The Future of Media: Not Just a Song but an Attention Platform

Edo Segal has an interesting guest blog at TechCrunch describing the “Future of Media.”

He points to Apple’s App Store as an example of what the rest need to learn:

The only way to block the incredible ease of pirating any content a
media company can generate is to couple said experiences with
extensions that live in the cloud and enhance that experience for
consumers. Not just for some fancy DRM but for real value creation.
They must begin to create a product that is not simply a static digital
file that can be easily copied and distributed, but rather view media
as a dynamic “application” with extensions via the web. This howl is
the future evolution of the media industry. It has arrived from a
company that is delivering the goods. Apple has made it painless for
consumers to spend money and get the media they want where they want
it, proving that consumers are happy to pay for media if delivered in
ways that make it easy and blissful to consume.

He also states, rather matter of factly, that “he premise of extending the media experience to the cloud is a core
necessity for the survival and growth of the media industry.”  I agree.  The media industry needs to “sell access and experiences, not media files.”

So how does an artist or a media company build these experiences?

I’ve been doing some thinking along these lines for a band I’ve followed for many years – Steel Pulse. What’s interesting is that while the band has a huge, global, cross-generational following built over the past 35 years – the media companies that were responsible for promoting them have done absolutely nothing to tap into this enthusiasm.  Not one thing.

The same goes for most of my business thought-leader clients as well.  The publishing houses do nothing to create a conversation with the passionate fans. 

Engagement is the key.  How does a musician or an author engage with their audience, their fan-base?  It starts with the quality of the conversation. And let me tell you, it’s far easier for an individual thought-leader or musician to do this than companies, largely because companies are too formal, too corporate, and don’t usually communicate with a human voice.

What’s needed is a way to go direct. 

Let the celebrity or thought-leader engage with their fans directly to build an attention platform, unique to the celebrity. The company that empowers this attention platform, and builds new services for the fans, will build the next media empire with the “lock-in” that comes with authentic engagement. 

Of course, none of this works without authenticity.  The celebrity must remain true to themselves. In Steel Pulse’s case, this means they need to stick to their core brand dimensions.  So each successive album, each song, each product, each statement, builds on the Steel Pulse Experience.wordle_spbrand.gif

They could even track the core messages of a successful album – in this case “True Democracy” – and extend their meaning in new songs and releases:

wordle_truedemocracy.gif

So now let’s talk engagement, and I’ll break it into two simple phases – push and pull (borrowed from JSB and JH3).

Phase One: PUSH

So what does the celebrity do today?  In Britney Spears‘ case, she’s
tweeting her launch of a new song.  To me that’s not much of anything.
Yes, she’s reaching out through social media -Twitter, Facebook, and MySpace – but these are all still one way marketing pitches – push media.

The artist pushes their songs, their products, their newsletter, their tweets, etc. etc. No discussion, no give and take.  Products are created and sold. One market, one size fits all. Core fans are treated the same as newbies. Nothing special except the show and the products – media files: audio or video. See what I’m getting at?

All of this is still just pushing product.

Phase Two: PULL

What happens if the fans come to you – with their suggestions, requests, and insights? What happens when they want to participate? Is it possible to co-create products and services based on insights from yoru fans?  Of course it is.

Start the conversation. Go 80/20: focus on the 20% of fans that will get you 80% of your profits. Start talking (and listening) to your biggest supporters.

Engage: physically meet the 20%. Create special events for them. In soccer for example, fans pay $30-50 dollars just to watch Cristiano Ronaldo practice. What’s wrong with doing a 30 minute sound check for your fans?  Invite them to the sound check – and have exclusive “sound check products” available only for these fans – available at the event, and online as well.  You could even have a question and answer session that they get to download later that evening.

Then of course you sell the live version of the show – for a “limited time only.” Vary the show slightly with the song set, so every night is a different.

Let your fans download the raw tracks and make their own mixes. Have a contest for the best mixes. Sell the mixes to other fans.  Use them in your album.

