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July 14, 2010

The industy is dead! Long live the industry! (Won’t someone think of the children!?!)

Since I touched on the subject of media transition touched on briefly in my post about going mobile friendly, I think this is a good chance to highlight some historical hysteria regarding entrenched business models collapsing to be replaced by new ones.

Let’s specifically look at the history of music distribution over the last 100 years.

Going into the 1900’s piano rolls and sheet music were the predominant methods of music distribution. Granted there were also broadsides, but those were considered a medium for the working class and were typically lyric sheets with no music score, commonly notated with statements like ” sung to the tune of -fill in the blank- “.

Even in a time where the average worker earned around $600 a year, 25-60 cents for a copy of sheet music was a premium purchase for many. That said, sheet music was big business and when the phonograph came around, sheet music publishers saw the new medium as a threat and fought tooth and nail to kill the medium. “Oh! We can’t let this happen”, “This will destroy the traditional family gathering in song”, “nobody will learn to play music”, “someone think of the children”, etc…

But, the reality on the ground was that pianos are expensive both to purchase and maintain. On the other hand, phonographs are cheaper to produce, cheaper to maintain, easier to operate and you didn’t have to be able to play music to enjoy them. In the end music producers actually sold more copies of music because they now had a larger audience and the companies that adopted to the new business model profited greatly.

Most sheet music publishers failed to adopt the medium hardly failed to die. Granted some of the fears were well founded, the days of the families gathering around a piano to sing together for leisure were lost (if they truly were all that common to begin with). But sheet music is still produced and sold in most music stores. Granted these days it’s mostly piano and guitar based, but, those are the popular instruments for people learning to play music so it only makes sense.

Let’s roll ahead to the next big jump to radio. When radio hit the scene phonograph publishers went crazy. “Oh! We can’t let this happen”, “People will quit buying music when then can get it for free over the radio”, “This will make it impossible for musicians (sic, publishers) to get paid for their work”, etc…

On the contrary to most concerns, radio actually increased sales for two reasons. People were exposed to a larger variety of music and they like the convenience of listing to a song on-demand so naturally they went out to buy their favorite songs in order to have them available to listen to. Publishers that added value to their product saw even better profits (e.g., B-Sides) among core fans.

Then over then next 60 years not much changed aside from improvements in recording and distribution. Granted there were fights over the introduction of cassette tapes and fears that people would just copy music instead of buying it. The same thing happened with CD based music. But don’t forget it’s always been a steady lowering of the bar of the cost of entry into the world of listening to music contrasted against the publishers desires to maximize profits from that same music. Also, people on the whole will more often than not pay for something when they feel it is being sold at a value they perceive as fair. Don’t believe me? Ask Trent Reznor (of the band Nine Inch Nail) or for another example in a different entertainment industry, ask the video game publisher Stardock. Both have spoken out at length about the success of this business model to their sales.

Since the who knows how long the common perception (supported by much anecdotal evidence and statements from artists) is that artists get paid little if nothing for their work when they publish music through a publisher and that publishers takes all of the profit from sales. The big money for the artists more often than not is in concerts and live performances and endorsements. A popular song will generate larger ticket sales and everyone wins (hopefully). This situation set the scale for next big crisis for publishers. The Internet combined with the modern computer.

In the mid-to-late 90’s the barrier of cost related to copying and sharing music finally broke down and anyone with a computer and internet connection suddenly found a plethora of methods to acquire music to listen for free (sometimes pirated, sometimes not) that weren’t available before. And the net result? Sales increased! What’s that? That doesn’t make any sense. The music publishers told us that people stealing music was loosing them money. Wrong. People downloading music was gaining them customers. The money they were supposedly loosing was based on estimates of “if every single downloaded song on the Internet had instead been purchased we would have profited this much”.

… publishers used the same logic with radio by the way.

The reality was that people who used to be pigeonholed to a particular music style suddenly had a inexpensive way to explore new music that they might not have been willing to pay for (on the risk that they might not like it). When they discovered a new artists or new genre they enjoyed, they then frequently went down to the record store to find more of that music to purchase. You had punk rockers buy classical music and country lovers buying speed metal.

