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I just read a great post from Mike over at Techdirt entitled ‘Perhaps It’s Not the Entertainment Industry’s Business Model That’s Outdated’. I was instantly intrigued because I consider myself in the camp that says it is obsolete. So I read on…

He says their business model is not obsolete, but…

What is obsolete is what people think the industry’s business model is. And, the worst thing is that the people most guilty of this are the industry execs themselves.

This instantly made perfect sense, especially with an analogy. I’ll try my own here. It’s growing fairly obvious that the PS3 is failing behind the Xbox 360 and the Wii. Why? Because Sony thinks the business model is making video game systems but in reality they are competing in the home entertainment market. This allows the Wii / 360 to own the market before Sony realizes it exists.

Back to Mike’s post…

Everyone may think that you’re buying “music” or “movies” but that’s very rarely what you’re actually buying. You’re buying the experience of going to the movies. Or the ability to have the convenience of a DVD. Or the convenience of being able to listen to a song on your iPod. And, in many cases, it’s not just one thing, but a bundle of things [...]

I wonder how many other industries this can be applied to? I bet one kind find analogous examples with Microsoft, GM, and other ginormous corporations.

It can still affect the small, agile company though - if you are not careful.

Sometimes it’s good to re-evaluate what your company does, who you compete against, and how your current model will translate into emerging markets. Or else you may end up obsolete.

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