-The music industry tried to cling to an obsolete business
model far too long and suffered gravely for it.
-Spotify finally dragged the labels into a new era and revitalized
the industry.
-Disney - and the other media companies - didn't learn their
lesson from their adjacent industry's troubles.
-Netflix is the movie industry's Spotify. Cripple it, and
you'll unleash a crushing wave of piracy.
-Almost all media stocks fell Wednesday; this is a lose-lose
decision for Disney, Netflix, and third parties.
Shares of both Disney (DIS) and Netflix (NFLX) fell in
after-hours trading on Tuesday, and those losses extended into Wednesday's
trading. That followed Disney's decision to pull its movies from Netflix going
forward and greatly expanding its own digital distribution ambitions.
And, let's get it out of the way right at the beginning of
this article. I think this is a bad decision, and the market is correct to be
sending shares of both firms downward. Here's why - let's examine the parallel
of what happened with music in the digital era.
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