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The Influence of Technology

Technology is another major factor in determining which companies will become the new leaders. By being able to stay ahead and predict rising trends for new technologies, these major conglomerates can find new niches and new markets in which to compete. Had members of the Big Six not adapted to the new birth of the compact disc, for example, they would not be alive to tell of their success today. As we discuss further in the "piracy" section, companies must now deal with new internet technology, such as MP3 players.

Threat of Substitutes?

We should be worried here about the threat that new technologies might have on substituting existing music technologies, creating a possible shift in power. What causes people in the music industry to worry less about this aspect is the simple fact that the major conglomerates own pretty much every sector of the entertainment market. If any such changes should occur, they would actually prove more beneficial than harmful to these huge powerhouses. For example, when CDs began to popularize as a standard in the 90ís, replacing cassettes and LPs, these conglomerates actually experienced the biggest growth in profits of about 8%. The reason for this is that they were the ones that had created this new technology. Hardware and software manufacturers, mostly all belonging to the conglomerates, were not the only ones to benefit from the change. Producers and distributors, mostly belonging to these conglomerates too, also profited because people now had to replace their entire cass! ette/LP collections with the new standardized and more expensive CDs. Producers could produce more music because of the speed and progress of the new technology, and distributors could distribute more new and expensive goods to their customers.

The changes that we see with new Internet technology or minidisc players are almost similar. The question that everyone wants to answer is which design will be the standard in the future. After a lull in the music industry following the period of replacement from cassette to CD, everyone in the music industry is competing for the same resources. With new technology, this could change. To profit from these new inventions, people in the music industry must also learn to harness the power of these new technologies by limiting piracy. Some critics of the Internet as a new music medium think that profits from these conglomerates will actually fall because the price of finding and distributing music is becoming almost zero. Not only is it easy to copy music for free, but also the Internet makes the process of distribution cheaper as more middlemen are eradicated. Retail stores could suffer. But, the music industry as a whole could suffer too as consumers refuse to pay higher pric! es for music they could otherwise obtain for next to nothing.

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Last Update: April 6, 2000