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FROM CREATIVE DESTRUCTION TO CONVOLUTED CONSTRUCTION: Socio-technicalregimechangeintherecordedmusicindustry

SANJAY JAIN

Department of Management Nazarian College of Business and Economics

California State University – Northridge 18111NordhoffStreetNorthridge,CA91330sanjay.jain@csun.edu

Keywords:Socio-technicalregimechange,technologytransition,pipeline-platformevolution,institutionalentrepreneurship,socialconstruction,newcomer-incumbentdynamics

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ABSTRACT Inthispaper,wedrawontheinstitutionalentrepreneurshipliteraturetodevelopanunderstanding of technological transitions in digital fields – specifically thetransition fromproducts toplatforms.Empirically,weexamine the initiatives thatnewcomersandincumbentshaveengagedinoverthepasttwodecadestotransitionthe socio-technical regime of the recorded music field. Our account reveals theabundant yet limited impact of actor initiatives and highlights whatwe term thefragility of institutional entrepreneurship. This refers to the inability of bothnewcomers and incumbents to transition the socio-technical regime despiteinitiatingseveraleffortstodoso.Weidentifyunderlyingfactorsforwhythisisthecaseandsuggestthatthesecancontributetoafieldremaininginanongoingstateofflux.Wealsodemonstratehowthenewsocio-technicalregimeisemergentinnatureanddependon the interactionsof the actors involved. In specifying thedynamicsthatunfoldaspartof such transitions,wesuggest that themigratorypathwaysofsocio-technicalregimesareoftencontested,capriciousandcontinual.Inarticulatingthese findings, we contribute fresh insights to the literatures on technologicaltransitionsandinstitutionalentrepreneurship.

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EversinceSchumpeter(1950)invokedtheterm“creativedestruction”,there

hasbeenarobust interestamonginnovationscholars inunderstandingthenature

of technology transitions. Historically, much of this work has employed an

evolutionary economics lens and focused on documenting the path charted by a

particulartechnicalparameter(asreflectedintheworkonS-curves(Foster,1986))

or in describing the technical dimensions of such change. For instance, one

influentialmodel (Tushman& Anderson, 1986) is based on a variation-selection-

retention dynamic, in which a technological discontinuity – defined as a price-

performance improvement over existing technologies so significant that “no

increaseinscale,efficiencyordesigncanmakeoldertechnologiescompetitivewith

thenewtechnology”(TushmanandAnderson,1986:441)--precipitatesaneraof

ferment inwhichmultiple variants of the technology competewith another. This

phase endswith the selection of a dominant design and is followed by an era of

incremental innovation during which the retained design is elaborated upon.

Anothersignificantstreamofresearchhas focusedonemphasizing the inactionof

incumbents in the wake of technological change – whether of the architectural

(Henderson & Clark, 1990) or disruptive (Christensen & Bower, 1996) variety.

Technological transitions, from this perspective, is largely about the (in)ability of

actorstoengageinactivitiesrelatedtothetechnicaldomain.

Missing from this discourse is an acknowledgement that technologies are

themselvesembeddedwithinaninstitutionalenvironmentthatgovernspatternsof

interactions among actors in a field (Granovetter, 1985; Garud & Jain, 1996;

Hargadon & Douglas, 2001). As construed in this paper, the institutional

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environment consists of elements that underlie the production, exchange and

consumptionoftechnologicalartifacts(Garud&Rappa,1994).Intermsofspecifics,

this includes such facets as public policies (Dobbin & Dowd, 1997), intellectual

property regimes (Levin, Klevorick, Nelson &Winter, 1987), standards (David &

Greenstein,1990),conventions(Leblebici,Salancik,Copay,&King,1991)aswellas

scripts and schemas (Hargadon & Douglas, 2001) associated with the use of a

technology.These facetsprovide theunderlying frameworkwithinwhichproduct

markets associated with the technology function. In recognizing the intertwining

between technologies and their institutional environments, Rip andKemp (1998)

invoke the term “technological regime” to refer to the “rule-set or grammar

embedded inacomplexofengineeringpractices,productionprocess technologies,

product characteristics, skills and procedures, ways of handling relevant artifacts

andpersons,waysofdefiningproblems:allof themembedded in institutionsand

infrastructures.” In a similar vein,Geels (2004) employs the term socio-technical

regimetodepictthe“deepstructure”orgrammarofsocio-technicalsystems.

It is this conceptualization of a technology – as a bundle of artifacts, rules,

normsandcognitions–thatweelaborateoninthispaper.Giventhis,technological

transitions typically involve changes in technology as well as in the institutional

environment.Muchoftheempiricalworkinthisdomainoverthepasttwodecades

hasemployedhistoricalcasestudiestoexaminetransitions insuchinfrastructural

or “pipeline” domains as electricity (Hargadon&Douglas, 2001), shipping (Geels,

2002),cargohandling(VanDriel&Schot,2005)andwaterutilities(Fuenfschilling&

Truffer, 2014). More recently, a vibrant scholarship has emerged that examines

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contemporary transitions to sustainability (Markard, Raven & Truffer, 2012).

However, there has been a scarcity of studies that explore the dynamics of

technological transitions in digital fields, i.e., information and communication

technologies(Garud,Jain&Tuertscher,2008andAnsari&Garud,2009arenotable

exceptions). This despite the fact that the emergence of the Internet and the

platform economy (Van Alstyne, Parker & Choudary, 2016) has been among the

mostsignificantdevelopmentsintheglobalbusinesslandscapeoverthepasttwenty

fiveyears.

In this paperwe address this gap in the literature by asking the question:

howdo socio-technical regime transitions take placewithin digital fields?We

begin by identifying key characteristics of such fields, which indicates that their

transitiondynamicsarelikelytobedifferentfrominfrastructuralorpipelinefields.

Wethendrawfromthe literatureoninstitutionalentrepreneurship(Garud,Hardy

and Maguire, 2007; Battliana, Boxenbaum & Leca, 2009) to examine one

manifestation of socio-technical regime transition in digital fields – themigration

fromapipelinetoaplatformconfiguration.Specifically,wetracetheactivitiesthat

newcomers and incumbents engaged in to transition the recorded music field

between1990-2010–i.e.,themovefromCDtoMP3technology.Ouraccountreveals

theabundantyetlimitedimpactofactorinitiativesandhighlightswhatwetermthe

fragility of institutional entrepreneurship. This refers to the tentative and

convoluted efforts of both newcomers and incumbents to transition the socio-

technicalregime.Weidentifyunderlyingfactorsforwhythisisthecaseandindicate

how these contribute to a field remaining in a state of ongoing flux. We also

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demonstratehowelementsofthenewsocio-technicalregimeemergeprovisionally

over time and are dependent on the nature of interactions between the actors

involved. In specifying the dynamics that unfold as part of such transitions, we

suggest that the migratory pathways of digital socio-technical regimes are

contested, continual, contingent and capricious in nature. In articulating these

findings,wecontributefreshinsightstotheliteraturesontechnologicaltransitions

andinstitutionalentrepreneurship.

LiteratureReview

In recent years, a number of innovation scholars have established that

technology transitions reflect a co-evolution of technological and institutional

change(Garud&Jain,1996;Rip&Kemp,1998;Hargadon&Douglas,2001;Geels,

2002). Along these lines, the multi-level perspective (Geels, 2002), or MLP, has

emergedas an influential descriptorofhow transitions in socio-technical regimes

takeplace.Accordingtothis,aregime,inprovidingorientationandcoordinationto

therelevantsocialgroups,representsthegrammarofthesystemandaccountsfor

the stability of a technological configuration. A regime itself is situated in a

landscapethatcomprisesofdeepstructuraltrends,whichareevenmoredifficultto

change. Finally, niches represent alternate socio-technical configurations that are

protected from ‘normal’market selectionuntil theybecome capableof competing

with the established regime. When developments at the landscape level put

pressureontheregime,thelattercandestabilizeandgivewaytoanichebecoming

thenewsocio-technicalregime.Extensionstothisframework(Geels&Schot,2007)

haveelaboratedondifferenttransitionpathways,basedonthetimingandnatureof

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theseinteractions.

Prior empirical work using the MLP has examined the dynamics of socio-

technical regime transition in sectors such as land transportation and shipping

(Geels, 2002). More recently, it has been applied extensively to describe

sustainabilitytransitionsinsuchdomainsaselectricitysystems(Geelset.al.,2016)

and water (Fuenfschilling & Truffer, 2014). These studies reveal a focus on

examining the dynamics of technological transitions within infrastructural or

product-baseddomains – i.e.,whathavebeenreferredtoaspipelinefields-- that

are typically capital intensive and organized in a value chain configuration (Van

Alstyne,ParkerandChoudhury,2016).Bycontrast,therehasbeenlessemphasison

examining the nature of technological transitions taking place within digital

domains – i.e., what we commonly refer to as information and communication

technology fields. The emergence of the personal computer in the 1970’s, the

Internet in the 1990’s and mobile communications in the 2000’s have, taken

together, dramatically reshaped the contemporary technological and business

environment. Inconjunction,agrowingandvibrantstreamofscholarship(Arthur,

1996;Varian&Shapiro,1999)suggeststhattheconfigurationofdigitaldomainsis

fundamentallydifferentfromthoseofinfrastructuralfields.Thiswouldsuggestthe

needtoexamineindepththedynamicsoftransitionindigitalfields–ataskthatwe

turntointhisstudy.

Inordertodothis,webeginbyidentifyingkeycharacteristicsofsuchfields

andthenspecifytheparticulartypeoftransitionthatweempiricallyexamineinthis

paper. Digital socio-technical regimes are built around technological systems or

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platformsthatcompriseofcomponents(bothhardwareandsoftware)thatneedto

be compatible with one another (Besen & Farell, 1994; Garud & Kumaraswamy,

1993). In such scenarios, a key element of the institutional environment are the

rules of engagement that form the basis for stable expectations among mutually

interdependent firms, thereby fostering complementary innovations and product

refinement (Garud & Jain, 1996). This includes the interface specifications or

standards that enable components of the technological system to function

effectively with one another (Garud, Jain & Kumaraswamy, 2002). Specifications

about the formand functionof componentsand the rulesdetermining interaction

between them together constitute a system's "architecture." Maintaining this

architecture involves significant coordination activity across practitioner

communities and networks of organizations (Tushman & Rosenkopf, 1992).

