How Not to Think Strategically About the Future of Media, pt 1838134
Mini case study: SpiralFrog.
It's almost the end of 2006. A few years back, you would have thought that by now, the music industry would find a way to revolutionize it's industry and business model.
Unfortunately, you would have been wrong - they can't. Here we have a classic example of a competence trap. The short term costs of doing so far outweigh the short term gains - and to they will keep rolling out plays like SpiralFrog, essentially, until they die. They are trapped; and unless they can overcome their own myopia, and learn that taking a few knocks now is the price of future profitability, they are also dead.
How do we know SpiralFrog will fail? It should be obvious. The bet is that the costs of sorting junk on p2p platforms exceed the costs of 90 seconds of advertising + DRM on SpiralFrog.
There are two problems with this scenario. First, they don't- if anything, the equation is balanced agains SpiralFrog. Second, SpiralFrog is a product of 1.0 thinking and assumptions - it completely ignores the fact that Myspace and Last.fm now already own - from an economic, if not a strategic pov - this market space.
Also note the name. It's trying very hard to be 2.0, but it just ends up reminding me of an amphibian being impaled by a screw...nice one guys. Talk about not getting it.
Does anyone know if any of this ad revenue will be going to the artists or not? The reason I ask is that I suspect that the majors are rubbing their hands as it probably neatly fits into the "promotional" part of artists contracts, releases and such that they commonly do not get paid for.
Would explain why EMI has followed Uni and signed onboard....