An Evaluation of Web Strategy in the Musical Instrument Business

posted by on 2009.01.19, under New Marketing, Social Web

With NAMM taking place over the weekend and several of our clients in the musical instrument business, I thought it would be appropriate to evaluate the participation level in social media and web strategies of musical instrument companies. (Disclosure: a few of these are clients, noted below.)

Many corporate websites are becoming irrelevant, serving as static brochures. Visitors are expecting more than just information and positive spin. Social media, blogs, syndicated news, widgets, and videos are just some of the ways these companies are participating, along with a new approach to sharing and conversing with customers. Using the network effect of social networking sites allows content to be more discoverable than being on an island (aka, your website). More searches are happening on YouTube than on Yahoo (Google being first place). For this reason, along with zero bandwidth costs to you, there is no reason to not have your brand’s content on YouTube.

The Musical Instrument industry (including makers of brass and woodwinds, guitars, basses, drums and percussion, keyboards, synths, pianos, recording and effects, live sound reinforcement, DJ, karaoke, and all related accessories and educational products and services) is using a variety tools and tactics to execute their web strategy for marketing and customer contact. They can be classified into 12 areas:

Newsletter/mailing lists with a public news archive

You can tell these companies have been using the web to engaged with their customers for years, because at one point newsletters were the easiest way to reach out to customers, back when sending and managing e-mail was easier than posting a blog. I would still recommend both newsletters/mailing lists and blogs to make content available in as many formats as possible. Feedburner allows publishers to be notified of new posts by e-mail.

Bias: news, press releases, newsletter

SKB Cases: news and mailing list

AKG: mailing list, news

Sony: mailing list, press releases

Newsletter/mailing lists with no public newsletter archive

You need to sign up for the mailing list just to see if any news is happening. This strategy means that there are fewer pages for search engines to spider, and then other sites have a better chance of receiving search traffic about a companies’ product, like Harmony-Central forum.

D’Addario

Ovation Guitars

Korg

Dean Guitars

Dipinto guitars

Gretsch Drums

Toca Percussion

LP Percussion

Steinberg Software

Roger Linn Design

Hosting Forums

These are a great way to get search engine queries from users that helps them find answers to product questions saving companies repeated support inquires over time. They do take some time to manage, but they are a great way to show customers that you are listening and willing to help. Several of these brands below are with the Harmon Group.

Fishman: news, forum

Jackson Guitars: news, forum

Lexicon: news, forum

Digitech: forum, news

dbx: news, forum

TC Electronic: forum (more below)

Using a blogging platform or good content, but no feed

This is coming from a good place, but for blogs to live in the blogosphere properly, they need to have feeds and comments. WordPress is free, runs on any commodity LAMP server. There is no reason to re-invent the wheel here. Although, there is one blog in my survey that seems to be using Blogger.com but has disabled the feed. This is no way to get people to go to your site. Allowing people to subscribe to your feed makes your content stickier. (Update: I spoke to Rick at PreSonus and he is now aware of the problem).

PreSonus: blog, YouTube

Access

Blogs on Blogger, MySpace, or WordPress

These guys are seeing the light. In some cases, maybe it is a rouge employee in the marketing department who is living the “better to ask for forgiveness than permission” rule. It is really easy and free for anyone to go on to these sites, start a presence, and link back to the main site.

Epiphone blog, Twitter

BC Rich: blog

Jomox: MySpace (no posts yet), news and newsletter

Seymore Duncan: MySpace blog

RSS syndicated press releases

These companies understand the benefits of syndication. Both musicians and publishers looking for news updates and stories can subscribe to news feeds directly from the sources by subscribing to RSS feeds. This has less management headroom in comparison to having a mailing list. But some are just putting out the same type of content they have always put out: product launches, personnel changes, partnerships, and promotions. And these sites are not using a full blown blog platform so there are no comments or trackbacks.

MoTU

Akia (with bonus Digg button)

Crown Audio

ElectroVoice

Monster Cable

RSS syndicated news and newsletters/mailing list

From an infrastructure perspective, these guys have everything covered. Some are also using social media. But some are not using blogging platforms, so there are no comments or trackbacks.

Behringer has a blog posts by Uli Behringer himself and three other Behringer personnel so far. It looks like they just started the blog in December 2008. They are also on Twitter.

