How iTunes Destroyed The Music Business In 1 Simple Chart

The music industry was the first entertainment business to confront the digital transition, although it was not exactly a willing pioneer. Rather, it was thrust into this role as a matter of survival, as it grappled with the rapid rise of online piracy in the early 2000s.
The music industry was incredibly slow to respond to the digital transition. Napster, the original music piracy site, burst onto the scene in 1999, but it wasn’t until 2004 when Apple iTunes debuted that consumers grew more and more primed to free music.
This was a serious error and haunted the music industry for years thereafter, costing the industry multi-billions in annual sales. The rest of the entertainment industry has taken note and, as a result, all other entertainment sectors, including video, have been comparatively quick to embrace digital distribution.
The music industry, rather than focusing on a legal digital download service, initially focused all its effort on shutting down Napster by way of a copyright infringement lawsuit. Ultimately, the industry prevailed and the courts shut down Napster in mid-2001; however, this was a pyrrhic victory. By the time Napster was shut down, the pirates had moved on to the next new thing: decentralized peer-to-peer file sharing, led by Gnutella. Unlike Napster, these piracy sites were virtually impossible to shut down because there was no central server storing the files. Shutting down Gnutella would have been tantamount to shutting down the entire internet.
In addition to the failure to launch a legal alternative to the pirate sites, the music industry was, understandably, paralysed by its fear of album unbundling. Piracy had given consumers a taste for singles and there was no going back to albums.

This post was published at Zero Hedge on 05/24/2015.