Losses and Gaines

Every time I drive west down Lafayette Avenue in Jacksonville, heading for the intersection with IL-104, I glance to my right at the mostly empty Capitol Records, later EMI, building. At its height, roughly a thousand employees worked there. The production plant withstood the transition from vinyl records to cassette tapes, and finally to CDs. I am old enough to remember believing that CDs were the wave of the future. For a guy who remembers dropping the needle onto a spinning 45 rpm record, the technology of CDs seemed nothing less than magical. Now the massive production plant lies largely empty. CDs are so yesterday, and I guess so am I.

April 28 marks the anniversary of the opening of the first iTunes store in 2003. My idea of a store is a place you go to buy things off the shelf. In my youth, every decent-sized town had a record store, with bins of vinyl LPs. The concept of stores, as I knew them, seems to be fading away. I still remember a time when customers would go to a store, stand at the counter, and a counter worker would wait on you. You’d tell them what you wanted, and they’d get it. Some of the few places left that still do this kind of transaction are auto parts shops. Howe Electric Supply on College Avenue was also that kind of store. Wait your turn at the counter and a representative would take your order and write it down on one of those metal boxes that held receipt slips. Some of the older workers would then perform a skill almost lost to the ages. They’d add up the subtotal without the use of a calculator, then refer to the sales tax table on a handy card, and lastly calculate by hand the grand total. A little slide would dispense the receipt and a carbon copy, advancing the next blank order form onto the writing surface — no electric power, no batteries needed.

Montgomery Ward, Woolworth, Sears, Kmart, and now Walmart and Target, were each in their time considered unassailable monoliths, the arch enemy of the small mom-and-pop’s establishments. Little did we know that even the big box retail giants would soon be fighting for their very existence against a competitor whose “store” is never really seen. Just a few computer keystrokes, and days later packages magically appear on your porch.

The loss of production plants like EMI Music, and stores like Howe Electric Supply, may be jarring. We are familiar with what’s been lost, but often we have little idea of what comes next. This sort of creative destruction has been going on for a long time.

At the end of the 19th Century, home illumination was largely accomplished with kerosene lanterns and candles. John D. Rockefeller’s oil refining fortune was made by producing kerosene. Then, out of the blue, Edison invented the incandescent light bulb. Rockefeller never saw it coming. Fortunes were lost, but fortunes were also made.

Today, most of the biggest, richest companies are not heavy manufacturers, commodities conglomerates or entertainment companies. The richest companies seemingly came out of nowhere, and they make little things, like smart phones. They make them, program them, produce apps for them and then deliver them to your door. From kerosene lamps to electric lights, from CDs to iTunes, from waiting at the counter to ordering from Amazon … on and on it goes. Innovation is disruptive, and often painful, but who among us is willing to abandon the new technology and methods, and return to the past?

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