Conversely, changing this architecture requires significant modification of

ecosystem relationships (Moore, 1996; Adner, 2006; Ansari, Garud &

Kumaraswamy, 2016) and the concomitant institutional work required to

accomplishthis.

A second key characteristic of digital socio-technical regimes is that they

exhibit network effects or increasing returns to scale (Arthur, 1996) – i.e., the

platform’svalue toanygivenuser largelydependson thenumberofuserson the

network (Eisenmann, Parker & Van Alstyne, 2006). Fueled by the promise of

increasing returns, competition in suchregimes isoften fierce,given thatmarkets

associatedwiththemhavea“winner-take-all”qualitytothem(David&Greenstein,

1990).Moreover,thevirtualnatureoftheinformationalgoodsthatconstitutethese

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platforms(Varian&Shapiro,1999)impliesthatthereisaprofoundlyreducedneed

to own physical infrastructure and assets, making updates to and the scaling of

thesesystemssimpleandcheap (VanAlsytne,Parker&Chowdury,2016).Finally,

therelentlesspaceofchangeintheunderlyingtechnologiesthatthesetechnological

systems reside on – as reflected in Moore’s Law – highlight a landscape that is

inherently dynamic. These characteristics of digital socio-technical regimes –

compatibility,networkeffectsandthevirtualnatureofgoods–combinedwiththe

vibrancyof the landscape suggest that thedynamicsof technological transitionof

theseregimesarelikelytobedifferentfromthoseofpipelinefields.

Inthispaper,weexamineaspecifictypeoftransition–thatfromapipeline

towards a platform regime.Many goodshave traditionally been sold in a product

format (e.g., books, CD’s, DVD’s, etc) or through physical retail, this requiring the

craftingofelaboratesupplychains–i.e.,pipelines--inordertoensuretheirtimely

and widespread delivery. However, over the past few decades, these goods are

increasingly being transacted over the Internet via platforms that serve as

cybermediaries(Sarkar,Butler&Steinfield,1995).Thesetransitionshaverequired

a fundamental re-think of the technologies, business models and institutional

arrangements that constitute the extant regime. They have also set up existential

battles between incumbents (i.e., the bearers of the existing regime) and the

newcomers(ornicheplayers)–oneofwhichwechroniclehere.

In order to do this, we build on the burgeoning literature on institutional

entrepreneurship (Garud, Hardy & Maguire, 2007) – to further illuminate our

understandingoftechnologicaltransitionprocesses.Thisstreamofresearchfocuses

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on the ‘activities of actors who have an interest in particular institutional

arrangements and who leverage resources to create new institutions or to

transformexistingones’(Maguire,HardyandLawrence,2004:657).Itrootscanbe

traced to DiMaggio’s observation (1988: 14), that ‘new institutions arise when

organized actors with sufficient resources see in them an opportunity to realize

intereststhattheyvaluehighly’.Whilepriorresearchfocusedonhowinstitutional

forces influenced organizational processes, this literature emphasizes how

institutionsthemselvesareshapedbycreativeentrepreneurialforces(Garud,Hardy

&Maguire,2007).Empiricalworkinthisdomainhastracedtheactivitiesofspecific

actors (either individual or collective) who craft and build support for new

institutionalarrangements,akintoasocialmovement(Rao,1998),employingsuch

strategiesas technicalandmarket leadership, lobbying for regulatorychange,and

discursiveaction(Fligstein,1997;Garud,Jain&Kumaraswamy,2002).Theseactors

deploy social and political skills while initiating changes that break with the

institutional status quo in a field (Battliana, Leca & Boxenbaum, 2009). In recent

years, the term “institutionalwork”hasbeenemployed todescribe thepurposive

actions of individuals and organizations aimed at creating, maintaining and

disruptinginstitutions(Lawrence&Suddaby,2006).

A key theme that runs through this research stream is the role that

newcomersandincumbentswithinafieldplayasinstitutionalentrepreneurs.Along

these lines, Leblebici et al (1991) andMaguire et al (2004) emphasize the roleof

newcomersor fringeactors in initiatingsuchchangegiven theirmarginalizedand

disembedded position, and hence their greater exposure to institutional

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contradictions(Seo&Creed,2002).Theseactorsareabletobridgediversesetsof

stakeholders and access disperse resources within emerging fields. On the other

hand,Rao,Monin&Durand(2003)andGreenwood&Suddaby(2006)suggestthat

incumbents are often the initiators of institutional change given their higher

awarenessofsuchpossibilitieswithinafieldaswellastheir(relative)immunityto

its institutional pressures. Their network position exposes them to field-level

contradictionsandtheyareoftenwillingtoexperimentwithalternatepossibilities

asameanstosecuringtheirfutureviability(Petkova,Wadhwa,Yao&Jain,2014).

In this paper, we build on this research to suggest that shifts in socio-

technicalregimescanbeconceptualizedasfollows:actorsrecognizecontradictions

within the extant regimeand thenharness these – employing acts of institutional

entrepreneurship– to initiate transitions.However, incontrast toearlierresearch

thathashighlightedeithernewcomersorincumbentsasbeingthedominantbearer

ofchange,wetracktheactivitiesaswellastheinteractionthattakeplacebetween

these actors and the resultant impact that they have on the transition trajectory.

Tracing these dynamics, we suggest, provides a more grounded depiction of the

unfoldingprocessandenablesustoengageinnoveltheorizingrelatedtothenature

ofthesocio-technicalregimetransition.

ResearchDesign

Inthispaper,weemployedanaturalisticmodeof inquiry inwhich insights

areinducedthroughinterpretivemeans(Lincoln&Guba,1985).Thisisappropriate

giventhecomplexandembeddednatureoftheinitiativesbeingobserved.Inother

words, fielddynamicsarebetter explicatedbydelvingdeeply into the specificsof

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thecontextandproviding“thick”descriptions(Geertz,1973)thatenablethetracing

of unfolding processes. In presenting rich, detailed and historically grounded

material, we contrast extant understandingswith observed events in an effort to

broaden existing theory and generate new insights (Lee, Mitchell & Sabylinski,

1999). Our inquiry mode emphasizes “procedural adequacy” and “credibility”

(Lincoln & Guba, 1985) which we establish by employing steps that Miles and

Huberman(1984)suggestedintheirprimeronqualitativeresearch.

Sampling in theory building studies relies on choosing “strategic research

sites” (Bijker, Hughes & Pinch, 1987) that capture the integral aspects of the

theoreticalphenomenaunderexamination.Inconductingthesestudies,careneeds

tobetakentoensurethatthefindingsaregeneralizedinananalyticalratherthan

statistical sense to other contexts (Glaser& Strauss, 1967, Eisenhardt, 1989).We

chosetherecordedmusicfieldasourresearchsiteforthefollowingreasons.Now

over100yearsinexistence,thisisanexemplarofafieldthathadawell-established

socio-technicalregimeunderpinningit’sfunctioning.Sincethe1990’showever,the

adventofdigitaldownloadingtechnologyandtheascendanceoftheInternetopened

upopportunities for significant reconfiguration of the existing order. In response,

newcomersandincumbentshavebothlaunchedinitiativestoshapethistransition.

Giventhatsuchactivityisthefocusofourtheoretical inquiry,thisfieldrepresents

anexcellentcontextinwhichtoextendtheoriesofsocio-technicalregimetransition

–specificallythetransitionfromapipelinetoaplatformconfiguration.

Whatmakesthisresearchsiteparticularlycompellingisthatwewereableto

observe initiatives to transition the socio-technical regime even as they were

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unfolding.Observing thesedynamics in real timeenabledus tobettercapture the

inherent uncertainty that actors face when attempting such transitions. Such a

prospective design – i.e., studying history “in the making” -- provides a different

perspective (and set of insights) than a purely historical account, which can

sometimeslapseintoanarrativeoftheinevitable.Ontheotherhand,thefactthat

thistransitionhasbeenunfoldingforthepastfewdecadesensuredthatthepatterns

thatweobservedwerenotlikelytobeepiphenomena.

Wereferredtoover40booksanddissertationswrittenbyindustryexperts

andacademics(theseincludeAlderman,2001;Hull,2003;Gillespie,2002;Knopper,

2009;Witt,2015)andaccessed/readover600mediaarticlesaspartofassembling

our dataset related to the emergence and evolution of the recorded music field.

These materials provided us with a deep understanding of the socio-technical

regimeofthefieldpriortotheemergenceofdigitaldownloading.Inparticular,we

gained an extensive understanding of the underlying legal framework (copyright

law) as well as the standards, practices and understandings that came to

characterize production, exchange and consumption of recorded music over the

pastcentury.

Inaddition toestablishingahistoricalbaseline,weengaged inan intensive

data collection effort to chronicle the initiatives that incumbents and newcomers

have engaged in to reconfigure the logic of this field since the mid-1990’s. This

involvedtrackingpubliclyavailableinformationfromvariouson-linenewsservices

includingCNETNews,NewYorkTimesOnline,TheWallStreet Journal Interactive

EditionandWiredNews.Thissearchyieldedover1800newsitems.Inaddition,we

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downloaded all the press releases available on theRIAAwebsite, accessed all the

articlesrelatedtothemajorrecordingcompaniesresponsetodigitaldownloading

technology that have appeared in Billboard, the industry’smost prominent trade

journalandobtainedalltheCongressionalrecordsrelatedtohearingsonthefuture

of digital music. These multiple data sources helped us accomplish triangulation

(Jick, 1979) and reduced the likelihood of retrospective bias given that we got a

contemporaneous feel for the phenomena – i.e., these various sources described

eventsintermsofthetemporalcontextwithinwhichtheyunfolded.

