# 121: BOOK OF THE WEEK — “The Music Business and Digital Impacts”
Story behind the Book Choice
This morning someone whom I greatly admire for his visionary thinking and his ability to also implement visionary ideas sent me an article about the disruption of the music business and the latter’s inability to respond successfully. I read it and afterwards I immediately knew that I had to write about a book on the topic today (will write about the article as well soon). Nordgård’s dissertation was my choice and it was very illuminating because of the learnings you will read below. If you want to understand how digitalization disrupts business, you have to start with the music industries. If you want to learn how not to respond to the digital transformation, you also have to start with the music industries. So, in sum, there is no way around the music industries, no matter if you work in the publishing business, in the university, or in a city administration.
Just a year ago or so, I would not have thought that I write words like this today. If there was anything that I had no idea about, it was the music business. As I started getting deeper into the publishing business, however, I frequently met people who told me examples of the music industries. This is also when I noticed that I have come to know quite a few entrepreneurs but also managers who started their career in music or are still involved in the music industries. In the past, I only read up on this interrelation with respect to the creativity part. But now, I totally get the business side as well.
The reason why I am using the plural industries is already one learning from Nordgård’s book. As a layperson, you might just think that there is one industry that basically takes care of the production and distribution of music. But the matter is much more complex, as you can easily imagine if you just think back of the invention of the radio, for example, when songs all of a sudden could be played to a mass audience. There are so many parties or rather intermediaries involved that you have to talk about many industries, as the author explains at the outset. The way in which he explains his motivation and his goals also already take me to the first one of my key learnings. As always, this is not a comprehensive book review. This is simply a short overview of three out of the many things that I took away from the book.
- Academic involvement
In case anybody out there has forgotten about it due to the “publish or perish” and third-party funding race: Scholarship is about creating knowledge! The German word “Wissenschaft” (creation of knowledge) brilliantly underlines this. But more often than not, academics assume that they really know it all just because they have read more books about a topic than anybody else or analyzed more data. This is all nice and necessary but what I loved about Nordgård’s book from the start is that he writes from the perspective of someone in the music business who then took the chance to do his Ph.D. in a field that is probably still emerging: music business research. His goal was to explain why exactly the music business was not able to respond to the digital disruption as quickly and successfully as it should have.
I also loved the way how he describes his perspective as someone involved in the research subject, as opposed to academics who only work from the “distance.” There is no judgement involved in this, just the clarification of how he derived his deep insights about the field and how he also collected his data. This data largely consists of the Round Table Conferences conducted at the University of Agder in Norway which involved major key stakeholders from the music industries. The book offers long quotations from these meetings (anonymized) to actually allow the reader to almost become part of the discussions that took place. From my perspective, it is such a great way of linking methodologically sound research with powerful storytelling that — should I ever do a longer research project again — keep this in mind for my design.
2. Music as commons
If you studied political science — or even if you did not — you might have come across the concept of the commons or allmende as put forth by Towse whom Nordgård also quotes here. Simply put, commons means that a certain good is considered a common good. That also means nobody is willing to pay for it because, as the name already reveals, it belongs to the public, i.e., contributes to the common good. The air we breethe or the rain water are easy examples of this. But it gets really difficult if a good was not a commons in the past but now has turned into one. This is exactly what happened with music as soon as the internet disrupted the music industries. All of a sudden, you could trade, copy, and download music anywhere. This took away the power of the giants in the industry, above all Universal and Sony. Their reaction was exactly the one that lead to fatal consequences: They ignored the digital change and then tried to defend their old way of doing things by sticking to a containment approach. This did not help at all and anybody who already understood the magnitude of the internet back in the 1990s was able to predict this. Still, they held on to their tech-neglect until getting disrupted again and again by outside players.
This inside/outside differentiation mostly derives from Nordgård’s use of Fligstein and McAdam’s theory of Strategic Action Fields (SAFs). For readers unfamiliar with the approach — as I was — I want to briefly quote the definition because I really find it helpful — not only with respect to Nordgård’s aim but also for others trying to take a more anthropological approach to business problems.
