How Traditional Forecasting Failed the Music Industry

There are many examples of organizations and industries that have used traditional forecasting models in situations where scenario planning would have been a more appropriate approach to disaster preparation. The music industry is one of the most glaring examples of this situation, in that the entire industry was caught off guard by the advent of peer-to-peer file sharing. As the industry faced the looming threat of loss of profits due to piracy, many executives resisted the technological change and attempted to use litigation to prevent p2p services from impacting their revenues (Hracs, 2012). As the music industry had dramatically changed over time, the landscape went from dozens of major record labels in the ’50s down to five major labels in 1999 (Hracs, 2012). A merger in 2004 between Sony and BMG saw the industry technically shrink to four major labels, and finally in 2012 down to three majors (Hracs, 2012).

While the industry evolved, investment into individuals became more refined as the risks associated with building an artist grew. Major labels resorted to investing in smaller labels, which were tasked with finding the talent, marketing the music, and building a community around the artist (Hracs, 2012). In its nascent stages the music industry had enjoyed a mutually beneficial relationship with the technology industry. The growth that the…