Poole,VandeVen,Dooley&Holmes(2000)suggestthatinordertoexplicate

the processes underlying field dynamics, one requires a narrative that relates the

sequenceofeventsastheyunfoldovertime.Inpreservingchronologicalflow,such

an account enables the researcher to gain a better grasp of which events led to

consequences, enabling him/her to make stronger statements about causality.

Proceeding from this principle, we constructed a timeline of events from our

archival effort (see Table 1) and used this to generate a qualitative account that

providedacondensedbut“thick”descriptionoftheflowofeventswithinthisfield.

We organized this description around the sensitizing concept (Strauss & Corbin,

1990)centraltothisstudy–i.e.,thedeploymentofinitiatives,bybothincumbents

andnewcomerstotransitionthesocio-technicalregimeoftherecordedmusicfield.

Inordertoestablishitsvalidity,wedistributedthiswrite-uptothreeindustryexperts

whoverifiedtheaccuracyofitscontents.

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Evenaswedevelopedthedescriptiveaccount,weremainedcognizantofthe

theoretical issues and constructs that emerged. Through ongoing discussions and

numerousiterations,wegeneratedandexploredtentativeconstructsthatappeared

to capture the dynamics thatwere unfoldingwithin this field. We subjected our

exploratorytheoreticalframetothescrutinyofthecontinualdatastreaminorderto

actively modify and abandon its elements as well as add new elements as

appropriate. We went through three major revisions of our theoretical framing

beforesettlingontheonedevelopedinthispaper.Theemergenttheoreticalframe,

inturn,guidedfurtherdatacollection.Thisprocessofiterationbetweentheoryand

data continued until our narrative adequately captured developments in the field

and theoretical frame and its underlying generative mechanisms were specified

(Tsoukas, 1989; Strauss & Corbin, 1990). Put differently, analysis at this stage

involved converting descriptive historical accounts into analytical ones thatwere

couched in theoretically relevant language (Bates, etal.,1998).Asa final step,we

comparedtheinsightsemergingfromourinductiveframeworktothoseprevalentin

theliteratureasameansofextendingandelaboratingcurrenttheory.

Ourinductivestudyyieldedthreekeyinsights:attheactorlevel,wespecified

anideathatwetermthefragilityofinstitutionalentrepreneurship–i.e.,theinability

of both newcomers and incumbents to effectively transition the socio-technical

regimeofanestablishedfielddespitetheseactorsbeingawareofsuchopportunities

and initiatingseveralefforts todoso.Weprovideunderlyingreasons forwhy the

actions of these actors often have limited impact. Second, we suggest that such

failurescanleadtoorganizationalfields(andthesocio-technicalregimesassociated

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withthem)remaininginanongoingstateofflux.Andfinally,weillustratedhowthe

new regime is emergent anddependedon the interactionsof the actors involved.

Weelaborateontheseinsightsintheanalyticnarrativethatfollows.

DISHARMONYINTHERECORDEDMUSICFIELDBlockbusteralbumswouldsellasmanyastwomillioncopiesoutofthegate;recordstoresreporteddouble-digitgrowth.TheindustrywassobullishthattheRecordingIndustryAssociationofAmericasooninstituteda''diamond''certification,foralbumsselling10millioncopies.Moneywaseverywhere.Musicvideosbecamemoreelaborateandexpensive,andexecutiveswererewardedwithincreasinglylargebonuses.'Itwaswhenthingspeaked,''saidJeffPrice,anindustryveteran,''andit'swhenthingsbegantogotohell.''--Browne,2007describingtherecordedmusicfieldcirca1998

The emergence of audio recording technology can be traced back to the

invention of the “talking machine” (phonograph) by Edison in 1877. While he

visualized this device as an office machine that would be primarily used for

stenography, itwasBerlinerwho envisioned the contours ofwhatwould become

therecordedmusicfield.Atthefirstdemonstrationofthegramophonethathehad

developedin1888,Berlinerarticulatedtheformationofamass-marketthatwould

involveasystemofroyaltypaymentstoartistsderivedfromthesaleofdiscs.Prior

tothis,sheetmusichadbeenthemainvehicleforthemassdisseminationofmusic

andpublisherswereatthecenterofthefield.

Even as recorded music faced a number of technical, legal and cultural

obstacles, it grew unabated over the next few decades with revenues reaching a

record $106 million in 1921. With the advent of commercial radio broadcasting,

however, this business shrunk dramatically, and revenues dropped to an all-time

lowof $6million in 1933, prompting awave of consolidation. By 1950, however,

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recordshadbecomethestapleofallradioprogrammingandthedominantmedium

ofmusicasawhole.Recordingcompaniesreplacedpublishinghousesasthecentral

players in this domain. These actors further consolidated their position over the

next fourdecades througha seriesof initiativesaimedatdefiningandcontrolling

thesocio-technicalregimeassociatedwiththemusicfield(seeTable2).

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The RIAA (Recording Industries Association of America) was the key

collectiveforumthroughwhichtherecordingcompaniesshapedthesocio-technical

regime. Founded in 1952 as a means for combating rampant piracy, this trade

association grew rapidly and had over 300 members by the early 1990’s (Hull,

2003). The RIAA’s mission remained remarkably stable over time – to foster an

environment that supported and promoted its members' creative and financial

vitality. As part of this mandate, it lobbied for various amendmentsmade to the

CopyrightActaswellasmonitoredandenforcedintellectualpropertyrightsatboth

the state and federal level. On this front, it engaged in a seemingly endless battle

with a variety of piracy approaches that included bootlegging, counterfeiting and

illegalelectroniccopying(Heylin,1995).Onthesymbolicfront,theassociationwas

responsible for perpetuating the star artist system by certifying albums with

platinum,goldorsilverstatusbasedontheirlevelofsales.Asalegalandsymbolic

watchdog, the RIAAworked actively to provide guidelines as towhat constituted

appropriateformsofbehaviorvis-à-visthetransactionofmusicasacommodity.

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An elaborate legal framework, a stable technical format and an ingrained

system of practices and understandings supported the socio-technical regime

associated with recorded music in the early 1990’s. Moreover, by positioning

themselvesatthenexusofacomplexsystemofexchange–onethatwasarranged

around a physical product organized in a “pipeline” configuration -- recording

companieswereintegraltodefiningandcontrollingtheregimeassociatedwiththis

field.Indeed,themajorlabelsenteredthe1990’swithrenewedvigor,withsalesof

recorded music reaching a record $30 billion worldwide in 1993. However, this

well-entrenchedsocio-technicalregimewastocomeunraveledwiththearrivalofa

noveltechnologyaroundthistime.

Technological change and the emergence of contradictions in the extant socio-

technicalregime

Prior research has established that socio-technical regimes – and

institutionalized fields more generally -- possess latent contradictions that can

potentiallyengenderendogenouschange(Leblebicietal,1991;Geels,2002;Garud,

Jain & Kumaraswamy, 2002). Under such conditions, newcomers, who are less

embedded to the extant regime, often pioneer innovative practices that are

eventually adopted by other actors (Leblebici, et al, 1991). But how did these

dynamicsplayoutwithintherecordedmusicfield?

In this particular case, unanticipated applications of the extant technology

surfaced contradictions in the extant socio-technical regime, with this process

takingaboutadecadetounfold.Evenasthecompactdisc(CD)begantotakeholdas

theformatofchoice,engineersbegantoexplorepossibilitiesofferedbythesimilar

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(digital) code employed by CDs and computers. One such research area was the

developmentofcompression/decompressionalgorithms,orcodecs,thatshrankthe

sizeofmusic filesconsiderablywhile largelymaintaining their fidelity.Aresearch

groupattheFraunhoferInstitutewasabletoreducethisfilesizebyafactorof12

around the late 1980’s. The Moving Picture Experts Group (MPEG) within the

International Organization for Standardization (ISO) approved this specification -

referred to as MP3 – as a dejure standard in 1992. While other methods of file

compression were available at this time, a factor that made the MP3 format

appealing was its open nature, i.e., the lack of any security elements in the

specification.1Thisfeaturewastoplayasignificantroleintheexplosivegrowthof

thistechnology(aswellascontributetoitsnotoriety)laterinthedecade.

Newcomerinsurgence

Withhigh-speedaccesstotheInternetbecomingareality,firstatuniversities

and then in homes beginning in themid 1990’s, newcomers to the field began to

explore possibilities in coupling compressed audio files with the distributional

capabilitiesofferedbythisnewonlinemedium.Theseactorssoonrecognizedthat

this combination afforded them with opportunities to significantly reshape the

socio-technicalregimeassociatedwithrecordedmusic.Anexemplarofthisformof

grassroots experimentationwas the InternetUndergroundMusicArchive (IUMA),

oneoftheWeb’sfirststart-upcompanies,foundedin1993byJeffPattersonandRob

Lord. The site hosted statistics and stories about unsigned bands and provided

samples of their music for download. A reporter described the site as a ‘kind of1Bycontrast,anumberofotherfilecompressionformatsavailablearoundthistime,suchasLiquidAudio,weresecureinthattheyhadbuiltinuser-restrictions.

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digitalclubwherethebandsplayfor free, there’snocoverchargeandtheowners

arejusthappythatyoucame”(Alderman,2001).Lordexplained:“Attheheartofit

all, IUMA is about letting the music speak for itself and letting the artist speak

directly to their fans” (Alderman, 2001). This notion of reviving the relationship

between performer and listener was also embraced by MP3.Com, a company

launchedbyMichaelRobertsoninNovember1997.Bandscouldposttheirsongson

thiswebsiteforfree;userscouldbuyCDsofthebandforapricesignificantlylower

thantheusualCD.Whilethestart-upwouldsplittheprofitsofsuchsales,itwould

assertno rightson themusic. Suchpractices represented radicaldepartures from

theexistinginstitutionalarrangementsthatexistedbetweenperformers,consumers

andmusiccompanies.AsRobertsonelaborated:

“We’re talking about fundamentally changing how (consumers) buytheir music, how much music they buy…we are changing how youlisten tomusic,whereyou listen to it,whatmusicyou listen to, andhowartistsgetpaid.”(Alderman,2001)ThenewcomersalsotookstepstoinfusetheMP3formatwiththerhetoricof

revolution,withRobertsonbeingaparticularlyvocalevangelistforthespecification.

