When portable MP3 players crashed the party in the late 1990s, they threatened the entire economic model of the old and venerable record labels. These companies had successfully navigated a series of shifts in playback technology—most recently from vinyl and magnetic tape to compact disc. Now they found themselves at the mercy of an upstart ecosystem that could replicate the digital sound files contained in those compact discs and in seconds distribute them throughout the world at almost no cost. They responded with litigation and largely ineffectual attempts to lock up the music they had commercial interests in through what was euphemistically called ‘digital rights management’.
Ironically, the computer maker Apple, which had risen from the ashes in part as a result of the popularity of its own MP3 players, became a victim of innovation when music-streaming services such as Spotify and Pandora began to take business away from its own MP3 download store. Apple’s US$3 billion purchase of Beats Electronics, in May 2014, was in part an attempt to reverse the decline by bringing Beats’ successful subscription streaming service into the fold.
The music industry is not alone in wrestling with the fallout from such digital disruption. Book publishers, newspapers and other printbased media have for years struggled to create viable new business models and to stay relevant in the internet age. But there is more to it than the displacement of a number of popular media by new, digitallybased successors. As Andrew McAfee of MIT Sloan School’s Centre for Digital Business notes, a great deal of other information is now being digitised. As a result of online social media our social interactions are increasingly digitally mediated. A vast array of sensors that measure pressure, temperature, force, stress and so on are digitising the attributes of the physical world. And our whereabouts increasingly is digitally recorded and tracked by GPS-enabled smartphones.
The Austrian economist Joseph Schumpeter famously observed that the most significant economic advances are often accompanied by what he called “creative destruction”, which realigns profit structures, shakes up entire industry sectors and topples business incumbents. And this process, which has often been driven by technological innovation, increasingly has digital disruption at its core.
Fittingly, the cover of this issue of the Business Review carries an algorithm-generated word cloud of its contents. As can be seen, the contributors cover a lot of ground—from the nationwide roll-out of high-speed broadband infrastructure to the challenges of online education; and from game-changing digital currencies and 3D printing technologies to the potentially disruptive ‘gamification’ of corporate recruitment.
The articles bear witness to the fact that digital technologies are forcing a new tune on the world. For many organisations, the question comes down to this: Is it a tune we can dance to?
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