From the moment Edison unveiled his talking machine in August 1877, there was a race to create recordings with greater fidelity and realism. The technology led us from wax cylinders to rotating discs to vinyl records and compact discs. But then something weird happened around 2000: consumers started becoming apathetic when it came to high-fidelity music. Why? The MP3. The convenience digital files offered trumped their inferior sound.
But leading up the rise of the MP3, dozens of companies kept pushing for ever-better-sounding music technologies. The Harvard Business Review takes a look at the forgotten format wars of the late 1990s.
By the mid-1990s, both industries were eager to introduce a next-generation audio format. In 1996 Toshiba, Hitachi, Time Warner, and others formed a consortium to back a new technology, called DVD-Audio, that offered superior fidelity and surround sound. They hoped to do an end run around Sony and Philips, which owned the compact disc standard and extracted a licensing fee for every CD and player sold.
Sony and Philips, however, were not going to go down without a fight. They counterattacked with a new format they had jointly developed, Super Audio CD. Those in the music industry gave a collective groan; manufacturers, distributors, and consumers all stood to lose big if they bet on the wrong format. Nonetheless, Sony launched the first Super Audio players in late 1999; DVD-Audio players hit the market in mid-2000. A costly format war seemed inevitable.
You may be scratching your head at this point, wondering why you’ve never heard about this format war. What happened? MP3 happened. While the consumer electronics giants were pursuing new heights in audio fidelity, an algorithm that slightly depressed fidelity in exchange for reduced audio file size was taking off. Soon after the file-sharing platform Napster launched in 1999, consumers were downloading free music files by the millions, and Napster-like services were sprouting up like weeds.
You might be inclined to think that Sony, Philips, and the DVD-Audio consortium were just unlucky. After all, who could have predicted the disruptive arrival of MP3? How could the consumer electronics giants have known that a format on a trajectory of ever-increasing fidelity would be overtaken by a technology with less fidelity? Actually, with the methodology outlined below, they could have foreseen that the next breakthrough would probably not be about better fidelity.
This is fascinating stuff. Keep reading.