Asheproclaimedat the firstMP3 summit (held in1998), organizedas an annual

conference for enthusiasts of this technology: “There are two classes here – the

music industry,which is interested in protecting its distribution and the Internet

crowd, which is more focused on the consumer and the independent artist”

(Alderman,2001).Asinterestinonlinemusicgrew–forabriefperiodin1998,MP3

surpassedsexasthemostpopularsearchtermontheInternet(Sullivan,1999)–a

number of other firms, such asWinamp, Liquid Audio, Goodnoise (later EMusic),

21

Riffage,andListen.com,gotstartedwiththehopesofredefiningtherecordedmusic

fieldandcashinginontheprocess.

However, these newcomers soon found that attempting to establish a new

socio-technical regime from the ground up was no easy task, given how deeply

entrenched existing practices and understandings were. For consumers, the non-

availability of music by established artists reduced the allure of these new

distribution systems. For artists, these sites mainly served as stepping-stones to

obtaining a more lucrative contract with an established label. Moreover, the

revolutionary rhetoric employed by the newcomers did not endear them to the

incumbents,wholargelyignoredorrebuffedtheirattemptsatbuildingrelationships

withthem.Ascommercialimperativesbegantosupersedeotherconsiderations,the

inabilityof these start-ups to gain traction for theirproposed systemof exchange

from key constituents contributed to their marginal influence on reshaping the

extantsocio-technicalregime.AsJeffPattersonreflected(Bacon,2001):

Whenwestartedout,ourattitudewas,“We’regoingtokilltherecordindustry!” You know, disintermediation….We realized pretty quicklythat there’sactuallyahugeplace for labels….Thegoalofmostof theartistswedealwithnowis togetsignedtoa label.Theywant toberock stars. And in order to be rock stars they need money behindthem….Ourattitudeisthatbeinginabandisstillabusiness.”

Evenastheseactorsfalteredintheirefforts,theentryofanothernewcomer

had amore subversive and inimical impact on the extant socio-technical regime.

Napster was introduced in June 1999 when Shawn Fanning and Sean Parker

designedasoftware“peer-to-peer”applicationthatgreatlyfacilitatedInternetusers

abilitytoshare,findandobtainmusiconline.Napsterconvertedwhathadbeenan

obscure(albeitgrowing)activity--obtainingmusicfilesfromonlinesources–intoa

22

mainstream phenomenon. The application was an instant sensation with half a

million people using it every night bymid-2000. 2 Its availability contributed to a

surge in the sales/use of MP3-based players, rippers and burners. Moreover, the

applicationfundamentallyupendedtheextantsocio-technicalregimebyopeningup

new conceptions of how recorded music was distributed, stored and consumed.

Institutionalcontradictions,whichhadbeensimmeringforawhile,nowboiledover

to the point where the need for developing a new socio-technical regime –

configuredasaplatform--wasapparenttoallfieldparticipants.

Ournarrativeprovidesinsightsintotheinitiativesthatnewcomersmountto

transition away from the extant socio-technical regime. These actors typically

distance themselves fromentrenched incumbents.Moreover, theymobilizeothers

within the field in amanner akin to a social movement as ameans of attracting

attention and resources to their cause (Garud, Jain & Kumaraswamy, 2002;

Hensmans, 2003). However, our narrative also illustrates pitfalls associated with

takingsuchanapproach.Transitioningasocio-technicalregimecanbeanextremely

difficult task forresource-strappednewcomers if therearehighdegreesof inertia

and resistance displayed by actors belonging to the extant regime (Frost & Egri,

1991). To the extent that newcomers differentiate themselves from existing

regimes,theyincreasethescopeoftheirinstitutionalwork,thisfurtherjeopardizing

theirprospectsatbringingaboutatransition.

2Followingthetremendousresponsethatthisapplicationgenerateduponitsrelease,Fanning,withthehelpofseveralventurecapitalists,foundedNapsterinmid1999

23

Ontheotherhand,totheextentthatnewcomerinitiativesdobegintocatch

on, they can substantially undermine the existing regime. This is because the

changes embodied in these new practices and understandings are likely to be

significantlydifferentfromtheonescurrentlyentrenched.Thiscansetoffaperiod

of fluxwithinthe field–one inwhichthe fragilityof theextantregime isexposed

but emergentnewpractices andunderstandings themselvesdonot converge to a

newregime.Rather,suchactionsoftensetthestageforwhatisahighlycontested

and negotiated transition process. Under such conditions, the incumbents likely

mountavigorousresponse,onethatIdescribenext.

IncumbentAssertion

Asignificantbodyofresearchhashighlightedthepropensityofincumbents

tonotrespondoracquiescetochangesbroughtforthbynewcomers(Henderson&

Clark,1990;Christensen&Bower,1996).However,Frost&Egri(1991)documenta

numberofcases inwhichincumbentssuccessfullysquelchednewcomerinitiatives

tochangeregimes.Thisresearchsuggeststhatincumbentsdoengageinsubstantive

institutionalworkespeciallyiftheyperceivethattheregimetheyareentrenchedin

isunder threat.Butwhat specific initiativesdid theseactors engage inwithin the

recordedmusicfieldandwhatweretheirimpacts?

WhilethemajorlabelswerealerttotheexistenceoftheMP3formatandthe

possibilities formusic distribution that the Internet offered, their early efforts at

makingsongsavailableonlineweretentativeandclumsyatbest(Alderman,2001).

Their awareness of the broader shifts taking placewas temperedwith a sense of

trepidation,asthisquotefromamusicexecutivesuggests:

24

“I don’t think any of us can deny that ultimately people will beequippedwithPC’sthathaveCD-recordablecapabilityandhighspeedcablemodems. If themusic is going to be a click away…howdoweprotect copyrightedmusic and the rightsofmusiciansandwriters?”(Alderman&Johnson,1997)These concerns soon translated into tangible actions,with the incumbents

(via the RIAA) relying on the legal underpinnings of the extant regime tomount

their response. In early 1996, the RIAA started contacting onlinemusic sites that

circulatedunauthorizedcopyrightedmaterialand issued“cease-and-desist” letters

to them.The stakeswere raised in June1997,when theRIAA successfully filed a

lawsuitthatshutdownthreemusicarchivesitesandrequiredthemtopaydamages

totaling over $1 million each. In explaining their rationale for taking this more

forcefulstance,FrankCreighton,vice-presidentoftheRIAA,said

“Clearlypartofthereasonforfilingtheseactionsistosendamessagethat stealing theseartists’work isnotgoing togounaddressed…WewanttoestablishthefactthattraditionalcopyrightlawappliestotheInternet.”(Oakes,1997)Itwasthenextseriesoflawsuits,however,thatunderscoredthemagnitude

oftheunfoldingbattle.Whilemusic intheMP3formatwasoriginallydesignedfor

use on personal computers, it was inevitable that actors would conceive of a

portable electronic device to extend its usage. Diamond Multimedia, a computer

peripheralmanufacturer,hatchedplans to introduce suchaplayer, called theRio,

for the1998Christmasmarket. Inresponse, theRIAAsuedDiamondthatOctober

forcopyrightinfringementandsoughttoobtainarestrainingorderagainsttheRio’s

release.Separately,MP3.comannouncedinlate1999thatitwasgoingtointroduce

a service thatwouldallowconsumers to store theirCD’s as apersonalizedonline

jukeboxandenablethemtoaccessandaltertheircollectionsonlineatanytime.The

25

RIAAmoved toquash thisserviceby filingasuit in January2000contending that

thestart-uphadnorightcopyingrecordingsonbehalfofcustomers.Andfinally,the

RIAAslappedNapsterwithalawsuitinDecember1999andrequestedaninjunction

topreventcirculationofcopyrightedmaterialthroughitsservice.Indeployingthis

barrageofoffensives, theRIAArevealed its intention to takeaggressivestepsand

usethelawtodefinetheboundariesoflegitimateactivitywithinthefield.

Asitturnedout,theimpactoftheselegalandcognitiveinitiativeswasmixed.

A federal judge ruled in April 2000 that MP3.com’s arguments did not meet the

standards required towin a defense. Subsequently, the company put itself up for

saleandwaspurchasedinMay2001byVivendi,theparentcompanyofUniversal.

The RIAA underwent amuchmore convoluted process in its court dealingswith

Napster,partlybecauseresolvingtheissuesraisedinthiscaserequiredthejudges

to interpretcopyright lawdesignedforphysicaltechnologieswithinthecontextof

an emergent digital reality. After a lengthy and contentious debate, the legal case

culminated in February 2001 with the Circuit court ruling in the RIAA’s favor.

Napster, which had made a deal with BMG in November 2000 to create a legal

versionofthefile-sharingservice,endedupdeclaringbankruptcyinJune2001.In

theDiamondlawsuit,however,thecourtsboughtthedefendant’sargumentthatthe

playerwasmeantsolelyfortheplaybackofmusicandnotforrecordingpurposes.In

doing so, they providedmuch needed legitimacy to the incipient productmarket

forming around theMP3 format. Subsequent to its launch inNovember1998, the

Rioshipped250,000unitsinitsfirstthreemonths,withanumberofsimilardevices

soonfloodingthemarket(Alderman,2001).

26

Moreover, even as Napster shut down, a new generation of file sharing

programsfoundtheirwayontotheWeb.Gnutella,launchedinMarch2000,ushered

in the era of peer-to-peer (P2P) technology, with variants such as Grokster and

Kazaa launching their services later that year.3 In response, the RIAA filed suits

against these actors.More significantly, the association expanded the scope of its

legalstrategygivenitsrealizationthatshuttingdownfilesharingserviceshadinno

way curbed user enthusiasm for downloading copyrightedmusic for free. In June

2003,theybeganfilinglawsuitsagainstindividualssuspectedofsharingsubstantial

amounts of copyrighted music through P2P networks. The association justified

taking this extreme step in terms of the lack of viable options that it had left to

pursue and indicated that the aim of these lawsuits was not so much to seek

damagesfrominfringersastodeterfile-sharingbehavior.