M-Audio: news, newsletter

Moog Music: MySpace blog, YouTube, news (no feed or newsletter)

Digidesign

Alesis

Native Instruments: news, newsletter

Blog on the company’s site, used as a channel to push promotions

These sites have a full blog platform such as WordPress, allowing comments and RSS feeds, but still the content is not helping or teaching potential customers. In some cases the companies are well-known companies in their categories. Maybe they think they can only push awareness of promotions, which may result in a spike in sales, but does little to help build a long-term relationship with their user base. Some posts are about events and profiles on organizations that use the companies’ products. Most do not have comments or have them disabled.

Mackie

Fender

Taylor Guitars (featuring ShareThis.com links on every post)

Ernie Ball

All of the Conn-Selmer brands have at least an RSS feeds on their news pages. Some have Facebook fan pages:

Blog on the company’s site (or on Blogger/Wordpress.com), with content that helps or teaches

If a company is doing this, in my opinion, they have seen the light. They are using their brand’s influence to help their user base, teach them why they should pay more for finer features, and help them kick ass with their products after the sale. These blogs are also not afraid to put a face on the companies’ personnel. Some blogs have an actual byline from an person in the company.

Kessler:blog, written by the owner’s son

Gibson Guitars: MySpace, news, Twitter, YouTube

Dixon Drums: blog, YouTube

Propellerheads Software: artist profiles, YouTube

Roland has 8 different content channels, all with feeds, and most with a newsletter option, each one for a specific market need. These include:

They certainly offer the widest range and best frequency of content if you count ever channel. Roland has a long history of content production with their RUG (Roland User Group) print magazines. They are also one of the only companies profiled here to have a support channel as content available in a feed. This makes sense since they are a technology company. These notifications are are mostly software updates. They specifically cater to the church musician niche with their Worship Connection content channel, offering advice on live sound that fits in well with their organ products. They have a link to Worship Northwest 2009, a conference sponsored by many audio companies.

The Best are using two or more: blog, forum, MySpace, YouTube, Twitter, Flickr, Facebook

These companies have embraced the tools of social media. I don’t like the content style of all of them (some are too press release-ish), but they are going to where their users are. They do not need to reinvent concepts, and are fine using open source software or free web 2.0 services. Their blog content is decent as well.

ElectroHarmonix: YouTube, MySpace blog

Ludwig: MySpace, MySpace blog, Facebook, news, Twitter

Yamaha: The Hub: podcasts, blogs, and videos

Kaces: blog

Rock n’ Roller Cart: blog

Line6: news, Twitter

Reunion Blues gig bags: blog, wiki (a directory for touring musicians), Twitter, MySpace (disclosure: this is a client)

Sabian: news (no feed), forum, Twitter

Taye Drums: blog, community, Twitter, MySpace, Facebook

D’Addario bands have MySpace, Facebook, YouTube, and forums for most of it’s brands. They are listed on their ToTheStage.com community site along with a directory of sites that teach you how to play better:

TC Electronic has news across multiple categories available in one RSS feed, a forum, videos on YouTube, a Netvibes Widget, and a newsletter: news (on the home page), YouTube, Netvibes news widget, newsletter, forum, news page for the TC Helicon brand, and a Flickr stream. These guys really get it, and I think they are the best example of a company that is really participating in the social web, allowing their brand to be found across many platforms. I especially like how their news is part of their homepage. They understand that the context of their web presence is immediacy.

Newspage and newsletter/mailing list, no feeds

BSS Audio: newsletter and news

DM Pro: newsletter, news

Focusrite: newsletter, news

Mapex: newsletter, news

Marshall Amps: newsletter, news

Novation: newsletter

Peavy: newsletter, news

Soundcraft: newsletter

Sabian: newsletter and news

Zildjian: newsletter and news

Non-syndicated news page with press releases and/or collection of press mentions, no feed or newsletter, no forum

When companies can speak directly to musicians from their sites, why do they need to write a press release? It’s as if the only other place the musicians will read about new products is magazines and other niche sites. These news pages are written for them. There could also be content for end users.

