How the Music Industry Became its Own Worst Enemy


This episode of the Hit Parade podcast from Slate is a wonderfully geeky look at how the record industry tried to kill retail sales of the single in the 90s in favour of the more lucrative album format, but it’s also a salutary lesson for businesses of all types. The album had of-course been the prominent format from the 60s, with singles frequently seen as a way of boosting sales of the accompanying long-player, particularly in the 80s when albums like Thriller, Hysteria, Born in the USA all put out a high proportion of tracks as singles (Thriller, for example, had 7 out of 9 tracks released).

In the 90s however, record companies (starting with Capitol Records and MC Hammer believe it or not) went to war on the retail single by promoting hits to radio that you could only buy on a full length album (think Alanis Morrisette) giving rise to the phenomenon in the late 90s of consumers being forced to shell out for an entire album which likely had one good song on it (think Chumbawamba). The reason for this was of-course that the labels could make more money that way but inevitably they generated resentment amongst their customers which would eventually come back and bite them in a big way. The story of how Napster disrupted the music business in the run up to the turn of the century is well documented but I’d never really thought of it through the lens of how the industry’s own practices had set them up for a spectacular fall.

It’s a great example of how easy it is for entire industries to misalign incentives and goals and pursue strategies that might make sense on the balance sheet in the short-term but make no sense in the long-term and build up the kind of fragility that makes them hugely vulnerable to genuinely far-reaching disruption.


Photo by Bogomil Mihaylov on Unsplash

Music industry graph courtesy Benedict Evans


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