Parc / Between Technological Advancement and Protectionism 6 BETWEEN TECHNOLOGICAL ADVANCEMENT AND PROTECTIONISM The Bumpy Evolution from MP3 Players to Smartphones in Korea Jimmyn Parc Seoul National University and Sciences Po Paris
[email protected] Abstract In recent years, K-pop or Korean popular songs have enjoyed immense popularity around the world. However, the situation was very diferent before the mid-2000s when the industry was sufering from widespread piracy of its music. Furthermore, the emergence of the MP3 phone in the early 2000s provoked two critical conlicts. One was between the producers of the MP3 phone who were large conglomerates and the manufacturers of the standalone MP3 player who were smaller companies that feared for their future. he other conlict was between the producers of the MP3 phone and the Korean music industry who believed this new device would hinder their development. Given the current global popularity of K-pop, it is meaningful to analyze the position and rationale of these players at the time and their consequences. In brief, protecting existing industries hindered the corporate and industrial adaptions in the global competition and held back the momentum to explore innovation and a new business model. First, the MP3 player manufacturers encountered serious inancial and managerial problems and even went into bankruptcy because they were too slow in pursuing change. Second, the Korean conglomerates were late in producing a new digital device, the smartphone, and entering its growing market. hird, the Korean music industry was able to survive but only because entertainment companies have adopted a new business model that generated alternative sources of earnings.