Allen and Heath

Audix USA

Buffet-Crampon

Dave Smith Instuments

DW Drums

Fostex USA

Gibraltar Drums Hardware

Hosa Cables

JBL Pro

Johnson Guitars

KRK Systems

Kurzweil Music Systems

Middle Atlantic

Novation

Nord Keyboards

Numark

OC Drum and Percussion

Ovation Guitars

Pearl Drums

Paiste

Premier Percussion

ProCo Sound

Samson Audio

Shure

SennheiserUSA

Sony Professional

Tama Drums

Tascam

Ultimate Support

Some of the tools we use

For clients, I use Twitter for “ambient awareness,” WordPress as a blogging platform, PHPList for mailing lists, YouTube for free video hosting and syndication, MySpace for demographic outreach, Google Analytics and Feedburner to track visors and subscribers.

Our Favorite Picks

We are happy to see Conn-Selmer syndicate all of it’s news. TC Electronic has done a fair job using social media and RSS syndication, and YouTube. Yamaha has not only great videos that help to educate customers on their products, but podcasts also. Roland has the richest and longest running content channels.

Comments and Suggestions?

If you have any suggestions on companies we forgot to include, corrections, or would like help with your web strategy, leave us a comment.

(photos by synthesizers, psycht, Squiggle, and TCElectronic on Flickr)

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Atari complains about having to compete with itself

GameIndustry.biz reports that Atari is complaining about second hand sales at it’s event Atari Live in London. Their proposed solution? Add features that make it more useful to the users that rely on one sort of online social features that players would need to pay for.

It is a great idea, but the tone of the complaining seems rather childish, since it is Atari’s own fault for not keeping up with the pace of the industry. Competing with the sale of second hand items is just the cost of doing business for any type of product that has a resale value. If they don’t want customers to resell games, it is only going to force the companies like Atari to make more compelling games. Atari is perhaps one of the oldest game companies still around. It got to where it is by selling packaged goods. Upstarts have outmaneuvered by creating more innovative, compelling, and profitable games like World of Warcraft, Guitar Hero, or Rock Band.

In a way, Atari is complaining about second hand game reselling the same way it might complain about piracy. It admits that it can’t deal with it’s own externalities. At least they are not trying to outlaw game reselling which is clearly legal in the US under the First Sales Doctrine.

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The Uncanny Parallels Between Israeli Archeology and Innovation Challenges

I recently caught three interesting episodes of Simcha Jacobovici’s Naked Archaeologist on History International:

  • Episodes #5: “Real or Fake?”
  • Episode #6: “Fame & Forgery”
  • Episode #7: “Accidental Archeology”

Israeli ArcheologyEpisodes 5 and 6 are about the Israeli Antiquities markets where each player strives for the right to participate in a free market of goods within the context that the goods are authentic and that the sale was legal, or allowed by the authorities. Archaeologists are shackled by protocol and the need for proper financing. Targeted claims about forgeries can make or break a collector, archaeologists, or exhibit. Episode 7 covers the construction projects that discover ancient ruins and the chilling effects that jealous archaeologists cause when they discredit discoveries are made accidentally by non-archaeologists.

These topics are interesting because there are many parallels to the challenges facing business; in particular, the ones that rely on intellectual monopoly in the age of digital abundance and the success that can be had by amateurs. Producers of text, music, film, business methods, systems, and apparatuses are still at odds with where they want the market to be, and where it is today.

Bureaucracy Slows Progress, Maybe on Purpose
Archaeological excavations on new sites sponsored by the state or by western universities need to do everything by the book, and in accordance with the Israel Antiquities Authority (IAA). As a result, the excavations never find anything worthwhile. There must be funding, and it must come from the right sources. Permission must be granted, official documentation must be made, and so on. The cynical may believe that the excavations that are permitted will be fruitless, planned so there are fewer pieces in the marketplace.

Keeping the Marketplace Artificially Small
There is a perceived right by some to stifle the market. Dealers and private collectors such as Oded Golan, owner of the controversial James Ossuary. His collections rival the IAA’s own collection. The IAA, in its position as the authority, does not want such rivals. So, it goes after the best private collectors and their collections by claiming that some artifacts are either forgeries, or artifacts were purchased from tomb raiders who’s digs were not authorized by IAA. The IAA website goes at great lengths to document their victory in catching and apprehending unauthorized excavations like this man found using a metal detector in the middle of the desert. Such publications seems like a simple scare tactic. In any case, the IAA is taking moral authority over their competition in the name of propping up monopolies.