Reactions to this unprecedented action were not long in coming. Experts

criticized the use by recording companies of such unconventional legal strategies

that had broad implications for individual privacy and were likely to prompt a

consumerbacklash.Even theRIAAacknowledged the risks involved in taking this

step. According to Amy Weiss, a spokeswoman for the association, “From a PR

perspective,weknowthatthisprogramisnotgoingtowinusanyPRpoints.We’re

doingitbecauseit’stherightthingtodoandtosendadeterrentmessageandcurb

piracy on the Net” (Ahrens, 2003). Underlying this action, however, was the

incumbent’srealizationoftheneedtoforcefullyarticulatetheirstanceregardingthe

3Thisinnovationposedgnarlylegalchallengestotheincumbents,forunlikeNapsterwhichconnectedusersthroughacentralserver,filesinthesenewservicespassedbetweenindividualcomputerswithoutidentifyingtheirsourceordestination,makingitmuchmoredifficulttopindownapartyresponsiblefortheirexistence.

27

intrinsic value of copyrighted material in an online world. As Jonathan Zittrain,

cyberlawspecialistattheHarvardLawSchool,opined:

“The industry sees this for the cultural war it is. They think it’simportanttopreventtheup-and-cominggenerationoflifelongmusicusers from continuing to expect they won’t have to pay for it. Thepurposeofthesuitsisnottowin,buttoinstillthekindoffearthatwillchangebehavior”(Bombardieri,2003).

Asitturnedout,eventhissetofinitiativesproducedmixedoutcomesforthe

incumbents. The case filed against Grokster wound up going all the way to the

SupremeCourt,withthebenchfinallysidinginfavoroftheRIAAinJune2005.The

associationused thisprecedent to forceanumberof file sharing services, suchas

BitTorrentandLimewire,toceaseoperationsorcreatealegitimatepaidversionof

their business. The RIAA also persistedwith its policy of prosecuting individuals,

with more than 14,800 users being sued for online copyright infringement as of

October 2005 (Baldas, 2005)4. However, the effectiveness of this legal initiative

remainedindoubt,basedonreportsthatanestimated9.2millionpeoplewerestill

usingP2PnetworksatanyonetimeasofJune2005--i.e.,therewasnoperceptible

drop in the number of downloaders. Indeed, it appeared that the younger

generation now viewed accessing music online for free as a taken-for-granted

activity.

Theseeventshighlight thedilemmasassociatedwithengaging in initiatives

aimedatreassertingelementsofanextantregime.Existinginstitutionalstructures–

inthiscase,thelanguageofcopyrightladenwithitsrationalesforthepreservation

ofauthorownership–serveasasignificantsocio-culturalresource(Swidler,1986)4ThisformoflitigationwasfinallyabandonedbytheRIAAinJanuary2009.

28

thatincumbentsrelyontostembreachestotheregime.Putdifferently,theseactors

extensive familiarity with the existing regime function as a source of “deep

structure” power (Bourdieu, 1990; Frost & Egri, 1991) that can enable them to

substantially stifle the activities of newcomers as well as define the basis for

legitimatebehaviorwithinthefield.However,therearelimitationsintheviabilityof

adopting such an approach. The glacial pace of legal resolution (as well as the

inherentuncertaintyassociatedwithcaseoutcomes),thedifficultiesassociatedwith

monitoring rules within the new technological (i.e., platform) context and the

unflattering image that relying on such a heavy-handed approach engenders, all

curtailtheutilityofpreservinganextantregime.Asoneobserverputit,

“Themusiccompaniescantaketheirresourcestodayandspendthemonlawyersandlegalbattleswiththeirowncustomersinafutileeffortto preserve their threatened profit margins. Or they can begin thehard but rewarding work of building new businesses around newtechnologies. It sure looks like they’re choosing the former route. Ifthey stick to the narrow turf of copyright law and cede the widerterrainofnewtechnologiesandbusinesses,theymayekeoutashort-term advantage, but they will ensure their long-term irrelevance.”(Rosenberg,2000)AndIanClarke,developerofFreenet,aP2Papplication,putitsimply:“Ifyou

sellwaterinthedesertanditstartstorain,youneedtodevelopadifferentmodel”

(Alderman,2001).Giventhat theireffortsatstemmingbreacheswithin theextant

regimewasonlypartiallysuccessful,whatstepsdidtheincumbentstakenext?

IncumbentRenewal

Even as it was smarting from the loss of the Diamond lawsuit, the RIAA

announced the formation of the SecureDigitalMusic Initiative (SDMI)withmuch

fanfare in December 1998. This effort was aimed at developing a new secure

29

specification fordigitalmusic files thatwould enable copyright owners to control

distribution of their content while meeting the growing consumer demand for

online music. By promoting SDMI as their primary effort for creating viable

businesses around digital downloading technology – i.e., establishing their own

platform--theincumbentspositionedthisstandardsinitiativesquarelyagainstthe

non-secureMP3 format. Virtually all the heavyweights in the recordedmusic and

technologyfieldsenrolledinthisinitiative.5

Initially,thiscounteroffensivegainedsignificantmomentumintermsofthe

appointmentofLeonardoChiariglioneastheexecutivedirectorofthecoalition(the

sameindividualwho, ironicallyenough,hadpresidedoverthedevelopmentof the

MP3formatwithintheISO).However,apprehensionssoonbegantobearticulated

about the viability of this standards initiative, given its lofty goals and extremely

aggressivetimeline.Thecoalition’saimwastodevelopaspecificationsothatSDMI-

certifiedproductscouldshipbythe1999Christmasseason.Atthefirstmeetingheld

in February 1999, numerous proprietary copy protection technologies were

presented. Soon, however, a schism surfacedwithin this collective. For consumer

electronicmanufacturers,whose primary concernwas cost and time to launch of

digital music players, encryption represented an adequate way to provide audio

security. The record companies however felt that watermarking, while far more

time-consuming and expensive due to its complicated design,was the only viable

long-termmeanstoprotecttheirintellectualproperty.5 This included electronic manufactures such as Philips, Sony and Toshiba; computer companies such as IBM, Microsoft and AOL; as well as all the major multinational and independent recording companies (Sullivan, 1998).

30

Whenthegroupdideventuallyselectawatermarkingtechnology,thechoice

wasdoggedbycontroversy,astheforumdidnotrevealthecriteriaforinaudibility

employed, how the listening tests were conducted and who had participated in

them.EvenastheSDMIfendedaccusationsofalackoftransparencyinitsdecision-

making,itoptedforaradicallydifferentapproachwhenvettingalternativesforits

nextspecification.InSeptember2000,itissuedapublicchallengeoffering$10,000

if hackers could crack the six options proposed for this standard. However, this

contestwassoonmiredincontroversy,whenthecoalitionannouncedthatthreeof

the proposed specifications had survived the challenge while news reports

maintainedthatallofthemhadbeenbroken(Brown,2000).Toaddfueltothefire,a

research team affiliated with Princeton University indicated they would rather

publishtheresultsoftheirhacksinacademicoutletsthancollecttheprizemoney.

Thebickeringamongvarious factions, thecontroversiesassociatedwith its

selectionproceduresandthelongdelaysinreleasingspecifications,allcontributed

tothecollapseofSDMI.InJanuary2001,Mr.Chiariglionesteppeddownasitshead.

SDMI’signominiousfateimpliedthattheMP3formatremainedthedominantdigital

musicfilestandardwithinthefield(Sullivan,1999).

With the SDMI initiative collapsing under its own weight and consumer’s

appetite for music downloading remaining unabated, the incumbents began to

examinealternateoptionsfortransitioningtheregime.Someofthemwentasfaras

tohighlightthepositiveattributesofferedbytheoutlawedfilesharingservices.As

ThomasMiddlehoff,chairmanofBMG(whichbynowhadacquiredNapster)stated:

“Let’sbehonest.Despiteallthedangers,Napsterisprettycool…(Itis)an excellentmusic brand transporting the following characteristics:

31

simple use, global selection from the repertory of all labels anduncoupledprogramselection.”(Alderman,2001)

The incumbentsnowbeganworkondevelopingonlinemusic services that

were intended tobe legalandcompellingalternative toofferingssuchasNapster.

Doing so would enable these actors to shape expectations integral to the

consumptionexperience,andtherebyreassertcontroloverthefield.HilaryRosenof

theRIAAarticulatedthechallengeasfollows:

Ithinkit’sachallengetomigrateconsumersfromwhatthey’vebeengettingforfreeillegallytoapayservice,buthopefullyastimegoesonthe featuresof theserviceswillwinpeopleover.”(BBCNews,2002)In February2001,Universal and Sony announced that theywould offer an

online subscription-based service calledDuet,which they renamedPressplay that

June.BMG,EMI&AOLTimeWarnerfollowedwithanannouncementinApril2001

that they had struck a dealwith Real Networks to create a similar service called

Musicnet. These initiatives represented large investments by the incumbents to

create legal digitalmusic services – i.e., adopt a platform configuration.However,

when launched in early 2002, these offerings turned out to be underwhelming.

Besides offering a limited catalog, they had onerous usage restrictions – i.e., they

allowed users to only rentmusic for a period of time and prohibited them from

downloadingsongstoportabledevices.Theincumbentshadcreatedaservicethat

prioritized protection of copyrighted material over providing consumer

convenience.AsWaltMossbergputit,

MusicNetandPressplay,unfortunately,aredesignedinawaythatreflectsthefalselessonofNapster--allpeoplearethieves--muchmorethanthetruelesson,thatthere'sahugebusinessinsellingdownloadablesongsforamodestprice.(Mossberg,2002)

32

Asaconsequence,theseofferingssankwithoutatrace,withanalystsestimating

thecombineduserbaseofallauthorizedonlinemusicprovidersatamere650,000

inSpring2003(APState&LocalWire,2003a).Theincumbentshadletyetanother

opportunitytoinfluencetheemergingplatform-basedregimeslipby.

