COULD STREAMING MUSIC PREVENT AN INDUSTRY SWAN SONG?

This post first appeared on the AIMIA Institute blog.

Back in 2005, I discovered Rhapsody, a first-of-a-kind subscription-based music streaming service, and my jaw dropped. What? For the same money I spent buying just one album every month, I can listen to every new album that came out that month, as well as a catalog of almost every album ever released.

So, for the past decade, I have easily perused music of all kinds, checking out knowns and unknowns.

Right now, for example, I am taking a quick listen to some of the latest album releases, from Tame Impala’s Currents — I appreciate that the song craft is not predictable, but it is too produced for me — to Future’s DS2 — good grooves, but I am turned off by misogynistic lyrics — to Wilco’s Star Wars — a favorite band of mine and a nice new album.

With the launch of Apple Music in July, this kind of offering fully hit the mainstream, but the evolution of streaming music to this point provides a fascinating look at the psychology of consumers, brand building, and how this business model is affecting music industry.

I am Not Buying It

I am a big fan of music and established many friendships, both offline and online, through this shared passion. Once I discovered Rhapsody in 2005, I was thrilled to spread the word to all of these friends. To my surprise, however, they did not buy into my excitement.

“So, do you own the albums?” my friends would ask.

“Well, no,” I would reply. “But as long as you pay your monthly fee, you continue to have access to everything, and there is rarely an album I can’t find on Rhapsody.”

Their typical response: “Hmmm. Sounds interesting, but I am not sure I need it.”

Mind you, this was coming from people that likely spent over $100 a year purchasing music, whether CDs or mp3s. There was psychological resistance to paying for access to an album without getting ownership. People were comfortable relinquishing ownership for other types of long-form media, whether borrowing books from a library or renting movies from Blockbuster, but they could not buy into this idea for music.

Unlike most books and movies, songs and albums are listened to over and over again, so the value of ownership is driven by both emotional and functional benefits. I believe people also were skeptical that a service like Rhapsody would even last. So, they preferred the idea of buying one new album each month that they could listen to forever (if they liked it), rather than paying each month for unlimited access to millions of albums because of the perceived potential of losing that access at any time.

In 2006, though, one brand changed the model for streaming music, Pandora. Because it mimicked the radio model, Pandora fit an existing expectation of “temporary” music access. Pandora took the radio listening experience to a new level with personalization. Once you picked a single song, album, or artist, Pandora produced a stream of music matching that style. Like radio, all you had to do was suffer through a few ads.

Pandora is not designed for users to select and immediately listen to any particular song or album, but without any fee (and no DJ chatter), people were happy to have a cool, new passive listening experience using the web.

Brand Building Changes the Game

Is it better to be a first mover or a fast follower? The streaming music model offers an interesting case study on this oft-debated question.

Rhapsody was developed and launched independently in 2001, but it was acquired in 2003 by RealNetworks, a pioneer in developing the capability to steam audio and video content over the internet. Despite creating an innovative model for listening to music, with licenses from all the major record labels, Rhapsody could not escape the shadow of iTunes, which launched that same year.

By October 2003, Apple’s iTunes, originally developed for the iPod, was also compatible with the Windows operating system and everyone with a computer could own digital music with a few clicks. By combining an easy way to purchase music “by the drink” through iTunes with the iPod, the portable music device of choice, Apple usurped any earned attention that might have come to Rhapsody, even though Rhapsody offered users the ability to purchase and own most of its licensed songs and albums, as well its subscription model. Without an investment in marketing and PR dollars to truly compete with iTunes, Rhapsody continued to trudge along in relative obscurity, gradually growing a small user base.

Other entrepreneurs were spurred by the possibilities of streaming music. Spotify, launched in Sweden in October 2008, smartly combined the ad-based and subscription models. This allowed it to grow large numbers of casual users who were willing to submit to ads and some service limitations, while also gaining more dedicated music fans willing to pay for full capabilities and no ads.

By 2011, Spotify was available throughout most of Europe and the United States. It not only surpassed Rhapsody in its number of subscription users, but also boasted another three to four times as many registered users who picked a free option.

Rhapsody was run by an older Web 1.0 team, who had likely become risk averse after the dotcom bubble burst. Rhapsody management focused on a stable, buyer-only business model with modest growth expectations. Spotify was developed by experienced entrepreneurs whose business model and growth plan were driven by VC funding and the goal of a high valuation based on rapid user growth and buzz. The Spotify team employed Web 2.0 principles: a freemium model, active social media integration, an open programming interface (API), and a budget for marketing, PR, and advertising.