Unauthorized and Accidental Discoveries
If a tomb raider (particularly Palestinians) are caught on the streets in Israel, they can be punished. However, there is some sort of strange exemption they receive if they make into a dealer’s shop without getting caught by the authorities. Perhaps the Israeli dealers are covering for the tomb raiders who my be bringing them valuable items the dealer can resell. The Dead Sea Scrolls were discovered by accidentally by a goat herder, and for this reason, we ignored by the larger archaeological community at first. Similar things are happening with companies that innovate in digital distribution who are at first blown off by incumbent content industries, and then sued instead of creating alliances, and then insist on doing it themselves.Siebenberg house

Jealous archaeologists discredited the discovery that are not made by one of their own, such as the 2nd Century BC mansion found under a home in Jerusalem known as the Siebenberg House. Without much interest from the archaeological community since it was not discovered by one of their own, the Siebenbergs conducted the excavation themselves over an 18 year period. Now their home rivals some museums.

With the rapid commercial development, there is a cat-and-mouse game between archaeologists and contractors. Contractors are sometimes quick to secretly destroy ancient ruins so that projects are done on time. Discoveries that do get reported usually hold up new construction projects indefinitely, such as a the construction of new walkway for the Temple Mount which uncovered remains of the first temple.

Pirates” Push the Boundaries
As with the artifacts that are sold by tomb raiders, forgeries also compete for prestige, sales dollars and attention in the Israeli antiquities scene. Corrupt officials could deem an artifact as a forgery in order to simply take it away from or to discredit a dealer. The irony is that some older forgeries themselves are now artifacts. In the 1880’s, Moses Shapira, an entrepreneurial antiquities dealer, knew that there was a great demand in antiques for Holy Land tourists but not enough authentic pieces to go around. He and his associate, Salim al-Kari manufactured thousands of fake antiques, selling hundreds of pieces to German museums. He was eventually caught by investigative journalists and outed in London newspapers when he tried and failed to forge a piece of parchment with Bible passages. In shame, he killed himself soon after. However, this is not a cautionary tale, since today’s pirates that push the boundaries are not claiming to pass originals. The irony is that this rich history now accounts for a demand in original Shapira forgeries, as they are shown at his one-time historic home, the Ticho House in downtown Jerusalem.

Conclusion
The market for antiques is abundant. The ability to discover them and fill voids is natural. Authority and protocols keep the rights to discover and sell antiques scarce, thus creating even greater scarcity of antiques themselves. The more abundant new discoveries become, the lower the value for pieces currently owned by museums and dealers.

Anyone can think up ideas and digital technology makes it easier to execute on ideas. Unnatural limits emerge to keep incumbents in control of the marketplace, and this is a danger to us all because it limits our liberty and ability to innovate. It is not the privileged that innovate. It is the “pirates,” early adopters, and amateurs who break the rules and forge ahead by breaking barriers disguised as rules.

(top photo by heatkernel)

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Using Social Media to Market Music

posted by on 2008.06.09, under Social Web

Jackie Peters has a post about the great opportunities record labels have in using social media as a marketing strategy. The challenges they are facing: they must switch from selling music in physical packages to selling musical experiences, allow fans to interact with the music in meaningful ways, and allow music to be an experience to share with friends. The convergence of downladable, infinitely available music along with the ability to learn about new music via word of mouth/social media in the form of music blogs, podcasts, recommendation (both algorithms and friend) is the perfect fit.

But for now, the transition is rough for music industry veterans. Almost every week for the past two years the music industry manages to make one puzzling move after another, while independent artists are free to make decisions who’s only stockholders are themselves along with their artistic and commercial aspirations. Increasingly, independent artists commercial strategy is not in selling CDs, but in the more scarce goods such as early access to new releases, performances, and limited edition vinyl or DVDs, reliable discovery and immediate access to files on iTune or Amazon MP3 . They now they need to sell their fans something they cannot get for free.

People love to talk about the music they love. Allowing them to share it easily and legally, and talk about it online, and put it in new contexts is the new path to commercial success.

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When the cost of making ideas can be zero, the fee to use an ideas should be zero

posted by on 2008.05.24, under Creativity, Innovation

As AgainstMonopoly and Techdirt like to say: when the marginal cost of producing a product, service or experience drops to zero, the price the market is willing to pay will drop to zero. For those that can craft ideas in their heads or on a napkin, the cost of this production is zero. However, what makes an idea valuable is the idea crafter’s ability to execute on the idea successfully. This requires scarce resources such as time, skills and maybe materials. Coming up with ideas and executing them successfully should be allowed to be mutually exclusive activities.