The above account highlights how incumbents do take substantive steps

towardstransitioningtoanewsocio-technicalregime.However,italsorevealshow

these actors are constrained by their extantmindset and thereby limited in their

imagination when they do explore alternate paths. This situation is further

exacerbated in caseswhere these actors attempt to establish regimes “under the

gun”, i.e., in response to the impending collapse of the extant regime.Under such

conditions, it is likely that theseactorswill look inwardsandrelyon familiarpre-

existingtemplateswhilecraftingtheirtransitionefforts.

Suchanunfoldingscenariocanleadtoanimpasseintheemergenceofanew

socio-technical regime.The field remains inan continual stateof turmoil –one in

which rules, practices andmeanings are unhinged from their priormoorings, but

thereisnonewregimearoundwhichtheseelementshavestartedtocohere.Given

thisscenario,howdoesanewsocio-technicalensembleemergefromthismorass?

ProvisionalCooperation

While Musicnet and Pressplay represented initiatives by incumbents to

createlegaldigitalmusicservices,itisimportanttonotethatnewcomerstothefield

werethefirsttomakeforaysintothisdomain.Afewstart-ups,mostnotablyEmusic,

Riffage and Listen.com attempted to sell music legally in MP3 format online

(Alderman, 2001). However, they found obtaining licenses for established artists

33

fromthemajor record labels tobean impossible task, fueling their suspicion that

theseactorswerecolludingwithoneanother.

Withtheincumbent’sowninitiativesthemselvesnotgainingmuchtraction,

thestagewassetforthesetwogroupsofactorstomountmorecollaborativeefforts

todefineanewregime.Onthisfront,theturningpointcamewhenApple,arelative

newcomertothisfield,rolledoutitslegalmusicdownloadingservicecalledI-Tunes

inApril2003.TheabilityofApple toget themajor labels to cooperatewith them

wastestamenttohowsignificantlythingshadchangedinthefield.Onlytwoyears

prior,Apple’sdecisiontoreleasetheI-Pod,adigitalmusicplayer,hadincensedthe

labels,whichfeltthatitsintroduction(anditsassociatedRip-Mix-Burnadvertising

campaign) further endorsed thedownloading of copyrightedmusic by consumers

(Leonard, 2003). However, the combination of Steve Jobs persuasive skills,

provision of a copy protection scheme that satisfied the major labels and their

(labels)ownrapidlydwindlingoptionsenabledApple to licensemusic fromallof

theseactorsandprovideabroadcatalogofsongs.Inofferinganintuitiveinterface

atareasonablepriceandwithvirtuallynousagelimitations,I-Tunessetthebarfor

consumer expectations of a fee-based onlinemusic service – i.e., a platform. The

willingness to pay for quality and convenience was demonstrated in the warm

public response that this service received -- it sold onemillion tracks in its first

week(APState&LocalWire,2003b).

ThesuccessofI-Tunesmadeincumbentsmorecomfortablewiththenotion

ofopeninguptheircatalogsfordigitalsale.Thegrowthoffee-basedservices–the

numberoflegaldownloadssoldrosetenfoldin2004–signaledthattheseofferings

34

had begun to establish a foothold within the evolving field. These developments

formedthebasisofanewfoundoptimism,succinctlycapturedinthisstatementby

IFPI(InternationalFederationofPhonographicIndustries)chairmanJohnKennedy,

“Atlonglastthethreathasbecomeanopportunity”(IFPI,2005).

Thesedevelopmentssuggestedthatanewplatform-basedprovisionalregime

--centeredonlegaldownloadingservicesthatofferedconvenience,ease-of-useand

qualitythatcustomerswerewillingtopayfor--wasbeginningtotakeshapewithin

the field through collective arrangements forged by newcomers and incumbents.

While the legal licensing arrangements and a copy-protected digital rights

management(DRM)formatwerethelegacyoftheincumbents,theconvenienceand

user-friendliness in service provision came from the newcomers. Also enshrined

withinthisprovisionalregimewasthegrowingtrendtowardstransactingmusicin

asingles(asopposedtoalbum)format.

However,thefragilityofthisprovisionalregimesoonbecameapparent.Even

asdigitalsalesgrew,thiswasnowherenearenoughtorecoverthelostCDrevenue

(Witt,2015).TotalrevenuefrommusicsalesandlicensingintheU.S.plungedfrom

$14.6 billion in 1999 to $6.3 billion in 2009 (Goldman, 2010). Moreover, the

relationship between key actors,most notably Apple and themajormusic labels,

remainedcontentious,especiallyas the influenceof the formergrew.Finally,with

theviabilityofextantsystemsofexchangewithinthefieldstillremainingshrouded

indoubt,theincumbentsbegantoexperimentwithalternatemeansofmonetizing

their assets. This included significant restructuring of artist contracts in order to

shareintherevenuesthattheymadethroughliveconcerts.Theseinitiativessuggest

35

that this provisional regime was likely to undergo significant revision as both

newcomersandincumbentscontinuedtonavigatethroughthestateoffluxthatthe

fieldremainsmiredin.

Discussion

Below, we draw on our narrative to develop three key insights: first, we

identify underlying factors contributing to the limited impact of newcomer and

incumbent initiatives to (inhibit) transition to a new regime as a means of

explicating the fragility of institutional entrepreneurship; next we characterize

situations of turmoil and specify different levels of flux associated with regime

transition;andfinally,wehighlighttheinherentlyemergentnatureofnewregimes,

which are constructed through a process of contestation and negotiation under

conditionsofhighuncertainty.

Thefragilityofinstitutionalentrepreneurship

Our empirical account highlights some of the systematic limitations that

actors encounter when they attempt to transition the existing socio-technical

regime (see Table 3). For newcomers the tendency is to take on a revolutionary

stance and distance themselves as much as possible from the existing regime.

Takingsuchapositioncanbeareflectionoftheirideologicaloutlook,aquickmeans

togainingprominenceandnotorietyorsimplyjustnaïveexuberance.Adoptingthis

stance,besidesbeingresource-consumptiveandrisky,isunlikelytoendearthemto

incumbents, who are likely to perceive a threat to their position and rebuff

overturestocooperateand/orengageinastrongretaliatoryresponse.Overall,this

suggests that newcomer initiatives that take a highly visible and revolutionary

36

“swinging-for-the-fences” approach to change regimes often have a limited direct

impact. However, when such initiatives sometimes gain traction, they undermine

theexistingregime,settingthestageforaperiodoffluxwithinthefield.

-----------------------------------------------INSERTTABLE3AROUNDHERE

-----------------------------------------------

For incumbents, fear, greed andhubris are oftenprominently in display in

theireffortsattransitioningsocio-technicalregimes.Theprospectoflosingcontrol

over a well-honed regime lead them to initially stem perceived breaches to the

existing order. On this front, they deploy significant socio-cultural resources

(Swidler,1986)and“deepstructure”power(Frost&Egri,1991;Hensmans,2003)

to retain their control over the field.When theydo engage in attempts to forge a

new socio-technical regime, their efforts are significantly hampered by a lack of

imaginationthatisalegacyoftheirentrenchedpositionwithinthefield(Henderson

& Clark, 1990; Christensen & Bower, 1996). Overall, the incumbent’s actions

vacillatebetweenparalysisandbelligerence,impedingtransitiontoanewregime.

Whenjuxtaposedwithoneanother,therebelliousnessofnewcomersandthe

intransigence of incumbents often end up undermining one another. Entrenched

incumbents,whilepossessing theability to “cutoff theoxygen”ofnewcomersare

often encumbered by their hubris and banality. Newcomers, in their attempts to

revolutionize a field can potentially subvert existing regimes, but often lack the

ability and resources to engage in the institutional work required to craft a new

regime. To the extent that neither group of actors is able to assert themselves,

effortstotransitionthefieldstall.Incaseswhereactorsattempttojointlytransition

37

thefieldtoanewregime,theseinitiativesareoftentenuousandcontentious,given

theconflictingagendasoftheactorsinvolved(seealsoGarud,Jain&Kumaraswamy,

2002).Thiscanleadtoperiodsofintensejockeyingastheseactorsattempttogaina

favorablepositionforthemselveswithintheemergentregime.

Theseinherenttendenciesofnewcomersandincumbentscontributetowhat

wetermthe“fragilityofinstitutionalentrepreneurship”.Thisreferstotheinability

ofbothnewcomersandincumbentstoeffectivelytransitionsocio-technicalregimes

despitetheseactorsbeingawareofsuchopportunitiesandinitiatingseveralefforts

todoso.Whilenewcomerstendtounderestimatetheinfluenceoftheextantregime,

incumbentsfacetheoppositeproblem.Asaconsequence,theseactorsareunableto

locate the “sweet spot”where their initiativeswouldpotentially gain tractionand

obtain closure. Rather, our narrative suggests that acts of institutional

entrepreneurshipareoftenbesetbynaiveté,subversion,hubris,unimaginativeness,

opportunismandreluctantcooperation.Asaconsequence,whiledestabilizationof

an extant regime offers significant opportunities for agency by field participants,

effortsatrestabilizationoftenmeetwithlimitedsuccess,i.e.,convergencearounda

newregimeisbynomeansinevitable.

Characterizingtransitionflux

Our account reveals the unfolding of four distinct sub-processes as part of

the overall transition, which we term insurgence, assertion, renewal and

cooperationrespectively(seeTable3).Priorresearchhashighlightedhoweachof

theseprocesses,by themselves, canresult ina field transitioning toanewregime

(Leblebicietal,1991;Raoetal,2003;Geels&Schott,2007)orremainintheextant

38

one(FrostandEgri,1991).Incontrast,ourevidencesuggeststhatinthisinstance,

eachof these sub-processeshashadminimalorpartial impactwithnoneof them

beingabletobringaboutclosurearoundanewregime.Asaconsequence,thefield

remains in a state of turmoil. Moreover, such turmoil can persist for extended

stretches of time – as in our case where the recorded music field continues to

remain in limbo.6 Below, we specify two underlying factors that, taken together,

suggest different forms/length of flux associated with transition to a new socio-

technicalregime.

