particularly as it relates to digitally downloaded music files.
The more precise point is the lack of understanding of value by the music company executives.
By keeping their focus on the inside of their companies, they completely ignored the external value potential of easily obtaining music files.
It took Steve Jobs of Apple Computer to capitalize on this opportunity with iTunes—which at the time of this writing has a 70 percent market share on the legal downloadable music market—in an eerily analogous manner in which he capitalized on the personal computer opportunity invented at Xerox’s Palo Alto Research Center, validating Mark
Twain’s line, “History doesn’t repeat itself—but it does rhyme.”
Had the music company executives been focused on the outside of their companies—
studying, analyzing, and innovating what their customers found valuable—
they could have invested many millions into productive research and development
rather than throwing away that sum down the judicial sinkhole.
Yet the Napster saga is just one in a long history of revolutions taking place outside
the confines of an existing industry, in what the Austrian economist
Joseph Schumpeter labeled “creative destruction.” The reason entire indus-