Slashdot | 17 Million People Stopped Buying CDs In 2008

I'm serious. Kodak went thru the same process. Focused on selling physical high-volume goods (photo film & paper), they viewed the customer as the store buying stuff in volume - not the individual actually using the product. As a result, when digital photography started catching on, the manufacturer was faced with threats of retail stores dropping their products entirely. You see, the standard drug-store film-processing model required the end user to enter the retail store three times (buy film, drop off film, pick up prints), thus encouraging additional "well, while I'm here..." purchases resulting from the walk-in photo-processing model. Digital photography trashes that model: no longer must the end user come into the store so often ... which upsets the retailer, who then tells Kodak et al "don't go digital or we'll drop your products entirely". Thing is, by considering retailer = customer, the manufacturer doesn't see that the end user is going to go digital anyway and sales of film will eventually evaporate. Scared of losing the "customer" (i.e.: retailer), the manufacturer fails to serve the "real customer" (i.e.: end user), and isn't ready to handle the transition when it finally hits.

Same problem with music. Big labels see the retail stores as the customers, who complain "if you go to digital distribution we won't have anything to sell, so stifle that MP3 stuff or we'll stop selling your product" - not seeing that the end user is, en masse, going all-digital-download. You're not the RIAA's customer, the retail store is.

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