Thefirstfactorrelatestothescopeofworkrequiredtotransitionregimes.In

ourcase, thecombinationofanewtechnical format (compressedmusic files)and

formofdistribution (online)openedupawholehostofnewpossibilities forhow

recordedmusicwasmade, released, sold, stored andvalued (Guth, 1999) – i.e., it

involved amove from a pipeline to a platform configuration. The dissolution of a

significantamountoftheexistingsocio-technicalregimeleftasignificantvoidthat

needed tobe filled.As a result, awidevarietyof elements constituting theextant

regime–copyrightlaw,technicalformats,pricing,packaging,businessmodels,etc–

wererevisitedduringthetransitionprocess.Whileanincreaseinthescopeofwork

required to transition regimes expands opportunities for institutional

entrepreneurship, it also results in a lower probability of closure around a new

regimegiventhelargernumberofissuestoberesolved.

6Morerecently,thefieldappearstobeconvergingtowardspaidstreamingservicessuchasSpotify,buthereagainpracticesandbusinessmodelsaroundthisregimearelikelytorequirerefinementgoingforward.

39

The second contributory factor to flux during regime transition is the

relationship between incumbents and newcomers – andmore generally, between

theactorscentrally involvedwiththetransition.Here, to theextent that theseare

contentious, the state of limbo can continue for a while. Conversely, once actor

relationshipswithinthe fieldtakeonasufficientlycooperativeturn, theprospects

forconvergencearoundanewregimeincrease. Finally,theserelationshipscanlie

somewhereinbetween–i.e.,actorscanengageincoopetition–whichresultsfields

beinginasemi-stablestatethatcouldfurthercongealorunravelovertime.Inour

case, the fluid relationship between the incumbents (content providers) and the

newcomers(technologyplatforms)–aswellastheevolvingroleofusers,artistsand

thegovernmentwithin thisdomain–hasensured that the field remainsmired in

moderate-highlevelsofturmoilforover20yearsnow.

Newregimesasprovisionalandemergent

Our narrative provides a vivid description of how the contours of a new

regime are forged in real time through a sequence of interactions that cannot be

predicted inadvance.Evenas technologicaladvancementssurfacedcontradictions

thatmadetheextantregimeuntenable,multipleeffortssurfacedatdifferentpoints

intime–ledbothbynewcomersandincumbents--totransitionthefieldtoanew

regime. Most of these (IUMA, Napster, Pressplay, MusicNet, etc) gained limited

traction, but set the stage for a late newcomer (Apple) to create a “provisional

regime” (I-Tunes) that did gain some momentum. Over time this “provisional

regime”hasbeensupplantedbyanother(Spotify),which itselfcombineselements

fromearlierregimesinalegalanduser-friendlymanner.

40

Many of the “provisional regimes” emerge from conditions of

unpredictabilityandcontestationandaretemporarysettlementsthatareinherently

unstable,leadingtothecreationofrevisedversions.Ontheirpart,actorsattemptto

forgeconsensusaroundtheirprovisionalregimes inreal-timeandunderpressure

employingavariety rhetoricaldevicesaswell as social andpolitical skills (Bijker,

Hughes&Pinch,1987;Fligstein,2001;Garud,Jain&Kumaraswamy,2002).Thiscan

result in unexpected players gaining prominence in a field through sheer timing.

Overall, these dynamics highlight the capriciousness of new regime formation --

while the new regimemight appear “obvious” in retrospect, it remains fuzzy and

requiresnegotiation, recombinationand theorization inprospect. In adopting this

constructionistviewpoint,weemphasizethecomplexandvolatileprocessbywhich

elementsofprovisionalregimes(sometimes)coalesceintoastablenewregime.

Theoreticalcontributions

In highlighting the fragility of transition initiatives, specifying factors that

contributetoafieldremaininginfluxandcharacterizingnewregimesasemergent,

wemakecontributionstoongoingconversationswithinthesocio-technicalregime,

technologicalchangeandinstitutionalentrepreneurshipliteratures.

Socio-technicalregimes

Most of the prior work within the socio-technical regime literature has

focused on elucidating the dynamics unfolding within infrastructural or product

sectors – what we term pipelines -- such as transport and energy systems. Our

study,bycontrast,explicatesthenatureoftransitionstakingplacewithindigitalor

platform-based fields, arenas that are integral to the 21st century business

41

landscape. Specifically, we examine the transition from pipeline to platform, a

change that is occurring in many fields – that includemedia, retail, services and

more recently, manufacturing. Moreover, in drawing on the literature on

institutionalentrepreneurshipandbringingactorsandtheir interactions tocenter

stage,we(literally!)animateconversations takingplacewithin thesocio-technical

regimes literature andprovide amicro-sociological perspective that complements

themacro-dynamicsthattheMLPhaslargelyfocusedon.

Our findingshighlight thecontingency,unpredictabilityandmessinessthat

oftencharacterizetechnologicaltransitionprocesses.Indrawingattentiontoagency

in itsmyriad forms – subterfuge, power-plays, visionary, obduracy, opportunistic,

etc–webuildamoregroundedtheoryoftransitionthatemphasizes itscontested

andconvolutednature–i.e.,oneinwhichpathstraversedandtheoutcomereached

during the forging of a new regime are far from inevitable. This view of

technological transition is related to thatofAnsari&Garud(2009),whohighlight

themisalignmentsandasynchroniesthatunfoldduringsuch journeys.Thetracing

ofsuchchaoticpathways ispartiallya functionof thenatureofdigital technology,

wherelandscapesaremorepronetochangeandregimesareintrinsicallymalleable,

leadingtodesignsthatareinherentlyincomplete(Garud,Jain&Tuertscher,2008).

However, as our case eloquently reveals, thesemessy transitions also reflect the

limitationsandblindspotsofthekeyactorsinvolvedandthenatureofinteractions

betweenthemastheyindividuallyandcollectivelynavigateandattempttoforgethe

future.Structuringunstructuredspace, fromourperspective, isaprocessmiredin

42

cognitivebiases,politicalmaneuvers,opportunisticopportunismandsocialhysteria

mixedinwiththeoccasionaltechnologicaladvance.

Ininvokingthenotionof“provisionalregimes”,wehighlightthesignificance

ofunderstanding“regimes in themaking”– i.e.,aviewpoint thatsuggests that the

contours of the new regime are often unknown to begin with, and are jointly

constructed by actors attempting to transition the field away from the extant

regime.Putdifferently, the formationofanewregime isoftenaprocess inwhich

multiple provisional regimes are asynchronously offered as experiments that are

discarded,layeredupon,contested,repurposed,theorizedandpropagated,ontheir

pathto(potentially)gainingtractionwithinthefield.Fromthisperspective,thenew

socio-technical regime is emergentwithmanyof its key elementsbeing forged in

real time during the transition process. More generally, tracing “regimes in the

making” and identifying factors contributing to the shaping of these provisional

statesiskeytounderstandingtechnologicaltransitionsandnewregimeformation.7

Technologicalchange

Inspecifyingamechanism--theabilitytoaccessandwield“deepstructure”

power(Frost&Egri,1991;Hensmans,2003)–that incumbentstapintotoensure

their viability, we contribute to the technological change literature (Tushman &

Anderson,1986;Christensen&Bower,1996;Cohen&Tripsas,forthcoming)that,to

date, has largely focused on tracking techno-economic changes in describing

transition dynamics. More generally, in alluding to the embedded nature of

7Morerecentworkinthesustainabilitytransitionstradition(Fuenfschilling&Truffer,2014;Geelset.al.,2016)hasadoptedelementsofthisviewinthatthecontoursofthenewregimeremainawork-in-progressthathavenotyetbeenclearlydemarcatedandlabeled.

43

technologies(Hargadon&Douglas,2001;Garud,Jain&Kumaraswamy,2002;Geels,

2002) we emphasize the multi-dimensional socio-technical space in which

newcomersandincumbents(andotheractors)interactwithoneanother. Tracing

actionsunfoldinginthesevariousdimensionsduringperiodsoftransitioniscrucial

todevelopingmorecomprehensivetheoriesoftechnologicalchange.

Moreover,inhighlightingfactorsthatleadtoafieldremaininginanextended

state of flux, we add further insight to the technological change literature. Prior

workhassuggestedthaterasoffermentareshortpunctuationsinbetweenlonger

periods or incremental change (Tushman & Anderson, 1986). However, our

researchhighlightstheneedforamorefine-grainedcharacterizationoftransitions

given that these unfold relatively smoothly in some cases while they are more

chaotic in other instances. On this front, identifying additional factors that

contribute to length/stateof fluxaswellacloserscrutinyofselectionandclosure

mechanisms (Tushman & Rosenkopf, 1992; Bijker, et. al., 1987) that restore a

semblanceofstabilitytoafieldrepresentfallowareasforfutureresearch.

InstitutionalEntrepreneurship

Inidentifyingthesystemicchallengesthatbothnewcomersandincumbents

encounterintheirattemptstotransitionafieldtoanewregime,weprovideamore

realistic portrayal of these actors abilities to engage in institutional

entrepreneurship. Prior work in this domain has emphasized how newcomers

(Hargadon&Douglas,2001;Garud,Jain&Kumaraswamy,2002;Maguire,Hardy&

Lawrence, 2004) and incumbents (Rao, Monin & Durand, 2003; Greenwood &

Suddaby, 2006) exercise social, political and cognitive skills (Fligstein, 1997) to

44

dexterously navigate the landscape and initiate successful regime change. In

contrast, ournarrative suggests thatwhile these actors are able to invoke agency

whencontradictionsarise,theirabilitytoeffectivelydosoisoftenlimitedbytheir

own perceptions and prejudices as well as the nature of their interactions with

otherswithinthefield.Thehighlevelsofuncertaintycharacterizingfieldsinthese

situations further contribute toactions that range from tentative toopportunistic.