“[A] meso-level social order in which actors (who can be individual or collective) are attuned to- and interact with one another based on a shared (which is not to say consensual) understanding of the purposes of the field, relationships to others in the field (including who has power and why), and the rules governing legitimate action in the field (2012: 9). … It follows from this that an SAF is a social world.”
As Nordgård explains in later passages, the framework indeed has the advantage that it does not solely focus on structures as the most decisive explanatory variables in a system. Still, it does pay close attention to the human configurations within the music industries as a system with a culture of its own. But I do not want to drift into methodology talk here. What I simply want to get at is that the combination of approaches the author uses is well-chosen for the research purpose. It explains in a very focussed way how difficult it was for the actors to deal with the transformation while also considering the necesary complexity .
Not losing focus is also important when it comes to “the anti-commons problem” that Nordgård also explains in another instance. In fact, I had never heard about this before. When I studied the allmende in one of my political philosophy classes many years ago, I was fascinated by the concept and the work of Elinor Ostrom who worked on it and won a nobel prize for it, I think. When looking at Nordgård’s definition of the anti-commons above, I immediately thought of the explosion of knowledge today and related to this, obviously, the disruptin of the universities. I still think that many universities do not want to see this problem and thus try to forcefully hold on to research as “anti-commons” by complicating access and by holding on to inefficient business models. If this continues, they are repeating exactly the containment strategy that had devastating consequences for the music business.
3. Between reluctance and inability to change
The SAF approach allows Nordgård to take into account inside and outside action fields. When it comes to technological disruption, one might always argue that it is caused by external factors, i.e., the internet in this case. The other outside forces who then brought about the disruption of the big players in the music industries were former digital startups, above all Apple, Google, and Amazon. But here comes the point that he makes above: Of course, it is not technology itself that disrupts. It is the business models that emerge from the technology, especially platform businesses with the potential to infinitely scale network effects.
The lack of far-sightedness to predict these changes, to accept or counter them or use them to one’s advantage is the major answer why the music industry was not able to deal with the disruption. It was (and partly still is) not able to come up with business models to counter the rise of the new digital mega companies. This exactly is also a point that I want to make in relation with the universities in particular. One reason Nordgård gives why they did not think that Apple, for example, could not do much harm to the music industries is because Apple was not a music company. It was a hardware company, at least to them. But this exactly is the misunderstanding on their part. These innovative tech companies from the periphery became disruptors because they understood the music business quite well.
This risk of undererstimating the power of seeming outsiders is relevant anywhere; in business and, I would argue, in the public sector. If you do not understand that the world has changed and that IT companies are now building cars, you have not understood what digital transformation actually means. It changes EVERYTHING about your organizations. This does not have to be bad altogether, but it makes you change. And resisting change is the number 1 guarantee that you will not manage the transformation. So, you better pay attention to the small outsiders. Yes, they might not love music or books or any artistic products as much as traditional media companies because the former have a mere business or IT focus and the latter stress their relationships with artists. But all of the disruptors have proven that this does not mean they do not understand. For sure, they understand the digital world in a way that the (former) giants do not.
And these giants, this is also the most important thing that Nordgård emphasizes throughout, consist of people — people with differing interests, power plays, role conflicts, and personal resistance to change. All these dynamics, this is what the quotations nicely show as well, led to the fact that even the most diverse and inclusive Roundtable Conferences could not bring about results that led to immediate action and the creation of new business models in time. This is also the overall claim and warning of the author which I could not stress more: No matter how well you understand digital business models and technology — you have to understand the people in the game in order to know how and if they are going to act in time to find the right solutions for the digital age. If they do not, many others are waiting…
Reflection Questions
1) Which good did you use to pay for in the past that is a commons now?
2) Are you/is your business prepared for even more technological advances?
3) What can you personally do to remain open to change?