Which industries have no innovation and why

Innovations3 examples of a disruptive innovation

With the invention of the MP3 format for digitizing music, completely new possibilities developed to bring music from the “producer” (musician) to the “user” (listener). For many decades this was only possible with the help of music publishers such as Sony, Warner, EMI, Universal or BMG, who pressed music recordings onto sound carriers (vinyl, compact disks), marketed them and sold them in record stores.

Then came the Internet and the MP3 format, with which any piece of music could be compressed, stored on servers and played in good quality anywhere in the world (with an Internet connection). This brought innovative pioneers like Shawn Fanning with Napster, new entrants like Apple with iTunes and finally streaming services like Spotify on the market, which can now take advantage of large parts of the value chain for music. In 2001, worldwide sales of physical phonograms were around 23 billion US dollars; in 2019 it was only a fifth of that. The turnover from streaming offers has increased thirty-fold in 10 years and thus accounts for far more than half of the turnover in the music industry in 2019.

The established actors tried for years to stop this development - especially through legal proceedings. Then they realized they couldn't win in the long run. Some restructured their business models or bought competitors in order to keep at least a large share of the shrinking market. In the meantime, the form of the sound carrier is no longer important, but primarily the usage and marketing rights.