However, regimes such as patents put an artificial price on ideas and slow down innovation. One great example is the push-back on copyright by artists who license their works under Creative Commons. They are aware that someone else might be able to execute on their ideas better than themselves, and the license grants these permissions. Open APIs (application programming interfaces) allow 3rd party developers to use applications in ways the original application developers did not yet imagine. Execution is the natural and scarce barrier that differentiates competitors. It should not be an artificial price on ideas, methods, abstract processes, or the discovery of naturally occurring mathematics, physics, or biologies. The patents that are most dangerous to innovation are software patents. When patents first came on the scene in the US, it was intended for mechanical processes or methods, not necessarily for abstract ideas. Patents on software methods and business process are more akin to abstract ideas.

All of the money spent on patents and the barriers they creates for others is useless in “promoting the useful arts and sciences” unless you can successfully execute on them. And failure for one party to successfully execute holds everyone back, thus prohibiting the promotion of the useful arts and sciences. Your R&D resources are also a waste if you fail to execute. But this is the risk business must take. Even if you have a patent or a copyright, you can fail in the execution.

One might argue that there is a cost to making ideas, since you need to pay for R&D. This may be a leftover thinking from the industrial area. Sure, even for the development of abstract systems such as software applications and business methods, the time resource of engineers and the scarcity of their skills are necessary. But in a situation where one party has spent resources to come up with the same ideas that someone else might develop with fewer resources, and without any influence for the first party, it is as if the act of spending any resources whatsoever means that the idea deserves exclusive rights to execute. The context for protection comes from the belief that party A can “steal” ideas or the fruits of research from party B. These protectionist schemes make no room for the fact the two parties can come up with similar solutions independently, nor do that allow for the ability for some to ideate at no cost, and there is an automatic assumption that they are “anti-market”. It is as if the shareholder value for a couple individuals or firms is more important than the health and well-being of the world over. Or, the appearance that if the executioner is following protocol is going to covers some of their liability for failing and the false stigma of failure.

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Great Design Spoils Us and That's A Good Thing

posted by on 2008.05.16, under Creativity, Innovation

Great design along with great user feedback and iteration makes me intolerant of bad design, even when there is no alternative.

In the web app space, new entrants continue to appear, competing with each other and incumbents, each tweaking their strategy slightly. One thing that will separate each app is the quality of the user experience and user interface. Thus, users of these apps are increasingly spoiled. The best-in-class app emerges in a Darwinian competition. The web app space has to be the most fast-paced example of this paradigm, but it could be true of other products, services, or experiences who’s design can be constantly re-iterated.

I know I am spoiled. I have Google apps (search included) at my fingertips. I can use 37Signal apps to communicate complex ideas around my projects. I can communicate back and forth with web power users in an instant from almost any location without e-mail by using services like Twitter.

However, as I look at other apps I have no choice to use such as the web interface for my bank, government websites, or the CRM software at my last job, I am very intolerant of old, bad software. I expect that this software should not make me think. I only want to think about how to solve hard problems once, and then have have a software solve the problem when it comes up. In other words, I think software should do the repetitive mental heavy lifting.

When a great design ecosystem along with a great feedback channel to the designers and developers is available, we become even more spoiled. But I don’t think the spoilage is a bad thing. It creates an awareness for good design. It creates an awareness for the need for UI and UX designers. It creates awareness of the advantages of user feedback channels. It creates an awareness that rapidly releasing new code helps designers make better choices.

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How Open Source and Social Media are going to Eat SEOs’ Lunches

(Sphinn this)
Search engines react to behavior of its users and site owners. Search engines measures these behaviors to deliver value to each, but ultimately to serve the search engines’ best interests. At first, search engines used what they could by implying relevance and rank by link behavior. But as the web evolves to the social web, social media connections are going to have an increasing weight on search result relevance. Let’s face it: social media strategy is going to cannibalize black hat and some current white hat SEO strategy. Social media strategy is the new way to do SEO (figure out how to give value to your client’s web strategy). It is Matt Cutt’s job to figure out how to measure this relevance, and he is seeing that it is social media.

