What Has been Learned from Emergent Music business Models?


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What Is Strategic Management?

See also the Peering article on this topic and the follow-on article and this article in Portuguese as well, courtesy of Artur Weber. Much of the conflict between grassroots exploiters of emerging Internet and telecommunications technologies, and the vested interests that are threatened by them is largely due to the inability of the latter to predict disruptive effects and rationally respond with new business and governance models.

Their failure to see the application of peer-to-peer file sharing to consumer music, and their stubborn reluctance to give up their monopoly over music distribution and control over artists , has led to suing teenagers and reluctantly offering expensive on-line music services that are less convenient and comprehensive than the free ones. The question is why the RIAA would not anticipate the change and take advantage of it?

Strategic management

The short history of the commercial Internet is rife with examples of such short-sightedness. The real future was in Interactive Television. Of course, in France, who would have predicted that that the beautifully designed, widely-distributed, and much-used MiniTel would be supplanted by the Internet? Hollywood, France Telecom, and Bill Gates were only a few to be broadsided by the power of the Internet in the mid-nineties.

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Everyone understands, now and in principle, that the exploitation of Internet protocols creates disruptive technologies that change the viability of old business models, usually by eliminating the "middleman". The old middlemen, such as CD distributors, can fight back, but it is clear that they inevitably lose their distribution monopoly as users migrate to more sophisticated systems, such as FreeNet[1]. But proper exploitation can lead to business models, usually based upon aggregating information and services in a new way.

Amazon and Google are the latest and most spectacular success examples of this possibility. What is surprising is that many smart people seem to have failed to have learned from this history: readers will already be aware of many current examples of industries and governments misunderstanding Internet technologies. Contrary to the impression one gets from "Dilbert" cartoons, most of the people making decisions in governments and corporations did not get to their positions by being stupid.

What is it that they "don't get" after seeing repeated examples of success and failure over the last 10 years? The explanation that such leaders are insufficiently technical to see the potential of novel technologies is weak. Why did smart, knowledgeable engineers, familiar with protocols, not see this coming? Further, in , Robert Metcalf, one of the several "Fathers" of the Internet, said that the Internet would crash that year, or he would eat his words.

Rhythm game

Even for experts, the resilience and power of the Internet has been difficult to predict because its control mechanism is based on emergent behavior. Unlike ATM, the basic Internet protocol depends upon routers making local decisions, none of which is guaranteed to deliver a packet of information to its destination, but the global behavior is that communications happens, fairly reliably. A common example of this kind of emergent behavior is an ant colony. Godel, Escher, and Bach [Hofstadter], discusses "Aunt Hillary", an ant colony, in which it is pointed out that her behavior, and intelligence, is the result of the rather mindless interactions of individual ants following simple protocols of interaction that result in qualitatively different global behavior.

This effect is well-analyzed in computer science as "cellular automata theory"[Mitchell]. This leads to a more subtle point that has to do with state of mind. Engineers are used to being in control. Prime ministers, CEOs, and engineers depend upon the sense of being in control. They are congenitally incapable of realizing when control passes to a protocol. The important principle is that emergent-behavior protocols are the government. This is easy to miss, especially if you think you are the government.

Or the phone company. So-called "anarchists" are not out of control - they are simply recognizing who, or what, is really in charge - the protocol. This strong argument about the power of emergent-behavior protocols is increasingly widely-understood, and insufficient. It could have.

But it didn't. The disruption was caused by a new Internet layer: the WWW. The WWW is an emergent control-based system because there is no central control: merely nodes interacting locally with one another via hypertext links. But it is the social behavior of the users that makes the difference.

Reader's Guide

Who would have thought that thousands, if not millions, of people would start posting web sites of information, about everything, with no obvious commercial gain? Few did. Certainly not Bill Gates. The WWW allowed individuals to participate, contribute, create, and publish to a wide audience. Interactive TV and MiniTel were "closed" systems. The content was not under control of the users. The WWW was created because the older methods of sharing scientific papers and data, FTP and Gopher, weren't quite good enough for physicists.

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Jewish Emergent Network

The WWW enabled mere theoretical physicists, instead of only computer scientists, to easily share documents over the Internet. As it turned out, what was easy for physicists could be made easy for lots of people. The Anarchist in the Library [Vaidhyanathan] addresses the disruptive usages of new technologies, but emphasizes anarchy, both capitalized and lowercase, as a motivation.

We rather postulate a drive toward collective work and play. Malicious hackers and spammers are largely a by-product, as is the threat to existing distribution channels. People who share music aren't out to ruin CD distributors: that's a side-effect. Music-sharing networks expose such misunderstandings about control and intent.

Music executives failed to anticipate that people would collectively post their content for free. And then they mistakenly looked for someone in control to sue, finally falling back on suing teenagers. The WWW and peer-to-peer file sharing networks became popular because they were superior methods of allowing people to publish their own content for collective benefit.


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So emergent control networks are important because not only can they scale, but also that they do. Without central control, it's cheap to add nodes. And if tools make it easy to add nodes, then the system is likely to grow. And such systems should be error-tolerant if not homeostatic. But these are only necessary conditions. The final condition that is sufficient for network growth is when people want to add nodes, useful to others, to such a system. In the case of the WWW and music sharing, it is easy for people to see that they benefit individually from contributing to the collective: the network not only scales but increases in value.

We hypothesize additionally that there is a general motivation to contribute to a collective effort. Let us call the combination of emergent control networks, tools, and incentives that motivate people to act collectively " Emergent Collectives ". The effects of the overall system emerge from the interactions of the components, the protocols, data standards, tools, and people.

They are hard to predict. They run counter to many established models. Trying to protect older systems in which a single controlling entity provides content either for pay or power is futile and even counter-productive. Back to the phone companies for another example. When it was clear that the Internet was a major new market, the only way they could see to take advantage was cell phones. In late , when Siemens brought out its 2. Once the rider arrives at the bicycle, he or she uses the app to scan a QR code on the bicycle.

Assuming that the person has money in his or her account and meets the rental criteria, the QR code will open the electronic bike lock. When the bike is returned, closing the lock completes the transaction. The process is simple, intuitive, and usually takes only several seconds.

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Datafying the rental process greatly improves the consumer experience. On the basis of live data, companies dispatch trucks to move bikes to where users want them.


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  • They can also alert regular users to the availability of bikes nearby. Thanks in large part to these innovations, the cost of bike rentals in China has fallen to just a few cents per hour. Most businesses that seek to be more data-driven typically collect and analyze information in order to create a causal model.

    The model then isolates the critical data points from the mass of information available. That is not how smart businesses use data. Instead, they capture all information generated during exchanges and communications with customers and other network members as the business operates and then let the algorithms figure out what data is relevant. In a smart business, all activities—not just knowledge management and customer relations—are configured using software so that decisions affecting them can be automated.

    This does not mean that a firm needs to buy or build ERP software or its equivalent to manage its business—quite the opposite. Traditional software makes processes and decision flows more rigid and often becomes a straitjacket.

    How technology is changing the music industry - Fortune
    What Has been Learned from Emergent Music business Models? What Has been Learned from Emergent Music business Models?
    What Has been Learned from Emergent Music business Models? What Has been Learned from Emergent Music business Models?
    What Has been Learned from Emergent Music business Models? What Has been Learned from Emergent Music business Models?
    What Has been Learned from Emergent Music business Models? What Has been Learned from Emergent Music business Models?
    What Has been Learned from Emergent Music business Models? What Has been Learned from Emergent Music business Models?
    What Has been Learned from Emergent Music business Models? What Has been Learned from Emergent Music business Models?

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