Corp Unc & Philos

How business models collapse : the case of music

Nearly a year ago, Pascal Nègre, the CEO of Universal Music France, declared: "The public has never listened to music so much as today while paying so little for it."

To solve the problem : "We are currently looking for alternative sales models that are more adapted to the latest technological innovations."

In other words, a business model is dying. Technology is being blamed. Suddenly, it has taken the professionals by surprise. The debate on what is called illegal downloading always concerns payments and sales, never the music itself. New business models are explored when it comes to the sales transaction while the evolution of the product over the past years is totally ignored.

Since the radio developped on a large scale, nearly a century ago, music has actually been free. We are so used to it that no one cares to mention the fact anymore. What the consumer pays for when buying a record is not the music itself but the capacity to control its consumption by reproducing it at any time.

Constantly on the air, music can also be heard in elevators, lounges or shops, and it is most often related to advertising. It has become a background noise which is part of the scenery of the merchant environment. Through a low but steady process the function of music has become less and less esthetical and more and more pragmatical.

"The shift of affects towards the use value creates a situation where nothing is expected from music anymore. " This was written by Theodore Adorno in 1937 !  Anticipating the future, he added : "The listeners behave like children. They repeatedly request the same recipe that has already been served to them." This is an accurate description of the present situation.

By selling music to the broadcasting companies, the producers  have contributed to turn it into a free product, at least for the consumers who in the meantime have become addicted to it.

The development of digital music, therefore, is not the real cause for the downfall of the classical business model.  It is only a strong revealing factor of a situation that has developped throughout the 20th century.

This example is an opportunity to point out that a business model is not a pure transaction device. It always develops around a supply to the public which is unconscious and likely to change as society evolves.  The purpose of strategic innovation is to anticipate this kind of evolution before  things change suddenly out of control.

Technology and addiction

This is an add for a distribution company, seen in the corridors of the parisian subway. Comment :

"Information technology becomes a second nature"

Indeed, it is getting "under the skin", reminding us of a famous song by F.Sinatra.

An illustrated evidence that  the debate about how technology-based products and services might contribute to the development of addictive behaviors, is legitimate and necessary.

Will technology change the relationship between supply and demand ?

The relation between demand and supply is a key issue today, as a consequence of the development of Web.2. The idea of “direct”, whether democracy or economy, is a natural association to be made with that of Web 2. Bruno Giussani brings up the matter in an interesting post where he mentions a soon to be published book by Xavier Comtesse. According to Xavier Comtesse, we are heading towards a greater participation of consumers in the processes so far taken care of by producers. Though the idea is as interesting as doubtless, it requires a comment.

The productivity gains result from an increased involvement of the consumer in the value chain. IKEA is a typical example. The wiki wave fosters participation and will further develop the active role of consumers. There is no doubt.

Now does that mean consumers will take part in the creative process ?

I think it is another question. More and more economists now agree upon the “supply-oriented” characteristic of capitalism. Mauss’s essay on the gift is increasingly influential among them.  The essence of giving is a key of the system. Therefore, the idea of consumers being able to express their need is a recurrent theme which once again loses ground.

Once again because another myth has already been deconstructed : that of consumers need as such. Consumers have no needs, they have desires, even though the Maslow pyramid is still taught to young business schools students. It is not difficult to express one’s needs ; it is another story to put words on desire. Its essence is to be satisfied in meeting the desire of someone else. To make it short, the engine of consumption is in the meeting of desires, which implies the free development of supply.

This, in my opinion, is the limit to direct economy.  Technology will revolutionize logistics, organisation, distribution, product-improvement and personalization, but it will probably not devitalize the need for a creative supply. Demand will probably never rule supply.