November 15, 2011
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Have you ever noticed how major opportunities look like threats when they first appear?
A classic example is the American folk tale of John Henry. He and his co-workers viewed steam engines as a threat to their livelihood, and they tried very hard to resist the new technology, to no avail.
His was a marvelously poetic story of man versus machine. Much as we all admire these hard-working folk heroes, however, nowadays you would be hard pressed to find anyone who would want to swing a sledge hammer all day. Nostalgia is a fine thing, but in our hearts we all very happy that steam power came along.
Another example: In the 1950s, the major movie studios had a John-Henry-esque response to the invention of television. They saw it as a major threat to their survival, and tried to compete by offering widescreen formats and surround sound.
Eventually, they realized that the threat of television was actually a new opportunity to make money on their libraries of thousands of old movies. And now, far from seeing television as a threat, Hollywood is actually dependent upon it, as a vast and growing audience buys their movies through cable TV, DVDs, and Netflix.
The music recording industry went through a similar threat-turned-new-business-model process. When digital recordings came along, the major recording labels were in a panic. Customers could now make copies with no generational loss. Worse, the rampant downloading of digital music files was ruining their existing business model. In response, the recording industry demanded design limitations on digital tape recorders, and sued teenagers for downloading free music. The Luddites would have been proud.
Then along came Steve Jobs. He created iTunes, and now, instead of being threatened by the downloading of MP3s, the music business is dependent upon it. People are downloading music files and the music business is making more money than ever.
Throughout history, when status quo has been threatened, the first instinct was to run to the ramparts, resist the onslaught, and maintain the status quo.
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