Asaconsequence,eveninfieldsrifewithpossibilitiesforregimechange,actorsmay

fumbletheopportunitytodoso.

Our findings, then, suggest the need to take a more realistic and guarded

viewofinstitutionalentrepreneurship--oneinwhichactoreffortsoftenoverreach

andundercutoneanother.Cumulatively,theseinitiativescanhaveminimalimpact

and contribute to the field remaining in a state of limbo. In highlighting these

dynamics, we take a useful step towards expanding our understanding of how

actors shape institutions. Rather than be viewed as “hypermuscular” agents that

demonstrate superior cognitive and social skills, actors often take faltering and

hesitant steps to effect institutional change that itself cumulates in a convoluted

manner.

Conclusion

Through a detailed description of the events that have unfolded in the

recordedmusic fieldover thepast twodecades,wehave induced several insights

related to the nature of technology transitions. Our analytic narrative reveals the

fragilityofinstitutionalentrepreneurship–i.e.,theinabilityofbothnewcomersand

incumbents to effectively transition socio-technical regimes despite these actors

45

being aware of such opportunities and initiating several efforts to do so. This

conundrum stands in juxtaposition to the “paradox of embedded agency” (Seo &

Creed, 2002), which explains how actors embedded within an institutional

environmentareabletochangeit.Takentogether,thesetwoideasprovideamore

realisticportrayaloftherelationshipthatexistsbetweenactorsandtheyrulesthey

create/conformto.

Whilewe have focused on developments taking placewithin the recorded

music field, it is instructive to examineother arenas inwhichwemay see similar

dynamics as part of a socio-technical regime transition. On this front, key actors

associatedwith various content-based digital fields such asmotion pictures have

hadtocontendwithasimilarlyunpredictabletransitionprocess.Moreover,actors

within traditionally pipelines fields that are now rapidly digitizing – such as

automobileswith self-driving cars and physical retailingwith online commerce –

havebeguninitiatingstepstowardstransitiontoanewregime,withasimilarsetof

contestedinteractionsunfolding.Indeed,itwouldbeinterestingtoseetheextentto

whichwewitness similardynamics inpipeline fields associatedwith a significant

physicalpresence–suchasthebroadertransitiontoamoresustainablefuturethat

hasbeentermedsustainabilitytransitions(Markard,Raven&Truffer,2012).While

theunderlyingtechnologiesaredifferent,thescopeoftheinstitutionalworkandthe

inherent uncertainty of the path ahead suggest that the migratory trajectory for

fields undergoing this transition are likely to require substantial resources and

imagination–aswellasinvolvesignificantstrife–onpartoftheactorsinvolved.

Indescribingsocio-technicalregimetransition“as ithappens”,wehighlight

46

the constructivist roots of such change. Rather than privilege the end states of a

socio-technicalregimeandretroactivelydescribehowtheregimemovedfromone

statetotheother,weadvocateexplicatingtheunderlyingmechanismsinplayeven

as the transition is unfolding. Doing so provides amore realistic portrayal of the

tentative and turbulent nature of technological transitions. Along these lines, one

lineoffutureresearchcouldinvolvetakingacloserlookatvariousmechanismsof

“closure” (Bijker,et.al.,1987)andunderstandinghowactorsoperate these levers

while migrating socio-technical regimes. Studies could also examine contexts in

which technological transitions take place relatively smoothly (for example, IT-

basedfieldsinwhichcontinualchangeintechnicalstandardsisoftenthenorm)asa

meansofunderstandinghowcollectiveconsensusandclosure isachievedrapidly.

Anotherlineofworkcouldmoredeeplycharacterizestatesofinstitutionalfluxand

provideexplanationsofwhyfieldspersist insuchstatesforaprotractedperiodof

time.Suchstudieswouldprovideuswitharicherunderstandingofsocio-technical

regime change and enable us to navigate these transitionsmore effectivelywhen

suchscenariosarise–astheydoincreasinglywithincontemporarylandscapes.

AcknowledgementsTheauthorwouldliketothankArunKumaraswamyandYanfengZhangfortheir

thoughtfulanddevelopmentalfeedbackonearlierversionsofthismanuscript.

47

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TABLE1:Chronology of key events related to the emergence of the MP3 format

within the recorded music field

19821987

1992

19971998

1999

2000

2001

2003

2004

2005

• Worldstandardforopticaldigitalaudiocompactdisc(CD)established• FraunhoferInstituteinitiatesworkonanewaudiocoding-encoding(codec)

specification• TheMovingPictureExpertsGroupwithintheISOapprovesavideoandaudiodata-

compressionspecificationthatincludesMP3.• USCongressenactsAudioHomeRecordingAct(AHRA)inresponsetoRIAA

lobbyingforcompensationfromeveryDATmachinesandtapesold.• USCongresspassedtheNoElectronicTheft(NET)Act• USCongresspassestheDigitalMillenniumCopyrightAct(DMCA)• KoreancompanySaehanintroducesMpman,thefirstMP3player,intheAsian

market• DiamondMultimediaannouncesplantoshipRio,thefirstMP3playerintheU.S.

market• RIAAappliesfortemporaryrestrainingordertohaltshipmentofRio• USDistrictCourtallowsDiamondMultimediatoshipRio;RIAAappealstoFederal

Court• RIAAannouncesSecureDigitalMusicInitiative(SMDI)• Napster,afilesharingtechnologyislaunched• DiamondwinsappealinFederalCourtagainstRIAA• SDMIpublishesPhaseIspecification• RIAAsuesNapster• FrankellaunchesGnutella,adecentralizedP2Ptechnology;FastTrack,another

second-generationfilesharingtechnology,isintroducedbySharmanNetworks• RIAAsues,winsitscaseagainstMP3.com• DistrictcourtjudgegrantsRIAAinjunctionagainstNapster;Circuitcourt

temporarilystaysinjunction2dayslater• SDMIoffers$10,000challengetohackerstocrackSDMIwatermarkingtechnology• AppleintroducesiPodmusicplayer• RIAAwinsitscaseagainstNapster;Filesharingserviceshutsdown• ChairofSDMI,LeonardoChiariglione,resigns;SDMIdisbands4monthslater• USrecordandfilmindustriessuedownersofGrokster,MorpheusandKazaafile

sharingservices• RealNetworks,AOLTimeWarner,BMGandEMIannounceplanstointroducean

onlinemusicservice,calledMusicNet• SonyandUniversalteamupwithYahootointroduceanotheronlinemusicservice

calledPressPlay• BitTorrent(BT),anewgenerationofpeer-to-peertechnologyisintroduced• RIAAinitiatesfirstwaveoflawsuitsagainstindividualusers• DistrictCourtrulesthatMorpheusandGroksterP2Pservicesarenotliablefor

copyrightinfringement;RIAAappeals• ApplelaunchesiTunesonlinemusicserviceinUSwithrecordingsfromallthemajor

labels• RIAAcontinuestosueseveralthousandsofindividualusers• Hundredsoflegalonlinemusicserviceslaunched• CircuitCourtrulesagainstGrokster;casenowshiftstotheSupremeCourt• SupremecourtrulesagainstGrokster

55

TABLE2Keyelementsofthesocio-technicalregimeforrecordedmusic

LegalFramework • CopyrightAct1909:establisheda

compulsorylicenseformechanicalreproductionsofmusic

• CopyrightAct1976:updatedprioract;establishedfairusedoctrine;extendedlifeofcopyright

• AHRA1992:employedleviesondigitalaudiorecordingdevicesandmedia

• DMCA1998:makesitillegaltocircumventtechnologiesmeasuresdesignedtoprotectsoundrecordings

TechnicalStandards • Shellac-based78rpmpressings–1940’s

• Microgroove“longplaying”33rpmrecord(and45rpmcounterpart)–1950’s

• Cassettetape–1960’s• Compactdiscs–early1980’s

ConsumptionPractices • Mainstreammentality–emphasizedformulaicpopularmusicandartist“superstars”

• Packagedinalbumformat• Pricingconvention:recordedCD’scostapprox.$15inthe1980’s

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TABLE3Initiativestotransitionthesocio-technicalregimeofrecordedmusic

1998-2005

Processes Actors Actions OutcomeNewcomerInsurgence

• IUMA• MP3.Com• LiquidAudio• Goodnoise

• Napster

• Developwebsitesthatconnectartistsdirectlytofans

• OrganizeMP3summit• Introducepeer-to-peerfilesharingsoftware

• Lackoftractionforwebsites(duetolimitedcontent)

• Litigatedoutofbusinessbyincumbents

IncumbentAssertion

• RIAA • FilelawsuitsagainstDiamond,MP3.ComandNapster

• Filelawsuitsagainstnextgenerationp-pfilesharingservices

• Filelawsuitsagainstindividualsengagedinp-pfilesharing

• Abletoshutdownp-pfilesharingservicesafterprotractedlegalbattle

• AbletoshutdownMP3.Com

• NotabletopreventreleaseoftheRioMP3player

• Winindividuallawsuitsbutlosepublicsympathy

IncumbentRenewal

• SDMI• Pressplay• MusicNet

• Attempttodevelopsecurespecificationfordigitalmusicfiles

• Attempttoofferonlinemusicservice

• SDMIunabletoestablishstandard

• Limitedcatalogandoneroususagerestrictionsseverelylimituseradoption

Newcomer+IncumbentCooperation

• Apple• Spotify

• DevelopI-Tunes:legalmusicservicethatoffersmusicfromallmajorlabels

• GainssometractionbutunabletorecoverlostCDrevenue

• Industryrevenuesdropmorethan50%overadecade

• SpotifybeginstoreplaceI-Tunes(andincreaseindustryrevenue)butprofitabilitystillelusive