COMMENT Customer needs - anticipating change and fixing problems
28.04.05, 22.00 GMT, Leicester, UK
I am writing in response to the many emails and inputs I have received following my original post on customer needs.
If you had been a music industry executive when Napster burst onto the scene, what would you have thought and done? Let's see!
At that time a CD on the shelf in a box with all the pics, posters and music was selling at around $20 when it only cost around $1 to produce. Hmm, free MP3s versus $20 - looks like it is time to do something different! How about changing the business model? Buy Napster, sell ring tones, link sales to posters, magazines, t-shirts, calendars, clothing etc. In fact, anything the audience might value.
MP3 heralded the likely change from massive profit margins, with the artists receiving a very small proportion, to very small margins with the potential for the artists to take control and publish their own music. The really big questions are: how do you replace the lost value and how do you get the customers to maintain their spend?
Obviously, if customers no longer value music bits, then you either have to add extra bits in the form of video and or games. But you can also link to the sales of atoms and services and other goods. Interestingly, such developments are gaining ground really fast but the old music industry ain't involved, they are far too busy trying to protect their copyright. Might it just be that that is also a broken concept too?
What happens next do you suppose? The latest recording studios are on laptops in garages and bedrooms. And the new-wave tech-savvy artists are adopting a DIY mode with everything published directly on their websites.
It strikes me that MP3 and Napster were only the start. Unfortunately, the music industry still doesn't seem to be looking and listening... the audience, artists, technology and business model are all moving on!
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There are 2 comments. Join the discussion
1. Radical Meldrew
Peter, Do you really think that the dinosaurs that rule the music business would adopt a new strategy?
This would require more effort than wailing to the press which seems to be their main focus at the moment.
Metaphorically speaking, there may be a huge meteor on the horizon (albeit a musical one). Let's all hope that it can extinguish the latest dinosaur incarnation as effectively as the last time!
2. Richard Barber
The music industry is in decline - partly, of course, because of the issue of defining the music industry with the blurring at the edges with video and other presentation formats, but also because of the fragmentation that occurs with ill-defined channels to the consumer. The past few years have seen rapid change and transient groups unlike the longer lasting 'bands'that were prevalent in the 70's and 80's. The 'charts' no longer mean much to anyone; certainly not the force they used to be in confirming what is popular. Most businesses depend upon a core of really profitable revenue streams to fund new stuff that may or may not succeed. The death of bands and the charts are telling blows for the music industry in its current shape. If people like me hadn't bought the same material for the older bands on vinyl, then tape, then CD, the music industry would have been in even more desperate straits.
Despite claims of musicians only getting a tiny part of the revenue, successful ones seem pretty well-off to me (unless they chuck it away through excess!). However, it will be easier for musicians in the future to make some impact through their own efforts in terms of using the internet, MP3 etc but they are also less likely to achieve the astonishing impact on the lives of huge numbers of people that groups like the Beatles and even (so help me) people like the Osmonds and Bay City Rollers. Of course, some people might look on that as a positive improvement.
And don't imagine that somehow utopia is going to arrive on the music scene with the musicians getting all the money and having total control over their musical integrity: where there is money, there are always people who find a way to exploit the opportunity...