What Jukeboxes Teach About Disruptive Business Models
Sure, the jukebox may not be exactly the shining model of innovation these days, but it inspired a lot of innovation that came afterward (think Spotify). For trade groups, it might be a good reminder that coming to terms with disruption might be better than trying to tear it down.
Every good idea starts somewhere, and the launch of Top 40 radio started with a jukebox.
In the late 1940s or early 1950s, a radio station owner named Robert Todd Storz (who may or may not have been hanging out with his program director at the time) realized teenagers tended to pick the same handful of tunes when dropping a nickel into the jukebox at the local bar, or diner, or wherever he was at the time. The details are fuzzy, but it totally makes sense—we often get inspired by the things around us, and while the format certainly has had its flaws over the years (as anyone who’s listened to Pitbull 30 times in a week while driving around town can tell you), there’s more good about it than bad.
Surprisingly, jukeboxes taught radio a thing or two about data analytics about 50 years before anyone else used that term. The Billboard charts that track music now? They didn’t start out nearly as advanced as they are now—and one of the earliest charts was a jukebox chart that started way back in 1938, based on purchases of a song by owners of such machines. (There was even a competitor to Billboard that focused specifically on the jukebox industry.) The formalized formatting of radio came later—as did the SoundScan system that tracks the reach of a song or album to within an inch of its life. The jukebox, with its consistent ways of tracking data, became a direct inspiration to radio.
A lot of good ideas came after the jukebox within the music industry, and a recent Pitchfork article gathered up most of them. In his piece “Station to Station: The Past, Present, and Future of Streaming Music,” author Eric Harvey makes a compelling argument that Spotify-style streaming music is a phenomenon more than 100 years in the making—and that the physical form of such music, the records of yore, was actually an “anomalous blip” along the way.
It’s no accident that we’ve gone from 78s to Beats Music (thanks Dr. Dre), and that the headaches of Napster made way for a legal model—a model that itself has shifted from digital rights management-based ownership to a la carte streaming.
We Can Solve Disruption
I often find myself digging into stories like this on the hunt for lessons, and I think the one I’ll take from this is that we need to give the market more credit for solving disruptive issues on its own. Too often, we see innovations like Napster as industry wreckers that offer no benefit to our audiences.
In reality, they’re starting points to build a better horse. The peer-to-peer file sharing trend caught the music industry off guard, but in the span of just 15 years, a man who was at the front of the P2P phenomenon, μTorrent CEO Daniel Ek, became something of a saving grace for the industry. See, after Ek’s company sold itself to Bittorrent, Inc., he launched this little company you might have heard of called Spotify. Since then, the Swedish entrepreneur has figured out a way to make a weakness of the music industry (the constant theft of the industry’s music on peer-to-peer file sharing networks) into a strength. He scored the necessary deals, and the music industry came out ahead as a result.
(The competing streaming music service Rdio has similar bonafides. One of its co-founders, a fellow Swede named Niklas Zennström, earned his first taste of notoriety by co-founding the not-so-legal P2P company Kazaa. Oh yeah, he also launched a little service called Skype.)
While there are certainly downsides to these changes (ask David Lowery, or even Thom Yorke), the music industry eventually was smart enough to figure out that it could create something better than stealing by balancing its various needs in a way that reflected the market. People pay for music again, and they do because the industry made room for them.
Learn to Love Disruptors
Moving past music, I think too often industry groups see disruptive companies like Tesla Motors or Uber as the enemy. I’ve written about this in the past, and I stand behind my thoughts on the matter.
We have to stop seeing disruptive companies such as these as Johnny-come-latelies, encroaching on an industry’s territory, thinking they’re simply trying to cut us out of the market. Well-entrenched trade groups need to take a cue from the music industry (possibly with a little less resistance) and find ways to integrate what these competitors are selling into their approach. Maybe you weren’t first to the idea, but what if you were able to get the concept squarely into your comfort zone? It might be a better path for your industry’s future success.
(On this topic, Anthony Weiner—yes, that one—actually proposed an idea for the taxi industry to make friends with Uber. Weiner’s Business Insider piece partly involved Rahm Emanuel playing peacemaker, but mostly it involved getting the cab industry to boost its innovation efforts. Clearly, I let him read my blog post in advance this week.)
Here’s another way of putting it: A hard-line strategy is short-sighted. What if the jukebox industry came along to that enterprising radio station owner, told him to stop stealing its data-tracking ideas, and killed off Top 40 before it truly had a chance to thrive? Maybe we’d see more jukeboxes around, but would we be in a better place as a society? Probably not.
We’ve come a long way from the jukebox, but that doesn’t mean we haven’t carried some of its best lessons into the 21st century.