But the industry could only focus on the “lost sales” not factoring in that these weren’t really lost sales. Anecdotal evidence from the time indicates that were more like samples. To compare, yes, we know there is always going to be the guy who lives off samples at the grocery store for dinner, but most people actually buy their food and the samples are good because they primarily encourage regular customers to try things they never tried before. The guy living off of them is a cost of business.

I always said at the time that music companies should have jumped on this immediately and put their entire catalogs online at 56kbps bit-rate (radio quality), with an easy click to purchase the higher quality version priced as a convenience item. They would have made a killing, but instead they decided to fight their customers (and still do). Effectively deciding to sue anyone who eats a square of cheese at the deli counter without buying the whole wedge.

When asked years later why they pursued this course of action, one executive answered that they were so scared of the changes happening and knew that they didn’t have a clue about what was going on that they feared everyone was out to rob them and that even the consultants couldn’t be trusted. So they fell back on the only tool they could trust, their lawyers.

Sadly this fight is still playing out even to this day but in the last year some significant changes have happened that probably mark the end for some of the large publishers in this space. The barrier of entry for recording equipment has vanished and a lot of bands, frustrated with publishers and finding greater profitability by simply going solo on the Internet is increasing. When you strip away all of the fluff YouTube is now the largest publisher of music on the Internet at this time. So large that other publishers now effectively turn their content over to them just to get exposure for their artists.

The more things change the more they stay the same. Business is always evolving and those that learn and adopt quickly are well positioned to profit from their observation skills. Others are destined to dig in their heels and ultimately become a footnote to history.

….some references that helped in the creation of this article are listed below.

  • Media-Morphosis: How the Internet Will Devour, Transform, or Destroy Your Favorite Medium: http://www.internetevolution.com/document.asp?doc_id=171555&
  • http://www.econlib.org/library/Enc1/WagesandWorkingConditions.html
  • http://www.bls.gov/opub/cwc/cm20030124ar03p1.htm
  • Perspective: Radio/photograph was going to destroy print: http://web.mit.edu/comm-forum/papers/murphy.html
  • Sheetmusic and broadsides…: http://popmusic.mtsu.edu/dbtw-wpd/textbase/broad/broadside_ex.htm and http://www.phonobooks.com/BirthRec.htm
  • http://cultureandcommunication.org/deadmedia/index.php/The_Victrola
  • Radio was going to destroy the records: http://en.wikipedia.org/wiki/History_of_radio#Legal_issues_with_radio (although the Internet distributed music has revolutionized the way records are sold, it still hasn’t destroyed them)

January 15, 2009

Persona = Brand

Filed under: General,Perspective — Tags: , , , , — Bryan @ 12:24 am

So now that I’ve introduced you to thinking about Brand You or as we’ve been calling it, your persona, let’s think about what I’ve said and consider how this applies to a businesses.

Haven’t you noticed? Companies have personalities. Companies go to great lengths through advertising and marketing to establish a brand identity (persona) knowing that more often than not you’re going to buy something from either someone you identify with, someone you know or someone you trust. When companies inundate you with messaging they are trying to establish this relationship on a pseudo subconscious level so that you’ll gravitate to their product when presented with a comparable set of options.

Here is an easy thought exercise for you the next time the TV is on. Actually watch the commercials. Based on time of day, day of week and commercial content you can almost always identify who that company thinks is watching the show that you are watching. In theory the persona they are attempting to identify with is supposed to ultimately be you. So that either you or someone you influence will buy the item (eg, kids and toys).

Now a more challenging one. Go to your cupboard or refrigerator and look at what you have in there. Ask your self “why did I first buy this <fill in the blank>?”. Inevitably for alot of people there will be something that falls under the “that’s what my mom bought me as a kid and it’s my favorite” category. Think about that…

Companies have two ways to bring you in as a customer. Positive referral from someone you have an relationship with or by creating a relationship via marketing so that, as I said above, when confronted between product A or B you go with what you know. All they have to do is get you to buy once and if you have a satisfying experience on your first try you may never try the other products. That’s one battle down in the war for your brand loyalty.

