Creative Destruction: 30 Years of the Music Industry
Does anyone remember LP records?
In 1980, the music industry was dominated by LP/EP. With LP standing for long play and EP, extended play vinyl records, both represented almost 60% of the revenue generated by different musical formats. Next? Cassettes at 19.1%. By 1992 CDs were in that 60% position and by 2002, they moved up to 95.5%. Fast forward to 2012 and all has changed.
Music Industry Revenue Sources:
Sounds like Joseph Schumpeter.
Joseph Schumpeter characterized the unsettling process through which innovations replace established technology as creative destruction. The computer replaced typewriters. The auto eliminated the need for buggy whips. In the music industry, because of CDs, 78 and 45 rpm records became obsolete. And now, led by 13 to 35 year olds, internet based listening (see below) represents more than half of all music listening. For those of us who are older than 35, AM/FM radio is still #1 with a 41% slice of the listening pie.
Looking more closely at creative destruction in the music industry, we would see massive shifts in land, labor and capital.
Sources and resources: To see 40 years of the music industry in 40 seconds, do be sure to go to this graphic. It is excellent. NDC, the source of my second graph, also had additional fascinating facts about where we listen to music. Finally, this econlife post tells more about Joseph Schumpeter (1883-1950) while a good brief biography is at econlib.
Hat tip to Ezra Klein’s wonkbook.