So EMI has announced that its set to lose about 2000 people worldwide. In a major restructuring of the music company announced today, the boss has suggested that digital downloads of music are part of the problem. For years, the music industry has been telling us it is struggling against illegal downloads or people buying music at a cheaper rate from legitimate sites, like iTunes. However, when you look into this, you discover that not only does the music industry not understand the Internet, but they are also blaming the Internet for something that is nothing to do with the online world.

New research
shows us that actually over the last few years the proportion of music downloads is very tiny compared with the number of CDs that have been sold. Indeed, even now, after several years of things like iTunes, downloadable music only represents around a quarter of all music sales. Yet the bleating that we’ve heard from the music industry over the last few years would suggest that the entire industry is being ripped off by a bunch of teenagers in their bedrooms downloading music and preventing artists and the industry from receiving its much deserved income.

Looking deeper at the sales figures and the predictions for the coming few years it is possible to see the downloadable music sales will increase at the same time as CD sales will decrease. But by the time we get to 2011 there will still be $3 billion worth of CDs being sold still representing about half of all music sales.

All the sales data actually shows this is that people are buying less music overall. The issue that the music industry is facing is not that people are buying more chepa downloads – but that the recording companies are not providing the music we want. If it was, we’d buy it. The fact is, we are buying less music and that must mean the industry is failing to give us what we want.

The music industry has focused its entire attentions on the Internet and the problems it perceives the Internet is creating. In fact what’s been happening is that the music industry has failed to understand what its market really wants. So the music industry as like many other industries – focused on technology issues about the Internet because it thinks that’s where it’s problem lies. But the music industry’s problem clearly lies in not understanding what its market really wants.

And that’s the same for many online businesses as well. They think the answer to their problems lies in some new piece of technology. But in reality, most online businesses fail to understand their markets sufficiently well. As a result, they behave like the music industry, spending time on technological issues and solutions, when their businesses could be transformed by simply understanding their customers a little better.

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