In Clayton M. Christensen’s book The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail, he wrote that the best of good business practices can ultimately weaken a great firm when a "disruptive technology" is initially rejected by mainstream customers.

A disruptive technology threat has emerged that will dramatically change the industry’s landscape. Inkjet printing devices like the Epson C82 will do to the printing industry what Napster did to the music industry. Users of Napster’s technology ripped a hole so wide in the entertainment industry business model that it took a genius like Apple CEO Steve Jobs to clean up the mess. Apple’s plan may allow the record companies to maintain a role in the future of music, but never will these firms rule the record industry as before.

A Napster Refresher
Napster type services are file-swapping technologies that provide a venue for millions of people to trade files by using their computers and the Internet. In this case, millions of users swap songs. Think of these services as a giant EBay that provides millions of people one place to virtually congregate. But there is no auction here. Everything is free. Users just download the music to their hard drive and then copy the files on their MP3 Player. Odds are that the guy next to you at the gym bobbing back and forth to the music on his MP3 Player is listening to music he pirated off the Web.

The record companies were aware of this, yet they turned their back on the potential of this technology. They believed that consumers would stick with music CDs even as sales slowed dramatically. These executives were convinced, like the arrogance that affects most mature industries that the buyers would remain with the status quo. Unfortunately they were so wrong that they are now part of an industry that is so troubled that their traditional business model is no longer valid.