In this guest post, Keith Jopling, consultant and former director of strategic analysis and research for the IFPI, suggests the music industry lacks the insight of other sectors, including banking…
In 2005 Bank of America launched its ‘Keep The Change’ account, launched initially at
middle-aged women with children – a segment that, in research, had expressed concerns about their ability to save money. These women also frequently managed household finances, taking responsibility for paying most family bills. BoA’s research identified that a common characteristic was for housewives to ‘round-up’ all bill payments to the nearest $5, so that an electric bill of $42.12 would be mentally registered at $45, for example.
The Keep The Change account allowed these women to pay their bills by direct debit or make purchases by a debit card – but debiting the higher amount – and cleverly dropping the difference into a savings account, thus solving the customers’ perceived problem with savings, in a way they barely noticed and saw as ‘a bonus’. The account was a massive success and was said to help bring in an extra ten million customers to the bank.
Why is this relevant to the music industry? The answer is that the product development and innovation at work with the Keep The Change account was based on valuable customer insight – a discipline that has been sadly lacking in music service innovations over the years. Music, like banking – is a mature business in need of new ideas.
The music industry has had a real problem with product development and innovation. This is somewhat ironic given the flurry of entrepreneurial activity that buzzes around music and the sector’s obvious creative abilities. Innovations tend to
come from three sources: young, tech entrepreneurs with start-ups (MOG, Spotify, Muxtape), major label initiatives (Vevo being the latest) or ‘big media & telco’ – such as MySpace Music, Comes With Music et al. This is a troubled innovation triangle
in itself and much has been written on this blog before about the problems these three ‘corners’ have had in working together.
But my subject here isn’t the ability to get services off the ground, but the problem with the products & services that do get to fly, only to find that the atmosphere up there is turbulent to say the very least. Most recently it’s the ‘freemium’ tier services including Spotify, that find themselves the subject of spread bets across the industry as to whether or not they can keep it in the air.
Before the free-music breakthrough, the previous generation of ‘subsidised’ all-you-can-eat services – Comes With Music, Datz, PlayNow – all encountered serious difficulties gaining momentum. Prior to that we know ‘rental’ subscriptions struggled (and struggle on) with sustainability and profitability. Those services currently primed for launch by major ISP’s look hardly much different than what’s gone before.
Meanwhile any number of major-label D2C experiments (Music Box, Musividz, emi.com etc.)
never really got to take off. As for more traditional retailer brands, there has hardly been an effort to re-engage the customer at all. In the UK, HMV’s ‘Get Closer’ looked so ‘bandwagonesque’ following the trend toward social networking, as to be embarrassing. That said, HMV has had a serious attack of the smarts recently and is one of my key music brands to watch for 2010.
Perhaps it’s time to challenge the notion that this industry has any real, concerted idea
what consumers really want – or what they want enough that they might be persuaded to pay. We tend to think that the great digital music experiment has exposed consumer needs in every way – single tracks; no DRM; everything available; everything share-able; even free. Not only is that a list of demands that is impossible to meet commercially, it’s a list of demands from a particular corner of music fans. That list of demands does not nearly come to represent the true wants & needs of all music fans. To develop successful music services we really need to think smarter and to go deeper.
As an example, consider these very simple qualities that make up a fan’s joy of consuming music:
· “The more I listen to a particular album, the more I grow to love that album –
enough to keep consuming it for years into the future”
· “Any number of my favourite records were ones I didn’t like at first, but grew to like following a re-visit, it popping-up on shuffle-play, a recommendation or another catalyst, such as a live performance or appearance on a soundtrack – something that placed the music in context”
· “There’s no greater satisfaction than ‘discovering’ a piece of music – through any number of ways. Once I’ve done this I want to share that music, recommend it, playlist it, find out more about it or just simply enjoy it”
Do any of the current music services explore, exploit or enhance these types of experiences? Or do they perhaps even work against them? It’s perhaps fair to question – as many have in the past – whether music really is designed to be ‘totally available’ as opposed to being ‘rationed’ – however irrational that process actually is.
What is needed for the development of new, truly innovative services is a process – one which brings together the three corners of innovation – start-ups, music producers and big service providers. That process involves Ideation; Research & Insight; Problem Definition & Solution; Design; Testing; Marketing and Monitoring. I’m not sure anything like this process currently exists across the innovation triangle. Until it does I can’t see many services on the horizon that look genuinely new, exciting and passionate about their subject, which, given the wonderful qualities of music itself, is a shame.
But it’s not all doom & gloom. In terms of what is out there – in 2010 I’ll be looking to Spotify, MOG and HMV to build on what they have in more innovative thoughtful ways. I think Vevo might have a chance of success if it aims at the music television market rather than the ‘music video’ market. As for the big media and telco players – I think they will have a lot of work to do to really get closer to consumers in ways that deliver
value for music fans and for them commercially. It’s time to find a process that works.
For more comment along similar lines please refer to my blog Juggernaut Brew at http://juggernautbrew.blogspot.com/.