Business Insight Zone

In a comment to my post yesterday about the RIAA’s breathtakingly inane litigation strategy, Barry Ritholtz said:

The history of the music industry, from an investor’s critical perspective, is one of mismanagement, waste, and sheer stupidity which is hard for the ordinary business person to comprehend . . .

I concur. But don’t take my word for for it — or even Barry’s. How about the view of the world’s richest man? With Barry’s comment fresh in mind, I came across this tidbit in today’s New York Times story about the Microsoft Zune music player:

In an interview here this week, Mr. Gates hinted at his strategies for taking potential customers from Apple and expressed bewilderment that the recording industry had failed to turn digital music into a big moneymaker.

Emphasis added. Do you know why Gates is bewildered about this? Because he’s a much, much better business thinker than the folks who run the record industry, that’s why.

I would love for someone from the music business to take issue with that statement. All I have to do is point to the numbers. And I say this as someone who’s thoroughly skeptical about Microsoft’s monopolistic ways. Even with his monopoly advantages, Gates is still savvier about customer needs than the music business is.

This leads me to assert for the music business the same thing that I’ve asserted about the airline industry over and over. Someday, somewhere, somebody is going to figure out how to make money in a sustainable way from recorded music, taking advantage of digital music’s downloadability rather than trying fruitlessly to fight it.

Oh, wait: Steve Jobs already did that for Apple. Some of the biggest bands around have sussed this one out, too.

Who’s up next to make a fortune in the music business? My bet: not the big labels.

Category: Entertainment,Legal,Media