One extension of building brand loyalty is through lifestyle associations. Take for example the soft drink/soda business: Mountain Dew = extreme sports, Sprite = hip hop, Pepsi = young and young at heart, Coca-Cola = happy people, or Fresca = dieters. Companies play this card as one more relationship angle based on your personal identity with the hope that if you want to identify with your crowd you’ll buy their product. Sprite used this masterfully several years ago when they went after the Urban/Hip-Hop crowd or Mountain Dew with the extreme sports crowd.

Now maybe you can understand why companies go to great lengths to protect and promote their identity/persona/brand image. Or why when a company’s image is so badly damaged they change their name and logo and try to reinvent themselves. Good or bad, sometimes it works.

Worldcom -> MCI -> Verizon

THQ -> Atari

Enron -> CrossCountry

Philip Morris -> Altria

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January 7, 2009


Filed under: General,Perspective — Tags: , , , — Bryan @ 9:49 pm

This all brings us to my last point…

Don’t ever assume that anything you express on the Internet is private. Be it e-mail, web forums, IP based phone calls, anything. As the world becomes more connected and employers, governments and others feel the need to monitor you as a risk (warranted or not), you will have less privacy in your life. In fact you have less privacy now than you could ever possibly suspect. Consider the little intrusions such as how banks now monitor your Debit/Credit card activity with automated systems that do predictive analysis of your spending behavior and if something goes outside the prediction curve your card will be blocked or you will get a phone call from a CSR (phone rep) to verify that it really is you buying a new high-end TV on your debit card mid pay cycle. This is all done in order to reduce fraud and protect your money… but none-the-less, we are all subject to it already.

And worse yet, if there is money to made from that data, it is often already being sold to other companies who cross reference it with other data to figure out the optimal time to send you promotional offers in the mail. You may think I’m being cynical but this type activity is old news. Here is a good resource site to start you off on the subject, specifically this document “Customer Acquisition and Data Mining“. Here’s a quote:

“More complicated overlays are also possible. Customers can be matched against purchase, response, and other detailed data that the data vendors collect and refine. This data comes from a variety of sources including retailers, state and local governments, and the customers themselves. If you are mailing out a car accessories catalog, it might be useful to overlay information (make, model, year) about any known cars that people on the prospect list might have registered with their department of motor vehicles.”

Also, as I mentioned previously MySpace, LinkedIn, FaceBook and others allow third parties to review your account data and private, protected pages all the time without any kind of legal overview. You agreed to it when you (often carelessly) pressed the “I agree” button when you created your account. In fact just about every online service you’ve ever signed up with probably has a clause in the EULA/Terms & Conditions about sharing your personal information which you agreed to when you checked that box and hit submit.

Beyond that, you should always remember that everything you do on the Internet or an Intranet is recorded in some manner. Take for instance the simple (and default) behavior of a web server recording a log of every file it delivers and the IP address of every computer that the file was delivered to. It is how the owner of that log file handles the data that they store that ultimately impacts your privacy, hence some of the rules that have been fiercely debated across Europe regarding this very subject. Just this last October (2008) yet another ruling occurred in Germany indicating that an IP address is not personal data. I’m sure next month it will change again.

Additionally, new ways are always being invented to index and parse the web. It’s only a matter of time before either archive.org or some other company working with them develops a way to perform web searches across their database. Then that long gone web site where you thoroughly embarrassed yourself may come back to life and become discoverable again some day in the future.

In regards to modern technology, the idea of Privacy is nothing more than a quaint religion at this point in history and to bring this all full circle to the persona issue (now that I’ve completely scared you to death in the process) remember this… if your doing something online that you don’t want the whole world to know about, then maybe you shouldn’t be doing it.

…sounds like advice from Grandma…

[read the other parts of this series: 1, 2, 3, 4, 5]

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December 31, 2008

You can’t take it back…

Filed under: General,Perspective — Tags: , , , — Bryan @ 7:00 am

This isn’t meant to scare you. Posting things on the Internet isn’t really a big deal as long as you’re not a dork about it. Just use some common sense and be civil with people. The Golden Rule is always good way to go when in doubt.

Granted the things you say on a corporate Intranet aren’t likely to linger in cyberspace forever, but even there you should always adhere to your companies Code of Conduct or you’re like to find yourself under disciplinary action at best, out of a job or worse.

