That's Entertainment!
How Technology is Driving Change in the Music Industry
by JoAnn Warcholic Ashman
Technology has always
been an important factor in the entertainment industry. Technology
has played a critical role in improving the quality of the product—better
music as we moved from tapes to CDs, and better movies with DVDs.
But now, technology is touching everything, from where and what
we listen to, to how we hear about a new tune or movie, as well
as how and where we make a purchase.
Few could have dreamed that the Time Warner and AOL merger
announced early this year was possible. Few would have predicted
a deal valued at $350 billion. AOL, with revenues of $4.8 billion,was
acquiring Time Warner, with revenues of $26.8 billion. AOL's
market capitalization is about $164 billion and Time Warner's
is $97 billion. How did they come together? Because technology
changed the rules of the game. AOL was founded in 1985 and
today is the world's leader in interactive
services, web brands, Internet technologies,
and e-commerce services.
AOL has experienced phenomenal growth since it went public in 1992. But things were not always up, up, and away. There were some bumps along the way, and AOL managed to overcome the obstacles and today boasts more than 21 million subscribers. Time Warner is the world's largest media and entertainment company; it includes over 600 businesses spanning cable networks, cable systems, entertainment, and publishing.
Time Warner's history began in 1923 with Time magazine. The company grew by brand expansion and the acquisition of regional cable companies: Warner Communications in 1989 and CNN and TNT in 1996. Time Warner has fared well and continues to grow in every segment.
The formation of AOL Time Warner is the most visible sign that the entertainment industry is being transformed by technology. My company, Warner Music Group, is at the forefront of this change and I have never been more excited.
In years past, most of us were greatly influenced by our local and regional DJs. What played on the radio was what we wanted. Today, there are new and better ways of learning about new music, previewing music, and sharing it with friends.
Warner Music Group, like all the major music companies, never had a direct relationship with the consumer, the music fan. Technology has enabled us to change that. Today, we are building a consumer database that will help us understand consumer preferences like favorite artists or genre. We won't sell directly, but we will market and promote directly. When we better understand what the consumer likes, we can improve the experience by offering a closer touch with the right artist and the right music.
We offer alternative ways of finding out about new tunes, new artists, and new experiences. You can get e-mail notification of a favorite artist's new release, complete with a sound sample. This year, DVD audio discs will deliver digital sound that is closer to live than ever before possible. Best of all, you will be able to hear a song on digital radio, push a button to learn more about the song or artist, and then buy the music via download or the pre-recorded format of your choice.
All these capabilities are possible because of changes and improvements in technology:
- Streaming technologies enable digital downloads of music and music videos, including previews like Madonna's "American Pie."
- Enhanced compression and decompression technologies shorten the time required to send and receive text, graphics, audio, and video—so music downloads and videos like Vitamin C's are worth the effort.
- New software tools help to customize the information you receive. Campaigns are designed with you in mind, so one-to-one marketing is a win-win.
- Encryption technologies protect the product from being stolen as they maintain value for the customer, the artist, and the label.
Technology is changing all aspects of marketing, promotion, distribution, and sales at the same time that the product offering itself is changing. It is truly a game of move, change, or get out of the way.
For me, the game has started again. My introduction to technology came in 1984, the year of the Macintosh—the technology that set out to change the world. I was on that Macintosh team and shared that vision. Steve Jobs set the stage for radical change, but not even he would have imagined today's world back then. The Millionaires' Club is now the Billionaires' Club and most of the members have something to do with technology. Forget conventional wisdom; it is all about the technology. Whatever you do and wherever you work or play or communicate—the Internet and its related technologies are part of our lives. Technology has changed everything.
Here are a few examples:
- Traffic on the Internet is doubling every 100 days. (U.S. Office of Technology Policy)
- The number of e-mail messages sent on an average day in the U.S. was 300 million in 1995 and hit 3.5 billion in 1999. By 2002 the traffic will total 8 billion messages. (International Data Corp.)
- Consumers are spending lots of money on-line: a total of $27 billion in 1998. The motivation is not just to save money. Of those surveyed, 36% said they shop on-line to save time, while only 15% say they do so to save money.
- Total wages paid for information technology professionals have grown from $1.9 billion in 1991 to $4.7 billion in 1998. In the next five years, demand for expertise will outstrip the supply of skilled personnel. (Jupiter Communications)
- Nearly 30% of Harvard's 1999 MBA graduates chose careers in high-tech or venture capital, vs. 12% four years ago. (Fortune magazine)
Technology has created a new future for all of us. In a survey of U.S. Internet users, 44% said they considered the Internet a necessity and 77% believed it has made their lives better. But perhaps even more interesting, 67% surveyed said if they were stranded on a desert island they would rather have a computer and an Internet connection than a TV or telephone.
Technology is not just touching entertainment; it is changing every industry. You don't have to be a computer science or engineering graduate to participate. With technology, learning truly is a lifelong process. What was impossible yesterday is suddenly possible and affordable today. It's not about catch-up: it's about leapfrog. You need a passion and appreciation for technology and the imagination and desire to change the world. Just go for it!
|
|
|
|
|