I was so excited when I got my first break into the music business in the 1980s. The record labels were making so much money and it was such an exciting time.
Of course, we all know the history since then. The internet, Napster and piracy, and the ultimate demise of music ownership as the primary source of music acquisition and enjoyment, all contributed to the paradigm shift in the music industry.
But the record labels didn’t change, so they contracted and declined. In fact, with Spotify’s public offering debut last week, Spotify was worth more than the three major record labels combined.
One could quickly surmise this is a post about distribution (online vs retail), but that would be too hasty. This is a post about effectively responding to the rapid pace of technological change in a way that specifically takes advantage of your core value proposition.
Look at Netflix. Written off by many years ago as an anachronistic distribution model (mailing DVDs), they changed their business model to add streaming options. But they didn’t stop there. They understood that in video, just offering another video streaming option was not a sustainable, differentiated business. Netflix recognized the importance in video of developing proprietary content that could give the company a sustainable advantage over traditional networks and other on-demand providers such as Hulu. Further, they pioneered releasing an entire series at once to take advantage of the “binge watching” trend and also increasing the show’s probability of “going viral” through social media messaging.
In essence, because of who they were, they could effectively provide both content and distribution in a unique way.
So many companies lament the rapidly changing landscape and how it has impacted their top-line revenues, not to mention their bottom line. And the temptation is to think there is a singular, one-dimensional fix (the distribution reference above).
It just isn’t that easy. It takes a deep understanding of the changes themselves, and how your core value proposition can seize the advantages those changes afford you.
And yes, there are advantages. In virtually every change. You just need to uncover those advantages, and leverage them to cash in on your company’s raison d etre.