers began to get onto music sharing services. Altogether, these changes pushed music from an excludeable good to a non-excludeable one.

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