Tuesday, May 5, 2009

Change rules to win

I am delighted to present a guest post by Adesh Sidhu. Adesh runs his excellent blog Not being Sarkari. He is a "Customer Advocate, Apple fan, Desi and an avid reader". He writes passionately on customer service - his blog carries many excellent posts. Thanks Adesh for your post that follows

Big boys make rules. Big boys want to rule the world by the rules they have created. They have created rules, which are convenient to them, and these rules serve as entry barriers to new players.

For so long music industry worked on royalty and record labels were operating by the rules, which they have created. From music creation to marketing of music to enforcement of copyright, record labels handle everything. Singers and musicians were depended on record labels for their success. Record labels were the big boys and rules they created were suited to them. Customers had to pay whatever price record labels decided. If record has only one good song, customers also had to pay for 7 below par tracks.

Then came the digital downloads. Napster changed the rules of the game. They were small but agile. They did not have resources but they had ideas. They challenged the age-old business model of record labels. Customers lapped this idea of free downloads. Customers had the power to choose good songs over poor songs. Napster was David. They almost changed music industry.

But Goliath did not like it. They objected this, as they were clueless on how to play the game with rules changed. They got Napster banned. Napster started the revolution by giving music digitally and later on iTunes capitalized on this revolution. iTunes model was little different as they were charging from customers for music download and taken steps to reduce piracy. This time record labels decided to partner with iTunes. Record labels knew that if they have to stay in the game, they have to adopt new ways and means of doing music business.

Singers and musicians were dependant on record labels to launch them and promote their music. With the advent of social media, not-so-known but innovative singers and musicians started building communities of their fan clubs. They started releasing their music on Internet and their fans can download the music directly from sites. Record labels are eliminated and singers/musicians are communicating directly with their fans. David won again.

Lot of many times we decide not to compete because we do not have resources. We rarely think of competing with bigger players by changing the rules.

PS: - This article inspired this post.

In case link does not work, use the link in parenthesis. (http://www.newyorker.com/reporting/2009/05/11/090511fa_fact_gladwell?currentPage=all)