Music Monopoly?

Over at the Digital Music blog, Grant Robertson has an interesting take on comments by UMG CEO Doug Morris defending Universal’s strategies in the digital music market. Grant compares the music industry back to the days when AT&T had a monopoly in telephone service. He concludes that the music industry is in the same predicament as when Ma Bell was divested.

I do quibble with the analogy about AT&T since that was a result of government intervention rather than a paradigm shift in technology, but Glen does raise an interesting argument. If the music companies face the same dynamic as AT&T, he concludes:

Lower costs to consumers, wider competition and a broadened, democratized playing field. That, not piracy, is the bigger threat to Universal and the future of major labels.

There are some key differences between Ma Bell and Big Music. As I already mentioned, the government intervention changed the landscape in telecom. But the music industry is not without competition. Even though the oligopoly does act as one in terms of pricing and access, each label is competing for sales, chart positions, and promotion. There is definite sibling rivalry among the labels.

However, I would agree that piracy itself is not the biggest threat the music industry faces. Technology has forced through a paradigm change in music distribution but the big problem is the music industry’s refusal to adapt. Like AT&T’s monopoly, the music oligopoly does act to limit change and this has created a stagnant market, much like Ma Bell’s.

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~ by Som on November 30, 2006.

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