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The Internet is reversing business models
It reminds my of the book ClueTrain Manifesto which pushes the fact that the Internet puts consumers in charge of markets and that any company that doesn't get that will perish as they will not be competitive. The book is a good read, other than the bash-the-idiot-management-suits rhetoric. As an example of an entire industry 'not getting it', take the entertainment industry; the established players have failed to see the change in market requirements that has happened mostly due to the Internet. Their answer has been legal actions in terms of suing progressive parties such as the recent P2P case against Grokster and Morpheus and of course Napster. The entire industry is failing to see that their major target market, teens and young adults, have new requirements on how they get and use their media. These new requirements will probably mean a business model that is different than today's and that is why the established music industry is fighting back with desperate acts. Rule #1 in Marketing 101 is that any company that doesn't deliver on its market requirements will not succeed. Rule #2 in Marketing 101 is that you cannot change how your customers want to use your offering no matter how much money you throw into advertising, education, or legal action. With any market in any industry, the consumer wins eventually. With the Internet, there will always be a new technology that will allow better file sharing and new web sites that guide music lovers to finding what they want. The problem of media file sharing (pirating) will continue unless the new requirements are met. I'm not part of the major target market, but using my neighbor's' and colleagues' kids here are the requirements that I'm seeing for the music industry: 1) 'I want it now!' Like anything else in today's instant gratification world, they want their music now and not have to wait for the CD to be delivered or even take the bus to the store and buy one. 2) 'I want it in digital format.' Throw out the CD, DVD audio, or any other physical music format that is coming along. If they can't upload it to their iPod directly, then what use is it? CD player, 8-track player ... what are those? 3) 'I want it everywhere.' Check out the ads for one of the companies that actually gets it, Apple, and you will see kids listening to music everywhere on their iPod. Doesn't anyone else from the music industry watch TV and see these ads? Because if they did they would understand that if anyone had to choose between carrying a portable CD player with one CD in it and carrying an iPod with 1000 CDs in it, that the answer is very simple. 4) 'It is too expensive!' $15 per CD? Too expensive. 99 cents per song? Too expensive. Yup, kids think 99 cents is too expensive. Why? Because they don't collect music like we used to do 10 years ago. They want access to all the available music to 'try it out' and then they will settle on what they really like. That music that they like is probably worth 99 cents per song, but not anything else. Notice that I said 'per song' as the concept of an album is foreign to most kids. Besides, albums have really not been used appropriately as a medium to convey a single story or idea through a set of songs, like it was used before by 'The Who' and others. Those companies that refuse to listen, acknowledge, react and most importantly, deliver on the new market requirements will die off. That is the Darwinian world of our Capitalist market-centric world and the Internet has made it nearly impossible for consumers to not be in control over our own markets! [ Edit | New ] |
