Wired has an excellent article on the state of the music industry, as viewed through the eyes of Universal Music’s CEO Doug Morris.
Easy profits ended up blinding the industry to the threat of MP3s. Throughout the ’90s, a handful of insiders warned of the need to get out in front of digital music, but for the most part they were ignored. The big corporations that had snapped up record labels in the ’80s and ’90s continued to focus on short-term financial results, even as it become [sic] amply clear that the advantages of CDs — control, convenience, durability, flexibility — were even more pronounced with digital files. “There’s this mentality of always needing to make the numbers for the next quarter,” says Ted Cohen, a former exec at EMI and Warner Bros., now managing partner at the consulting firm TAG Strategic. “It kept me up at night. Some of us could see that something needed to be done, but no one wanted to do anything that wouldn’t maximize profit for that quarter.”