Right now, there are a bunch of SEOs listening to what Danny Sullivan has to say about social media strategy because they trust him. But some SEOs refuse to re-evaluate what brings value to their clients, (note: this Sphinn user was not in attendance) even saying that Jason should not be allowed at conferences. These sentiments just prove to him that what he is doing is right. It is innovators dilemma. SEOs got where they are today by being great at SEO strategies. Asking them to adopt social media as a new strategy is new and foreign. As Danny tries to lead his followers to new territory, some think he is betraying them and the strategies that made them the stars they are today. Some might be too afraid to go back to their clients to tell them they are going to try some new strategies to help their clients succeeded. They should remember that this does not mean the work they did in the past did not allow for successes or was a bad idea. SEO definitely has been one of the main ways to help clients succeed on the web for the past 10 years. But, there is no need to defend past actions with future ignorance. They need to redefine their metrics. The longer they wait, the more likely they will get their lunch eaten.

Thus, the knee-jerk reaction to Jason Calicanis’s rhetoric that SEO is a dying or bad strategy. Yes, let’s admit that Jason loves to agitate people by rubbing strategy decay into SEO’s faces, bad Jason ;) . No one is going to tell an SEO that they are not giving value to their clients using SEO techniques. It just that the tactics they are using need to evolve.

Less attention is going to be paid to traditional SEO because (especially in the creation of static pages) now it is so much easier and valuable to create site with an open source blog, CMS, wiki or other application platform that may or may not rely on search engine traffic. Sure, even with these there are some ways to tweak them from an SEO perspective, but not as much as you might have needed to do 10 years ago. This is disruptive technology, bad news for the traditional SEOs that build sites from scratch, sprinkling in their elusive, magical SEO code. But, the developers of these open source CMS apps have figured out how to do the complicated SEO work for you (why else would Matt Cutts speak, attend, and endorse Wordcamp?). Here (along with social media application designers) is where good SEO needs to happen, and smart web strategists will realize that this is where it should continue to happen, because it scales and eliminates redundant work. You just need to wait for the search engines to spider your site. Now, traditional SEOs (which should now be called web strategists) should have more time available to add additional types of value for their clients by either engaging in social media on their behalf, or teaching them how to engaging with their prospects in a way that will help them efficiently meet their goals over the web. This is done by creating “meaningful relationships” (for lack of a better term) with people. At this point, SEO is just one of many tactics used by a web strategist. So calling a person an SEOs or SEM will soon be a way to show how outdated or limited that person’s strategy toolbox is. SEO competes with other value-adding strategies if all you do is SEO. Thus, SEO people see social media strategy as a threat. Being a web strategist is where it’s at.

Update 4/25/08: Oh yeah, add semantic web to the list in the title.

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What is better: SEO or SMO?

You can spend engineering resources on fighting spam like Matt Cutts and team, or you could spend talent resources on writing and curtaining content like Jason Calacanis, Jimmy Wales, and passionate bloggers.

Likewise, you can spend engineering resources to make sure you rank well in search engines with SEO, or you can create value for your users/customers by allowing them to poll you presence with a social media strategy like blogging, Twitter, curated bookmarks, teaching them like Brian Clark at Copyblogger, or helping them kick ass like Kathy Sierra, until they are compelled to become a paying customer.

Is one better than the other? Those that made their name with one may downplay the other, but that is human nature. It is better to be a good sales person than a strategy picker.

The odd thing is that SEOs see SMO as an SEO strategy, and SMOs see SEO as a dying strategy. Let’s just call it all evolving web strategy.

If you are in town for SMX Social Media, we can discuss this further. Look for me at the bar at the Westin. Add me on Twitter if you can’t find me.

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Ignorance to Competitive Business Models Costs Incumbents $60 Billion by Refusing to Pay Strategy Taxes

posted by on 2008.04.16, under Book Reviews, Innovation

There is a really dumb press release (and I say dumb because of its FUDy tone) at Marketwire suggesting that open source is a threat to the software business. This is may be true, but I think my post title says it all. Plus, the Standish Group wants to charge you $1,000 to prove this to you. Smart companies are succeeding with open source, such as MySQL and RedHat. From their inceptions, their business models were designed to give away or use free software, an infinite good that can be copied at zero cost, to sell services such as time and expertises, a finite good. Incumbent market leaders are not willing to pay what Dave Winer calls The Strategy Tax. It seems like the same idea as Clayton Christensen’s The Innovators Dilemma. Companies are not willing to change so drastically that they cannibalize their current value proposition, turn off their currently paying customers, and find new ones, so they whine when someone comes to eat their lunch. These companies must die off or they will create poisonous incongruencies inside of an industry, just like in the recording industry.