Rhapsody was a first-mover, but it did not do much to build a brand, while Spotify—although it came later—proudly waved its flag as a disruptive agent that would transform the way music was consumed. That message got the tech startup community and its growing user base to spread the word along with Spotify. Today, Rhapsody has around 2.5 million paid users while Spotify has around 20 million paid subscribers and an additional 55 million active users of its ad-supported service.

Score one for the fast follower.

And in part two of this two-part series, I will discuss whether or not all of this will last.

BY MATTHEW QUINT

145 Years Young: Digital Innovation at The Met

In 1967, IBM founder Thomas J. Watson approached The Metropolitan Museum of Art in New York City with a then unheard of offer… to donate computers to the Museum. The Met declined. Ironically, one particular curator doubted that a computer would be a “time-saving device.”

This resistance to joining the technology-driven world may now seem as dated as a piece from the Met’s Ancient collection, given that 2011 marked the year the Met lifted its cell phone ban and redesigned its website for optimal viewing on smartphone screens. And in 2013, the Museum’s first-ever Chief Digital Officer, Sree Sreenivasan, was brought on board to digitally transform the museum experience.

Art and technology have long been bedfellows—from Michelangelo with his chisel and hammer to Ryan Trecartin with his mixed-media video installations. Speaking at the BRITE ’15 conference, Sreenivasan, who is also formerly Columbia University’s first Chief Digital Officer, noted, “Any art you see today is because the artist used the right technology at the right time—the right canvas, the right marble, the right tools.”

Sreenivasan understands firsthand the challenges of keeping pace with a rapidly evolving digital world, particularly at renowned institutions with such historical significance. At BRITE ’15, Sreenivasan shared insights from digital, mobile and social lessons learned during his tenure with The Metropolitan Museum of Art. He explained that a consistent strategy across mobile and social media platforms, like the one employed by the Met, is pivotal to staying relevant and continuing to meet consumers’ day-to-day desires in this age of constant change and innovation.

It’s no secret that mobile is now more important than ever. In September 2014, the Met launched its first app. Sreenivasan wanted to provide Museum visitors with an app that would speak more directly to their interests, “instead of putting the whole museum in [their] pocket.” Art enthusiasts can track upcoming events, save their favorite works of art to their smartphones and tweet about their favorite exhibitions. Within two weeks of its release, the app was downloaded more than 100,000 times and has been hailed as one of the Apple Store’s “Best New Apps.”

Though his title is Chief Digital Officer, Sreenivasan considers himself to be more of a “Chief Listening Officer,” observing the varying interests and behaviors of the institution’s 6 million museum attendees and the 30 million unique online visitors a year. “That’s a lot of listening,” quipped Sreenivasan.

One result of all that listening was a commitment to creating hashtags for each exhibition. No small feat, considering the Met currently houses over 2 million works of art. Sreenivasan credits the audience who tweeted their wishes for an intuitive way to share their museum experiences.

Sreenivasan notes that audiences are becoming increasingly “culturally curious,” eager to glimpse the behind-the-scenes of installations. The Met answered this growing need by displaying online the restoration of one of its most coveted acquisitions, Everhard Jabach (1618–1695) and His Family, ca. 1660, by French artist Charles Le Brun.

Through the Met’s social channels, fans and followers were able to view this typically veiled process from anywhere in the world. “Instead of working on it in secret for a year and then putting it out, we’ve already started blogging about it.” Viewer comments have ranged from questions surrounding oil paint solvents to expressions of gratitude for the ability to witness art history in the making.

One such commenter said, “Thank you for giving us the opportunity to see this fascinating work…. [R]eading about it does not convey the same image.”

Another asked, “How many more do we have to look forward to? I’m anxious to see the work in the gallery, but not so much that I wish you to rush, rush. I am enjoying my time!”

When it comes to choosing social media platforms, Sreenivasan advised that, depending on your business, you don’t always have to be on every network, and “there is no reason to be first [on a social media platform]. Join when it makes sense for you.” Sreenivasan reminded the audience of the potential minefield of controversy that social media platforms can become. “Almost everyone will miss everything you do until you make a mistake,” he cautioned. In the October 2014 New York Times article, Museums Morph Digitally, Amit Sood, director of the Google Cultural Institute in London, echoed this sentiment, “I learned not to underestimate museums. They were a little slow to the digital game. That’s a good thing.”

