Formats: the medium is one obvious difference between formats but there are others including the needle, the type of amplification, the speed of rotation, whether the needle moves left/right or up/down in the groove, whether the needle travels from edge to centre, or vice versa and which players from which manufacturers support it. Wikipedia has a nice overview.
Novelty: early recordings had extremely poor audio quality but the apparent impossibility of a machine that sounded like a human was spellbinding enough to outweigh the obvious flaws.
Brute-force production: in the beginning, if 100 copies of a recording were required then the artist had to perform it 100 times. Each repetition cut one copy direct onto the recording medium which was then packaged and sold. The cost and impracticality was not a barrier when there was a market to make, and own.
Legal niceties: there was a lag before copyrights, mechanical reproduction rights, royalty payments and the like caught up with the technology. In that time, you won't be surprised to learn, the artists were largely not the ones making bank. But, even if they weren't keen on new legislation, the manufacturers were happy to exploit existing frameworks, such as patent law, in their attempts to grow their market share.
Rapid obsolescence: to say things moved quickly is an understatement and, while that was exciting to the industry observers, it was confusing and demoralising to users who either couldn't keep up or found themselves holding doorstop technology shortly after purchase.
Remind you of anything?
But this story is by no means unique. I find the music industries an interesting parallel because there is content exploitation alongside the tech innovation, but the early days of the automotive industry, or electricity, or more recently home video show similar patterns: the wow moment, chaos, consolidation, and then commoditisation.
More seasoned and expert commentators than me will have a finer grasp of the economics, business politics, and sociodynamics of all this. What I'm holding on to is this: yes, there is some incredible tech here, and yes, things that were previously not possible are now possible, but, also, this doesn't happen without losers and, don't forget, the big players are in it today to be the infrastructure in the commodity phase later, not for your benefit or out of the goodness of their hearts.Soundtrack: Neil Young
