This rapid transformation of the music industry is a classic example of how an innovation is able to disrupt an entire industry and make existing industry competencies obsolete. By the end of 2013, the sales of physically distributed recorded music (e.g., cassettes, CD, vinyl) measured in unit sales, were back at the same relatively low levels of the early 1970s.ĭuring the 15 years that has passed since Napster was launched, the music industry has been completely transformed and the model that ruled the industry during most of the past century has been largely abandoned. As soon as one file sharing service was brought to justice and required to cease its operations, new services emerged and took its place. Even though the traditional music industry used very aggressive methods, both legal and technical, to stop the explosion of online-piracy services such as Napster, Kazaa, Limewire, Grokster, DC++, and The Pirate Bay, it was to no avail. However, a string of other, increasingly sophisticated services immediately followed suit. Napster was fairly quickly sued by the music industry establishment and was eventually forced to shut down the service. Shawn Fanning created and launched a file sharing service called Napster that allowed users to download and share music without compensating the recognized rights holders. At the end of the nineties, spirits among record label executives were high and few music industry executives at this time expected that a team of teenage Internet hackers, led by Shawn Fanning (at the time a student at Northeastern University in Boston) would ignite the turbulent process that eventually would undermine the foundations of the industry. Approximately one billion records were sold worldwide in 1974, and by the end of the century, the number of records sold was more than three times as high. In 1999 the global recorded music industry had experienced a period of growth that had lasted for almost a quarter of a century.
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