Why “majors” surge in the post-disruptive recording industry

Abstract

Purpose The recording industry has gone through a far-reaching disruption, but the major record companies from the past continue to surge. The following question is addressed: Why has disruption in the recording industry not followed the patterns of generic examples from other sectors? The purpose of this paper is to describe and explain why the digital disruption does not lead to the disruption of all types of companies. Design/methodology/approach This longitudinal study is based on a large set of secondary sources combined with in-depth interviews in Sweden’s recording industry. Findings Findings indicate that when customers turn to streaming, the major record companies’ direct control of which music the consumer is exposed to increases. This main finding contrasts statements that streaming services would facilitate peer-to-peer sharing activities between music customers and make record companies redundant. The major record companies have remained at a prosperous position due to the control of valuable content and marketing assets, as well as asymmetric interdependency among parties in the supply chain. Research limitations/implications The recording industry is different to many other sectors based on the latent value of catalogues, and the conclusions drawn from this paper should thereby not be taken for granted for other industries. Practical/implications Findings suggest that by “reading” the development of the industry and understanding what key resources create dependencies and revenue flows, managers would be better at tackling disruption. Originality/value The paper contributes to previous literature by describing how incumbent companies survive and even prosper post-disruption. It adds to the understanding of the digitalization of the recording industry and points at how dependencies help to understand disruption.

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