Slow to the digital game, perhaps, but well-conceived. Sreenivasan’s digital strategy at The Metropolitan Museum of Art has allowed this nearly 150 year-old institution to remain a timeless cultural mainstay while continually reinventing how it delivers art to art enthusiasts, based on their desires as they express them, from their smartphones to the front steps of the Museum itself.

BY THEO LEGRO

The Future of Omni-Channel: Insights, Innovations & Experiences

In this technology-driven age, a common challenge for companies has been integrating new technologies into their existing business models, marketing and operations. This has been said to remain true for luxury brands. Convention has held that digital commerce is for the penny-wise. Research and consulting firm McKinsey dispels this perception. It reported that nearly 50% of luxury purchases are in fact influenced by digital. Warc’s Darika Ahrens aptly notes, “High-end income earners love high-end technology.”

Recognizing this, luxury fashion brand Rebecca Minkoff, an early adopter of new technologies in retail, is leading the way in immersive experiences that touch upon all senses to resonate with these digital-savvy, affluent consumers. Speaking at the Center on Global Brand Leadership’s BRITE ’15 conference, Emily Culp, Rebecca Minkoff’s SVP of eCommerce and Omni-Channel Marketing, discussed driving customer lifetime value by delivering multi-faceted experiences derived from technology, insights and organizational structure.

In 2014, Rebecca Minkoff launched its “Connected Stores” in New York and San Francisco. Culp explained that by leveraging beacon technology and RFID tags, Rebecca Minkoff offers consumers an even more personalized, integrated experience. “When [our customer] walks into the fitting room, it recognizes merchandise and gives recommendations on what to wear [the item] with.” Interactive dressing room mirrors entice customers to browse video and content, order complimentary beverages, save merchandise options to their devices via the Rebecca Minkoff app, and check in-store and online inventory. Customers can even adjust fitting room lighting to reflect the setting in which they would don the outfit (i.e. “SoHo after dark”).

In developing experiences for their omni-channel consumer, the question Culp asks herself is straightforward: “How do we flawlessly execute this omni-channel marketing in such a complex ecosystem?” At BRITE ’15, she outlined four essential points to succeed at this:

1. Leadership: the ability to embrace smart risk and experimentation
2. Expertise: building teams with hybrid skill-sets (e.g. creativity combined with an understanding of metrics)
3. Linkage: breaking down the silos to align the KPIs of different departments
4. Communication: sharing insights even when they may seem irrelevant to another team. “Maybe they can take it in a different way that another hasn’t [considered],” explained Culp.

In particular, culling data from all touchpoints is at the foundation of their approach. “A lot of people think that data is boring,” she explains. “I inherently think this is one of the most creative and fascinating parts of marketing today.” Quantitative and qualitative insights paint a holistic picture of their consumer. “[W]e can see as she traverses across these different channels what her behavior is and help her make informed decisions when it’s right for her.”

Through research, Culp’s team discovered that their consumer checks her smartphone, on average, 150 times a day, spiking at different points depending on when she’s at work using her computer or at night on her tablet. “The constant is mobile. So for us, when we’re looking at omni-channel marketing… we start with mobile.”

Culp stresses the importance of not employing technology for technology’s sake. It should have a purpose. For Rebecca Minkoff, it’s using technology to seamlessly deliver value to consumers, relieving pain-points and empowering them to make informed decisions while shopping in-store and on any device at any time, anywhere in the world.

Check out Emily Culp’s talk at BRITE ’15 to hear more on developing omni-channel innovations and experiences to drive long-term value.

BY ALLIE ABODEELY

The Future of the News [VIDEO]

At the recent BRITE ’10 conference, I had the chance to speak with Vivian Schiller (CEO of NPR) and Jeff Jarvis (CUNY professor of journalism) about the future of the news business.

(Click lower-right buttons to watch full-screen, or embed/share. Video also here.)

