Apple, Amazon, and the Music Industry -- Same Old Tune?

Last Updated Jan 18, 2008 12:57 PM EST

Apple, Amazon, and the Music Industry -- Same Old Tune?The music industry is often excoriated for viewing electronic downloads as enemy rather than opportunity. It has a hate-love relationship with Apple, creator of the iPod and iTunes. It has a love-hate relationship with its own artists such as Prince who are trying to use digital to break the old recording business model. And music execs have just a plain hate relationship with former customers who now choose to pirate music from file-sharing services.

Now the Music Maestros are taking another whirl at the electronic market via Amazon's MP3 download service, introduced last year. This group includes several major labels that parted ways with Apple in disputes over pricing and digital rights management.

We've heard this tune before, says Harvard Business editor Jimmy Guterman, who believes the industry's strategy -- if there is one -- is making things worse for its bottom line, not better. While an excellent service for consumers, the Amazon offering is not all that great for businesses behind it, he says.

"It's a system under which the labels will make hardly anything, Amazon will make a bit -- and the artist, as usual, depending on the contract, may make nothing. "
Maybe it's time to throw out the traditional music model rather than tweak it. Guterman calls for the industry to price its products realistically so all players can win, and to level the playing field on the DRM front so that Apple and others can compete equally with Amazon to the benefit of music buyers.

A few years ago Harvard Business School professor Felix Oberholzer-Gee published research showing that illegal music downloads don't hurt CD sales, and in fact boost purchases of some types of music. Read my interview with Felix, Music Downloads: Pirates -- or Customers?
The recording industry blasted the data. What do you think?

(Gramophone image by wild.electricity, CC 2.0)

  • Sean Silverthorne

    Sean Silverthorne is the editor of HBS Working Knowledge, which provides a first look at the research and ideas of Harvard Business School faculty. Working Knowledge, which won a Webby award in 2007, currently records 4 million unique visitors a year. He has been with HBS since 2001.

    Silverthorne has 28 years experience in print and online journalism. Before arriving at HBS, he was a senior editor at CNET and executive editor of ZDNET News. While at At Ziff-Davis, Silverthorne also worked on the daily technology TV show The Site, and was a senior editor at PC Week Inside, which chronicled the business of the technology industry. He has held several reporting and editing roles on a variety of newspapers, and was Investor Business Daily's first journalist based in Silicon Valley.