By Doug Stephens

In 1999, a teenager and a relatively simple piece of technology rocked the music industry.   The teen was Shawn Fanning, the technology was P2P file sharing, the phenomenon was Napster and it changed the music industry forever. Developed over a summer by Fanning and his uncle, Napster allowed users to digitally upload and share music files.

The immediate response by the Recording Industry Association of America (RIAA) was an aggressive course of legal action against Napster for what it deemed copyright infringement. Soon the battle against Napster spread to include artists Metallica and Dr. Dre, who launched separate suits. No one was safe from the hailstorm of litigation and charges including file-sharers themselves.

After two long years of court battles, Napster was eventually shut down but in the meantime, other similar sites had sprung up.  Grokster, Madster and others carried on where Napster left off. File sharing was clearly an unstoppable force.  Yet, despite having an additional two years to evaluate the file sharing phenomenon and better understand the underlying reasons for its quickening momentum, the RIAA reverted to the same knee-jerk response – litigation.

And so in 2003, while the music industry jousted with windmills, Apple quietly launched iTunes and systematically monetized single-song downloading.  By 2009, 26% of all retail music sales were channeling through iTunes.

Broken Models Beg Disruption

What Apple understood (and what the music industry failed to see) was that file sharing itself wasn’t the problem.  People had been sharing files, including music, over the Internet for years before Napster came along.  In fact, long before we knew what a download was, people were making compilation cassettes for one another. The problem the music industry faced had nothing to do with technology or people like Shawn Fanning.  The problem was their product – specifically that music was sold in albums of 10 or 12 songs when what consumers really wanted were the best one or two tracks.  It had nothing to do with Napster and everything to do with the record industry’s archaic, arrogant and broken product model.  Had the industry only been honest and open minded about it, they might have actually partnered with or acquired Napster and harnessed the future themselves.

Disrupt or Be Disrupted

These “Napster moments” are happening all around us and in a multitude of industries.  Newspapers, publishers, and DVD rental chains, to name just a few, are being overwhelmed by changes that many saw coming a long time ago – changes that they could have been leading, rather than being annihilated by.

Such moments are particularly disastrous when companies or industries on the whole, simply refuse to acknowledge that their business model or core product must change.   For example, instead of embracing and capitalizing on e-reader technology, the publishing industry wasted precious time trying to convince us that nothing replaced the smell and feel of a paper book!  Really?  Try convincing a five year old with an iPad (which are now being sold at Toys R Us) in their hands of that.  Meanwhile, in February of this year, sales of e-books surpassed paperback sales for the first time.

Likewise, instead of developing the digital movie delivery opportunity, Blockbuster wasted time haggling with consumers over late fees while Netflix and others created the new distribution model right under their nose.

Painted into a Corner

And finally, here’s a real life example of an industry I feel is due for a Napster moment   – the architectural paint industry – an industry I actually spent some time in as a marketer.

If we’re being honest, paint is heavy to carry, and messy to use.  Changing décor involves the often-difficult process of choosing colors.  Selecting the correct finish can be tricky and preparation and application all requires effort, for which consumers have consistently expressed their dismay! Although vastly improved environmentally compared to older formulations, todays’ paints aren’t exactly natural spring water either.  Suffice to say, if we were inventing a way to get color onto walls for the first time, we probably wouldn’t come up with paint as the best of all solutions.  Essentially, we paint our homes the same way we painted our caves 50,000 years ago.

Enter Napster

It’s my firm belief that the manufacture of paint (as we now know it) for use by the average homeowner will be largely eradicated within a couple of generations (maybe sooner) by thin-film digital technology.  It doesn’t take a futurist to observe the speed with which both the thickness and price of LCD and plasma screens are decreasing.  In less than 60 years televisions went from being almost two feet thick to being less than an inch thick.  The first plasma screen was available in 1998 for an unbelievable $8,000.00.  A 50-inch plasma screen can be purchased today for under $1000.00!

Companies, like Displax in Portugal are already developing film surfaces as thin as a strand of hair that adhere to any flat or curved surface to offer touch screen capability.  Eventually it’s entirely conceivable that such thin screens will be wirelessly controllable from any handheld or tablet in the space and will accommodate any one of thousands of colors, designs and scenes.  Consumers will then have the ability to change décor any time they wish with touchscreen ease.  No effort, no mess…no paint.

So the question for anyone who makes his or her living from the manufacture, sale or application of paint is “what then?”  What will they sell?  How can a new and disruptive technology model work for them instead of against them?

The choices that lay in front of the industry are the same choices that companies like Blockbuster had.  The paint industry can disrupt itself or be disrupted.  Innovate its own controlled obsolescence by creating a new and better product or leave it to a Samsung, Apple or Intel to do it for them.

Like the paint industry, The “Napster Moment” for many is coming and my bet is, it’s coming sooner than they might suspect.

In a follow up to this post, I’ll talk about things companies and industries can do to project and protect against Napster moments.