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A New Pair Of Glasses for the New Business Model

This is Celia Hirschman with On the Beat on KCRW.

As the music business continues to shift and evolve, a new industry emerges in its wake. It's time for us to wear a new pair of glasses.

For decades, music companies built vertical business models, acquiring increasingly related companies to attempt a synergy across corporate lines. They invested heavily in owning the talent, the distribution and the production facilities. But the tall structures fell prey to market shifts and made these very organizations vulnerable to takeovers. Ownership shifted radically.

These days, music corporations are beginning to adopt a lateral perspective, which is far more efficient. For survival, record labels have been forced to learn to focus on creating content in multiple formats and for multiple outlets. The technology is moving so quickly, they can't anticipate the next configuration. They've begun to take their foot off the pedal of production and distribution and focus on controlling the content.

The new model for the business is building quality content for exploitation in the digital download world, the gaming arena, satellite radio and television mediums, the mobile telephone boon as well as the traditional commercial CD and DVD market. The old school idea of making a CD package the most important sale is very out of date.

Perhaps the most significant differences between the old business mind and the new one is based in a philosophical value schism accentuated by age difference. Consumers in their 40's and 50's have grown up in a culture that valued exclusivity, economic class positioning, and club mentalities. In contrast, folks in their teens and 20's value greater access, time efficiencies and personal innovations. The transition between these philosophies seems to have occurred in the last 10 years.

The subtlety of these differences marks a serious shift in the interests of the youth culture, and in media companies for the future. Young business giants of the new millennium are interested in the lateral growth sectors, as they understand one good concept or product can produce a dozen different sales opportunities.

They are interested in bringing music to the largest group of businesses for the greatest sales numbers.

In fact, no one is more forward thinking in the music these days than the digital phone and gaming industries. Buy a cell phone right now, and chances are your e-mail, ring-tones, personal stock prices and sports scores are available to you as well. It's only a matter of time for music and television to follow suit.

Naturally, whenever there's a serious and dramatic shift in values in any industry, there's a period of high volatility and uncertainty.

All of this signals the end of a &quotmusic; business" as we know it and the evolution of the content business. Most of the old rules in the music business will be obsolete in a few years, and producing dynamic content for portable players will be the focus of all media companies. Ain't it fascinating to be on the cusp of the digital revolution? Stay tuned and watch the world unfold before your eyes.

This is Celia Hirschman for On the Beat on KCRW.

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