And when you create a new album, it’s version-time.  Reggae music has a long history of selling versions. What’s sad is they’ve stopped this traditional practice when really they need to be exploiting it. (See Hal Varian on versioning.)  So every song should have the following versions: album version, extended version, dub version, accapella version, acoustic version, dance version, Nyabinghi version, etc. etc.  

Talk to the fans about the songs through webcasts, band-calls.  Let then know where and what’s next.  Let them vote on what you should do next.

For legacy songs, make sure you sell versions-in-time. The 1983 version of Chant a Psalm a Day is quite different from the 2000 version, which again is totally different from the 2009 version. Real fans want them all.

All of this is do-able today. It’s not about technology, it’s about attitude, and the ability to communicate, to lead.  For a cause-driven band like Steel Pulse, this is their opportunity to shine.

And let your fans share in creating and spreading your experience.

Now let’s take a quick look at the business world. 

VG, as he’s called affectionately, is an author and well known strategist. His latest article in the Harvard Business Review, co-authored with Jeffery Immelt and Chris Trimble, has been a huge success – introducing the world to a concept called reverse innovation.

What we’re doing now is building his engagement strategy – through his innovation newsletter.  The idea is to start a conversation about innovation with the people most interested in this topic.

A small step to start, but I know from experience that a “simple” newsletter can drive over 50% of monthly sales online.

The great news is anyone can build an attention platform like this. And if you have something important to say, your platform will bring you the attention you deserve. 

It may even elect you President!

As I was finishing up on this, I just saw a tweet from John Hagel on author platforms (read here). Again, if Apple can help an author or musician build that platform, then Apple will “lock-in” that artist for life.  Same goes for Amazon.com. The distribution model for media is changed forever, period.

Interview with Hal Varian: The Economics of Information

This is a digital reprint of an interview I did about ten years ago with UC Berkeley’s Hal Varian. At the time Varian was co-author of a bestseller: Information Rules: A Strategic Guide to the Network Economy; it’s still worth reading today. Today he’s the Chief Economist at Google. There are still a number of good things in this interview that the media companies could learn from…  (I’m a bit embarrassed by the silliness of my questions, but hey.)

I suppose we should begin by asking you for your definition of “information” and what you call “information goods”.

When we talk about information goods, we mean anything that can be digitized. Text, pictures, moving images, sound, all the media that can be delivered over a digital connection. Some people call them digital goods.

Information goods have some interesting properties. On the supply side there’s normally a big fixed cost to create the first copy, of say a movie, and then a negligible cost to create additional copies. On the demand side, the interesting feature is that you don’t really know what information is until after you’ve consumed it. So you have to experience it to know what it is.

When you’re selling information, you’re dealing with how do you give free samples, how do you give part of it away, how do you establish a reputation so people will purchase the information you’re providing, etc. etc.

I read about a travel publishing company that put its contents on-line, and their book sales went up, because people wanted the books with them when they traveled…

Yes. Another example is the National Academy of Sciences. They found when they put all their content on line and people could actually look at what the content was, they were more likely to buy.

What are some of the techniques you find companies use to create and sell information products? How do you sell an information product to different customers at different prices? How do you find out what the different customers will pay? Can you do this on a website?

The trick is to “version” your information product: construct a product line of your information goods that will appeal to different market segments. A common way to do this is to use delay: issue a book first in hardback, then, a few months later issue a cheaper edition in paperback. The people who are really interested will get the hardback, whereas people who are only casually interested will wait.

We see financial sites on the Web that sell real-time stock quotes, but give away quotes that are 20-minutes delayed. A movie first comes out first in the theater then six months later in video.

Then there are other things, user-interface, for example. If you look at Dialog, which is a search company, they have two types of search engines- one is a professional search engine, with Boolean searches and all sorts of options, and then they have an “ordinary-person” search engine, with a stripped down interface. It’s nice because the ordinary person wants to use the simpler interface, while the paying professional uses the professional interface. So there isn’t any cross-market cannibalization.

Other dimensions on which to version your product are user convenience, image resolution, capability, features, tech support, etc.

You mention Gresham’s Law of Information in your book. What is it?