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Do you want to be like Billy or like Trent?

posted by on 2008.03.24, under Disruptive Business Models in Content

We now have two great examples to point at in the music industry on adapting to change.

On one end, we have Trent Reznor of Nine Inch Nails, who ditches his label, does his own production, marketing and sales, and takes a complete hands-on approach into creating his own artistic and financial destiny.

On the other end we have Billy Bragg who simply expects to make music without him or his company taking any initiative to do anything innovative, and then sit back and wait for others to pay him, and to blame others (companies who provide an opt-in service to help artists deliver content to fans and potential fans) for taking advantage of him. Music is not worth as much as it used to be. The days of being paid a premium for your music when it is not remarkable are long gone, as is automatic payment for any use of your music.

Bragg, here is a list of other distribution service companies (some of which have had less business year over year since 2000) that have “taken advantage” of you that should be giving you money even though you have done nothing to deserve it:

Trucking Companies
Every Monday, thousands of trucks across the country would deliver new CDs, records, and tapes to independent records stores, Tower Records, SamGoody, The Wherehouse, and Virgin Mega Stores (these are all old US record store chains). These trucking companies had a business model because at the other end of supply chain was you, the artist. The funny thing is that labels (or maybe the stores themselves) where the ones paying the trucking companies for the service, not the other way around. No profit sharing with artist here.

Pressing Plants
CD and vinyl pressing plants perform a service of putting artist music on a physical media so these trucks could deliver it to the stores. A labels artists would submit the artwork, a mastering studio would deliver the glass masters, acetate, or master tapes to these facilities. Of course, these are still around. They are serving artists and labels that have figures out how to make fans buy things they can’t get for free. No, pressing plants are not responsible for paying out royalties either.

Music Stores
Label’s marketing organizations sometimes had a hand in promoting music at the stores themselves, by sending posters and promo CDs to play, and then having a rep come and visit the store to make sure the store was using the material. Also, they may have allocated shelf space to specific releases. But is this something they can rely on today to help your sales? Of course not. Amazon and iTunes might have similar equivalent, paid sponsorship of artists. But it is in their bests interest to promote artists that sell, not the ones paying the most for “virtual shelf space” (as some physical music stores were relying on for most of their income at one point).

But are any of these companies in the distribution chain charged with promotion and payment of artists? No. This was the label’s responsibility. And today, it is increasingly the artist’s responsibility to either take charge by creating his or her own destiny, or make sure they keep a management team that is not pretending that things are the same as they were 10 years ago. Back then, certain services were bundled together. Today, they are all separated. The distribution channel is not responsible for paying you unless you make this explicit, which fewer are not in the business of doing (remember Caroline? I think they are/were in this business).

Check out Bragg’s site, he links to his iLike profile. Watch out, iLike, you will be the next free service to owe him money for promoting him, and then not taking proper responsibility for making him rich.

Social networking sites with music were originally for unsigned, independents artists. Since these became some of the only places to legally listen to music online (since the major labels were to timid to participate), these sites became destination sites for music. Then came the established artists with their old-school expectations and mentalities who subtly wanted to hijack the attention established by the independents. Then the established artists cries foul for expecting the world to put the genie back in the bottle. I don’t think so.

Update 3/25/08:
Joe Weisenthal’s blog had a great thread going on that Billy Bragg himself was participating in. Well, it was great in that Joe, Techdirt’s Mike Masnick, Blaise Alleyne, Thomas Hawk, Matt Mason, and some others had the opportunity to debate the issue of the moral obligation Bebo did or did not have to pay artists. Comment were turned off. Temporary problem with the blog I guess, thanks for letting me know, Blaise.

Some argue that artists should be paid for their work, but offer no solution. Others say that the royalty organizations and/or the US Congress or the labels should have created compulsory licenses for such sites so they can pay artists. Speaking of pay for plays, I participated in the old mp3.com 10 years ago and it was a joke. I say take the bull by the horns like Trent, and just make it happen for yourself.

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