The advent of the Web has arguably been the most radical game-changer in the history of the music industry since the radio. In a shift that seemed to happen overnight, brick-and-mortar music stores, CDs and the Sony Walkman began seeming outdated in the presence of iTunes, MP3s, P2P file-sharing, iPods and - of course - illegal music downloading. While the Internet has streamlined the way the modern 21st-century world experiences music and made it much less-costly (even free in some instances - Pandora and Grooveshark, anyone?), the major players in the music industry struggled to quickly understand the changes in consumption (Who is still buying? Why do they buy? Where are they spending? What will make them buy more? Where can we reach them?).
Music sales plunged 40 percent from 2000 and 2007, and industry employment decreased by one-third in the past 10 years, with the tech-driven changes in music consumption behavior cited by many as the cause of the declines. The increase in music-purchasing (or music-stealing) options required the larger production and distribution companies to focus on gaining faster, deeper and better insight into the consumer mind-set to ensure that they produce more hits and fewer flops, saving both time and money. The major record labels and music entertainment companies needed to prove that they were still relevant, and more than that they needed to appear to be on the cutting edge of trends and technology; to be the source for all things music entertainment; and to make it as efficient (and appealing) as possible for consumers to influence what goes to market and what stays home.
While the Internet has been the source of many of the music industry’s problems, Sony BMG Music Entertainment, Munich, Germany, has found a way to harness the Web’s power and use it to its advantage. Sony BMG and others realized that although the Internet-driven shift would require an overhaul of the ...