Where did the music industry go wrong?


The varying reasons as to what went wrong with the industry, culminated into large capital investments which had woeful returns. The lack of innovation on not only musical and creativity level, but as well as structured and non-adaptive strategic leadership and below par business acumen had become the overall mode of operations. The retail model where physical copies of albums were carried down the value chain to the final consumer has now become completely discombobulated.

A variety of reasons exist as to why the decline happened within the music industry:

  • Fashion fad trends: albums sales as well as artists had a “sell-by” date where, if they did not reach certain sales levels by a certain date, disinvestment from artists and marketing campaigns would occur.
  • Project based financing without returns: financial returns that did not yield the desired rate of return, rendered record companies susceptible to huge financial risk.
  • Easy replication of products and substitutes: the role of the internet and physical copy mechanisms such as CD writers and blank discs etc, made it easy for consumers to now obtain music without paying for it.
  • Physical product format dissolution: at the rate that technology is changing ever continuously, digital format has now replaced hard-copy and physical discs as the format to play music.
  • Non flexibility and rigid structures: tall order structures ensured the rate of innovation was inhibited in companies, as to represent the challenge of the “new music economy” and the digital age.
  • Over-regulation: various barriers of entry into countries and setting up of foreign establishments, by multinational organisations. Communications authority registrations through foreign companies made it hard for global organisations to access heterogeneous groups, in an effective manner.
  • Over-saturation: the digital age and age of distribution, along with the dissolution of the retail model and traditional supply of chains, has created an unprecedented surge of music boom across all forms of media. It has made for consumers to determine what is new, what is highly rated or critically acclaimed etc. A phenomenon of the information explosion age.
The forces now governing today's music economy.

The forces now governing today’s music economy.

“Where to from now? “, is the present “opportunity” the musicians and their management teams needs to look at, rather than view it as a posing problem.


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