A scary thing though (and this is where persona plays into things) is that some companies now evaluate potential new hires based on the results of what can be found about someone in an Internet search. And just because you marked your MySpace or Facebook profile as private is really not relevant because there are agencies that have contract agreements with these sites that allow your prospective university or employer to access all of your content. As companies get more savvy to this (unless something happens to the contrary) expect even more privacy violations, and more digging. In reality, all it takes is a credit card number and your first and last name to dig up more information on you than you could ever think possible.

But Web pages aside, you should always be aware that whatever you write in a public space is likely to resurface at some point in time. Whether or not people care is a whole other matter. Just because you posted some comment to some forum or other that might be embarrassing ten years ago, don’t think it can’t come back to haunt you.

Personally, I’ve always tried to be reasonable when I’m online. I’m sure there are a couple of places where you can find me engaged in some argument about something or other (I think there is one out there where I have an argument over some 3-D gaming technology). But, I think the best surprise example from my own life has to be this item which is now recorded for all posterity on Google Groups.

It’s nothing embarrassing, but here’s the history. In 1993 when UUCP (News groups), IRC (internet chat), FTP repositories (file sharing) and Gopher (pre-WWW hypertext) where still the predominant communication systems on the Internet, I was contributing to some of the early video game related newsgroups through a local Columbus, Ohio based BBS system called BlueMoon BBS. This BBS was a UUCP node which means that it was connected to the Internet newsgroups. I only posted a dozen or so times through this site and had completely forgotten about it until one day when Google announced that they had located backup tapes of all Internet Newsgroup posts going back to 1981 and were now going to put them online in a searchable format.

That was pretty cool. From there, me and several thousand people immediately started searching for our old posts to see how far back we could locate ourselves. I had never in my wildest dreames imagined this stuff would end up on the web, but there it was. Good thing I wasn’t a newsgroup troll.

[read the other parts of this series: 1, 2, 3, 4, 5]

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December 24, 2008

Sharp dressed man

Filed under: General,Perspective — Tags: , , , — Bryan @ 9:46 am

In the on-line world something amazing happened. Anonymity.

In actuality, true anonymity on the Internet is a rare commodity. Just because you created a MySpace page with the username PuppyHunter342 and posted a photo of your neighbor’s cat on your profile, doesn’t mean someone can’t figure out who you are with enough resources. But just like the plastic lock on a file cabinet, it’s enough to keep the passing acquaintance from finding out.

In practice though many researchers have found that the key problem this has created (in part) is that people feel more liberated to show their at home self in public, or in many cases project their internal voice out into their communications much like a free writing exercise. You don’t know me, I don’t know you and in fact I may not even exist beyond the words you’re reading on this page, so the sense of social repercussions never even comes into play if you decide to write a rant in the comments. At worst, in some peoples minds, they’re simply writing a comment to someone. Not generating yet one more piece of electronic documentation for forming their online identity.

Beyond that, I personally think this may happen because most people interact on the Internet from home on in the privacy of their office space where they are conversing or thinking with their family/internal tone and then using that same voice as they type. This probably wasn’t the best thing to happen.

People like to categorize things as I mentioned at the start of this series. You’re going to be categorized, like it not, so why handicap yourself out of the gate. This is a hard lesson that most people only understand much too late when it comes to living an on-line life (oh nooes, that Facebook photo of you puking from a drunken stupor at that party may come back to haunt you some day).

When you think about it, while this perceived anonymity is a double edged sword it also presents humanity with an amazing gift. The ability to transcend preconceived stereotypes… Well… as long as you’re thoughtful of what you write and where you write it. But even then other people will still try to stereotype you (from casual observation, to academic review).

The perfect example of this self definition would be the growing realm of Virtual Worlds. You can be tall, short, male, female, black, white, green or purple. You can be an extremely unpopular person in the real world, but in a virtual world you can be that Sharp Dressed Man who is eloquent and has all the right connections. Nobody ever has to know unless you tell them.

Most people don’t think about all of this when the venture out to the wide world of the Internet but it’s even more important now than ever to be aware of this issue because of my next point…


[read the other parts of this series: 1, 2, 3, 4, 5]

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