It was a wide-ranging discussion that covered:

• The disruption of business models across industries: music, news, advertising, education (0:05)
• NPR’s sponsorship model and journalistic integrity (1:00)
• The need for media companies to create relationships and become a platform for content, not just a producer (3:45)
• Education – what’s wrong with lectures, redundant teaching, and opportunities to create new value (06:18)
• Serendipity & filtering: How we find quality content online via personalized news feeds and authoritative  brands (08:38)
• How NPR’s newsroom retrained to develop the core competencies for digital journalism (12:28)
• Fact checking, “algorithmic authority,” and reputation in online news (16:02)
• Business models for the future: NPR’s revenue mix; starting new ventures; facing up to the duplication and waste in traditional journalism; and rethinking the value of the industry from the bottom up (17:11)

Enjoy!

BY DAVID ROGERS

This post originally posted by David on the DavidRogers.biz blog at: http://www.davidrogers.biz

Why We Must Suffer Bad Business Jargon

I try to end each year on a positive note, so it was with some chagrin that I accepted my last interview request for 2009, to speak with David Schepp at Daily Finance about “The Decade’s Worst New Business Terms.”

As we chatted, I identified six kinds of business buzzwords I would jettison as we start the New Year:

1. Muscle spasms: Some business terms become so overused, that they crop up in speech with no purpose, like the twitch of a Tourette’s patient. (Listen in your next meeting for the chirpings of “think outside the box,” “no brainer,” or “win-win.”)

2. Disastrous ideas: These words will forever stink of the economic ruin brought on by their brave new business concepts. (Think of “synergy” and the whiff of AOL-Time-Warner’s merger, or “leverage” and our decade’s mortgage mess.)

3. Invented synonyms: Too often we think old words are best replaced by shiny new ones that mean the exact same thing. Why should we talk, when we can “dialogue”? Why look for the lesson when you can ask for the “takeaway”?

4. Definition creep: Some words start out with a specific meaning, but then are stretched to apply to every possible scenario. (Thus “ROI” came to mean not just a specific metric of financial return, but the impact of any initiative that you desperately wish could be measured in dollars and cents.)

5. Cure-alls: Other words never get defined, so they come to mean all the things to all people, a panacea to all our business problems. (Listen for the word “engagement” burbling up in any room full of advertising people.)

6. Grammatical abominations: These verbal sins earn a spot in the lowest circle of buzzword Hell. Anyone using the term “value add” (“Boy, that was a real value add!”) must explain why it should be a noun in the English language before they can escape from Purgatory.

Why do we suffer such terrible verbiage in business, though?

Doctors, engineers, and sanitation workers, all have their own terms of art that seem opaque and inscrutable to the outside world (e.g. “Malpighian corpuscles”). But while their jargon is wordy or inelegant, it usually serves some purpose (e.g. to describe a part of your spleen).

By contrast, buzzwords are a much greater plague on the business community than on any other professional class – proliferating wildly, and suffocating clear communication.

My theory for the reason why is this:

We suffer from a misguided desire for all of business practice to be scientific, when in fact much of it is an interpretive art, or simply a craft based on learned wisdom, practice and experience.

At the same time, we businesspeople have an unceasing desire for the next new thing, the big new idea.

Yet, unlike truly scientific disciplines (anatomy, mathematics, physics), there is no mechanism for enforcing that a new term in business must have an agreed meaning and contribute a genuinely new concept before it can enter the parlance of the trade. (By comparison, a physicist may assert that stars are made out of “string-dynamic-fluctuations;” but her peers would demand a clear and precise definition.)

In short, we are damned by a desire for scientific-sounding terminology, a constant craving for the new, and no vetting process to enforce communal standards.

As a result, almost everyone in business (from authors like me, to agencies writing verbiage for their websites, to MBA students trying to brand themselves during job interviews) has a powerful financial incentive to invent and flaunt new buzzwords, their precise meaning be damned.

One of the commenters on David Schepp’s article lays bare the results:

A few years ago, I took an upper management position with a company. My first day I sat in a 3 hour meeting where the terms “Synergy”, “leverage” and “It is what it is” were passed out more frequently by the management team than candy canes by a Mall Santa. I came away from that meeting realizing I may have made a mistake in accepting the job. Turns out I was right. This was the most dysfunctional organization I had ever been a part of… I should have listened to my initial instinct to quit after that first day.

If we can’t stop the rising tide of business jargon in the New Year, at least we can follow this man’s advice. When you enter a room full of people spouting buzzwords, turn around quietly, and just walk away.

BY DAVID ROGERS

This post originally posted by David on the DavidRogers.biz blog at: http://www.davidrogers.biz