Posted On 27. October 2015 By In Big Data, Business Intelligence, Cloud, Internet of Things, Trends & Vision

Industrial Digitalisation – What We Can Learn From The Music Industry

Right now we are experiencing the fourth industrial revolution. The introduction of the Internet along with sophisticated semiconductor technology and precise and affordable sensors paved the way for the IoT and big data which are fuelling a radical change often referred to as “Industry 4.0”. We reached a turning point and in order to stay successful we need to predict the future for industrial IoT (IIoT) applications as accurately as possible.

Surprisingly when it comes to digitalisation we can learn a lot from the music industry which has already gone through a similar process of challenges and opportunities. It is a 150 year journey back into our past which offers mistakes to learn from, inspiring ideas of creative masterminds to soak up and exciting and successful business models which can be transferred to the industrial sector.

However in order to keep this post to a length which is readable over a cup of coffee rather than a can we’ll sum up the first 100+ years of music recording history in a little graphic:

music-history

The invention of the CD transformed the music industry into a billion dollar business reaching the top of its success in the late 1990s. Not much later the music industry took a huge hit from the widespread personal computer which enabled consumers to copy CDs using “CD-Rs”.

However the appearance of songs in MP3 file format on the internet along with software like Nullsoft’s Winamp audio player for PCs and file sharing platforms like BitTorrent quickly grew to an even bigger threat for the music industry of the the 20th century.

In the beginning illegal music sharing was regulated by slow internet speed and it seemed like the bigger enemy still was the “CD-R” (I still remember how happy I was when I downloaded a 3 MB file in less than one hour!).

In 2002 there have been more privately recorded CD-Rs than original music CDs according to several representatives of the music industry. The following campaigns and lawsuits against piracy have been the last gasp of a giant which was already defeated by new technology and more convenient ways to listen to music.

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When was the last time you listened to a CD?

After the millennium new developments in technology came quickly and the music industry faced the most radical changes in its history. 

Some highly innovative companies recognised this change very early. In 2001 Apple introduced the first iPod and in 2003 the iTunes Music Store followed. This marked the end of sound records.

01original_ipod

The first iPod released in 2001

While Apple dominated the market for music downloads for a long time they slept through the beginnings of the last step of the music digitalisation: Cloud based music services.

When people began to upload music to platforms like YouTube the music industry again tried to get a hold of the trend with lawsuits and in many countries YouTube had to stop playing back those clips.

However some innovative companies like Spotify recognised the next big business opportunity: Consumers no longer want to pay for a single song or album they want access to music. “Whenever, Wherever, Whatever” is the new motto.

Spotify’s music streaming service launched in 2008 – Apple got into the music streaming business this year; 7 years later.

Spotify desktop-browse

Even Apple didn’t see this trend coming: Music Streaming “à la Spotify”

Now let’s translate the events from above to the industrial sector.

With cloud services and the IoT a space for completely new business models has been created. The music industry showed us that those models which make the life of customers and consumers easier will succeed. Trying to prevent changes with patents, lawsuits or campaigns will inevitable end in loss of business opportunities.

So what will be convenient for industrial customers and businesses? Cloud computing can provide tailored and cost efficient access to high computing power. Like CDs, hardware will be partially superseded by cloud services. Similar applies to local storage technology.

Smart services, which will offer tailored solutions and instant support to customers, will be another differentiator. Support, consultancy and maintenance offerings will no longer be sold based on issues as they occur but have to be integrated as on demand solutions directly in the customers processes. This will enable predictive problem solving and faster and more efficient production.

To put it in a nutshell: Right now these business models are comparable to the introduction of the iTunes Music Store.

The “Spotifys” of the industrial sector (which we will probably see in the next years) will recognise that patents and rights are not as strong as flexibility and innovation in order to create space for new opportunities.

I will follow up on this thought in the near future.

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Regional Application Manager. Driven by the unlimited goals we can achieve with modern technology and great engineering. My updates are inspired by trends, challenges and applications I identify in the semiconductor market together with our customers and suppliers.

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