The history of disruption in the recording industry (Format evolution)


As the recording industry goes, so will follow every other industry in the transition from physical to digital.

Source: Recorded music sales by format – Business Insider

The recording industry was the first media business to feel the transition from physical to digital formats in a big way.

Goldman Sachs went through data from the RIAA, a U.S. music industry group, to chart the rise and fall of various music formats over the last 42 years. (The left axis shows revenue in millions of dollars — so the peak in the the earlly 2000s was around $14 billion a year.)

The industry benefited when people replaced their physical analog recordings (LPs and cassettes) with digital CDs. But the rise of MP3 players and ever-faster internet connections soon made owning CDs obsolete. Piracy took off, and sales of online digital formats — first downloads, now streaming — haven’t made up the difference.

Print publications, books, movies, and television all face the same kind of disruption. The outcomes will depend on a lot of factors, including how well they defend their content from piracy, the speed with which they embrace what customers want, and the emergence of a single dominant company in any phase of the transition, as Apple dominated the early days of legal music downloads.

COTD 122315Goldman Sachs/RIAA

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