We are hugely privilaged to be in beautiful Victoria, Canada, at Transmission 2009. Please check out the introductory keynote, by Paul Hoffert. You can find Paul’s biography HERE. Paul has great experience in China having set up Noank which was engaged from 2005-2009 in trying to create innovative copyright solutions for China.
THE MUSIC INDUSTRY’S BLACK SWAN
A Black Swan was symbol for something that was thought to be non-existent. However, Black Swans were discovered in 1796 in Australia.
So Black Swans took on a new meaning. They are things that are unexpected, but come to life (the internet, WW1 etc)
Nassim Taleb wrote a book in 2007, the Black Swan
. Key tenets on a Black Swan were:
– the event is a surprise
– the event has a major impact
– after the fact, the event is rationalized by hindsight. Could have been expected, predicted.
The Turkey Example
Farmer – good outcome
– feed and care for 999 days
– kill on 1000th day
Turkey – bad outcome
– the farmer is a friendly benefactor
– feeds and cares for them every day
– analysis of historic data – for 999 days, they believe increasingly that the farmer is their friend – their data supports it
– BUT Black Swan event happens on the 1000th day
It satisfies black swan criteria
– surprise
– major impact
– could have been predicted
2008 Recession Example
– Taleb predicted in 2007 book
– Didn’t rely on conventional wisdom
– Took contrarian action
– Made lots of money
File Sharing – Napster Example
User – Good outcome
– Free music
– Gains control of transaction
– Unrestricted use
Music Industry – Bad Outcome
– Consumer is a friendly benefactor
– Shops at controlled distribution channel
– Pays retail and is honest
– Analysis of historic data
– Behavior can be contained
– Business as usual
The Black Swan here was Napster and the ensuing rise of piracy:
– Surprise
– Major impact
– Could have been predicted
HOW CAN WE (the music industry) PROSPER?
– Exploit the business disruption
– Don’t rely on conventional wisdom
– Take contrarian actions
– Make lots of money