Forgive me, but I just finished (finally) reading Clayton Christensen's "The Innovator's Dilemma," so naturally, this looks like another prime example to me.

It is amusing to watch the entertainment execs flail around. But apparently, it's not necessarily because they are incompetent. Ironically, it may be their actual competence in their current positions that prevents them from seeing the value in the long tail (or anything else made possible by new technology).

They have long made money a certain way. Now, a new method (internet streaming) is coming along. They would like to use it, but they can't. They can't because it doesn't satisfy their current customers.

Netflix is happy to pay for and take the deep catalog. They are new and therefore able take the risk in creating the new market.

I can't give the theory a good showing myself in a brief comment. But if you haven't read the book yet - go do it now. It's amazing how stuff he wrote ten years ago about older companies sounds like a history lesson to me today about Microsoft, Google, et al.