Gresham’s law said “bad money crowds out good”. We coined “Gresham’s Law of Information” which says “bad information crowds out good”. Low-quality, cheap information can displace high-quality, authoritative information: look what happened with Encarta and Britannica. However, Britannica is now fighting back and has come out with products that are much better suited to computer use. Smart consumers will look for quality information.

Your example of the struggle between Encarta and Britannica, how Britannica lost out to the upstart $49 Encarta…

Right, although they’re coming back. They’re doing some clever things now. What happens there is the incumbent in the industry has a very low marginal cost, so they should be able to beat the entrant but they can’t quite change their business model. It’s hard. Telephone companies are having this problem, the print/publishing media is having this problem, TV networks have this problem vis-a-vis cable.

(This was before Wikipedia!)

Since there’s a high cost of innovation and a low cost of imitation on the web, isn’t it harder to keep “first-mover” advantages?

You’re right, we talk about this — the competition is only a click away. But the clever company, which has that first-mover advantage, will try its best to create “lock-in” for their customer base. For example, look at what Amazon has done- one click ordering, keeping information on what you purchase so they can recommend books to you. If Amazon is recommending good books to me and I want to switch to say Barnes & Noble, I have to start all over.

Another good example of that is e-toys. You put in the birthday of your nephew, your neice, and your cousins, whatever, and they send you a reminder that your nephew’s birthday is coming up and here’s a nice stuffed rabbit that’s very popular with children in his age group.

Can you tell us a little more about your lock-in strategies?

Since the competition is just a click away on the Web, it pays companies to invest in building customer loyalty. The best way to do this is to produce a product that is so much better than the competition that they don’t want to switch! But there are other ways too, such as loyalty programs, like frequent flyer programs that reward frequent purchasers.

What about lock-in strategies for suppliers and partners?

What we were thinking about there was that if you have a group of loyal customers that are purchasing your products, and there may be other complementary products that they would also purchase, but you may not be the best firm to supply that. So then what you do is sell access to your customers.

The portal companies are doing this. For example, I go to Yahoo, and Yahoo charges other companies to have access to me. Let’s say e-toys wants to move into baby or children’s clothes. They might not do that themselves, but they could partner with other companies that do that.

So once you have a loyal customer base, then you can sell access to that customer base for other products that complement what you are selling.

What about the dangers in this, with privacy issues?

It’s certainly convenient for me to be reminded when my anniversary is or my nephew’s birthday or something. That’s a service, a good thing. Of course they can use the information about me in ways that could be detrimental- they could sell it to mailing lists and I get deluged by email. So the trick is to make sure that consumers give their consent; you want to know exactly how the information is going to be used by the company in question. There are companies like e-trust which meet a very important need.

I was looking at ANX, the auto-industry supplier network, and I found out that Chrysler, despite its enthusiasm during the pilot, isn’t part of the production version of ANX. And if you go to the Chrysler supplier website, you find they’ve created tons of business applications. So when does it make sense to join a standards organization and when does it make sense to go it alone?

There’s this fundamental equation that says that the value to you is your share of the market value times the size of the total market. So some of your actions, like standardization, can increase the total size of the market, but it can decrease your market share because it creates more competition. So you have to trade-off these two effects.

So you’re saying if the total size of the market gets bigger, and you make a bigger profit despite a lower market share, then you are on to something… How do you protect intellectual property on the web? Will the current move of providing patent protection to internet business models help or hurt the future of e-commerce?

The point is to maximize the value of your intellectual property, not maximize its protection. You can charge a lot lower price for content on the Web because you can reach a much larger audience.

I’m quite unenthusiastic about patent protection for Internet business models and feel that it will retard progress in this area.

(Like I said, my questions are quite stupid, but the versioning of information goods – that’s still something the media companies can learn about! This cartoon was also done about the same time…)

http://www.onewwworld.com/noodleman/noodle98.gif

Finally, to get you up to speed, here’s a decent interview with Prof. Varian with the [global-warming deniers](http://blogs.harvardbusiness.org/winston/2009/10/superfreakonomics-misses-the-b.html) at Superfreakonomics >>