Innovation: changing commerce as we know it

The commercial landscape is constantly carved by innovation. The wheel changed the ease with which a small farmer could transport his crops to a market. The use of steam to power ships and trains enabled much faster and more efficient transportation of goods. The mass production of steel reshaped modern construction.  In light of the influence of such innovation on the commercial environment, it is pertinent for any business to adapt to these environments in order for them to survive. Perhaps the most demanding innovation-driven commercial shift in recent times has been the internet, which has required diverse industries to rapidly adapt to fast-changing commercial environments.

While discontinuous innovation generates a hard-hitting paradigm shift to the commercial climate around us, it can take some time for industries to catch-up. Whether it’s a current industry such as banks introducing mobile banking applications, or the opportunity for newer businesses like Amazon to swiftly expand in the dynamic online environment, digital innovation opens doors across all areas of commerce. However, it cannot be overlooked that digital innovation closes doors too. Seemingly only yesterday in every mall, CD stores are increasingly hard to find as they’ve become swamped by cheaper online offers, live streaming and media piracy. While there are already some winners and losers, holistically we can assume that innovation will continue to contribute to the rise and fall of businesses, with one of the latest and most powerful rises being subscription services.


Subscription services were the result of profound changes to the entertainment industry. Consistent with the rapid dispersion of the internet in households around the world, consumers suddenly had free and convenient access to the majority of songs, movies and books.  In a matter of years the billions of dollars of revenue received by the likes of MGM, Warner Brothers and Walt Disney was threatened, and the face of consuming music, television shows and movies changed forever. It is unlikely that future generations will even be familiar with the forms of consuming media in the 90’s and early 2000’s. Indeed, such a dynamic solution to digital innovation, subscription services, will be consumed in greater volumes and with even better usability than what we know today.

Netflix, perhaps the most globally well-known subscription service is a prime example of the result of the new opportunities opened up to commerce by innovation. Such innovation was faced by unsurmountable odds – direct competition with media piracy that allowed users to freely and (almost always) anonymously skip their bill and download media for free. Initially the entertainment industry took a massive hit as a result of internet piracy, and sought to discourage it through advertisements and pressure on governments to prohibit the practice. However, while internet piracy threatened the demise of the entertainment industry, founders of Netflix Marc Randolph and Reed Hastings were able to provide even better value to consumers than that of free media access. Identifying the issues of streaming/download speed, inconsistent quality and the threat of computer viruses, Randolph and Hastings established Netflix, which solved these problems, integrating these solutions as a core part of their value proposition to provide exceptionally cheap, unlimited, high definition access to thousands of movies, T.V. series and documentaries. Despite pressure for stronger regulation against piracy as theft in order to drive profits back to the entertainment industry, it was instead a digital solution to a digital problem that prevailed.

Spotify is another similar, game-changing subscription service in which frequent and progressive innovation drove the reshaping of the music industry in only a decade. With millions of songs offered for free and with exceptional convenience, Spotify is a milestone in the progressive phases of facilitating consumer’s access to music. Walkmans and CD’s were undercut by portable music playing devices, the iTunes store enabled the purchasing of single songs or albums at lower prices, and Youtube offered free video access to millions of songs. With the digitisation of music services, applications like Spotify open up new opportunities to inform artists about tighter attributes of their target market, including how long users spend listening to their music, their demographics (through premium subscriptions) and location. This suggests more possibilities in future to rent or sell advertising time for these target markets for relevant products and services. Although there has been an unequal settlement about profits from artists and producers in light of changes to the music industry, those that are able to best adapt to the maturing digital music services are likely to be separated as the winners from the losers.

It’s evident that solutions to new challenges born of innovation can’t be found in the past. The steam engine drove the industrial revolution in the same way that the internet is driving the information revolution – onwards and upwards. Once opportunities are pulled out of the magic hat of innovation they can’t be put back in. Simply outlawing media piracy or insisting on intervention for internet innovation was or will never be an immediate or withstanding solution to the issue of unforeseen access to media online. Instead, innovation will continue to shift commercial landscapes, and put pressure on almost every industry as we know it. It is this pressure that is responsible for generating such creativity and drives commerce forward. Subscription services demonstrate the type of progressive solution required in the face of wide-spread and irreversible change. As commerce and more broadly society continues to innovate, we can expect the way industries are shaped to change with them- those that don’t might just be left behind.

Ryan McMillan
Digital Marketing Assistant at Onmark