By: Jonathan Salem Baskin
Five Lessons From the Music Industry
No industry has crashed headfirst into the digital age faster or more painfully than the music business. It has been forced to contend with a widespread and irreversibly chronic practice of consumers stealing its products, and then the creation of a new distribution model that slashes its margins and changes the very structure of its entire business. It has been future shock on steroids for the business, and its experience makes your most bold experiments with technology or social commerce seem like playful, entertaining distractions.
The results have not been pretty, either. The value of the global music industry has fallen by a third since 2004, a third of what’s left delivers lower-margin digital sales, and sales growth overall slowed to 6% in 2010 (according to the IFPI’s latest “Digital Music Report”). Nielsen SoundScan reported that 2010 album sales were down almost 13%, and only 13 albums scanned sales of more than a million copies, which is a 20-year record low. The results are marginally better so far this year (a 1% increase in album sales, driven mostly by older titles).
So what could CMOs learn from the music industry? A lot, it turns out. All you have to do is imagine that your brand is a band and you can pretty much teleport into the uncomfortable shoes of your counterparts at any of the major labels. They’ve dealt with more change over the past few years than you or I could imagine in our worst nightmares. While the parallels are imprecise and sometimes discordant, there are at least five things — variations on a theme — that you might want to avoid … or rip:
Don’t disaggregate your branding. Many people trace the implosion of the record business to the moment consumers no longer had to buy entire albums to get the tracks they wanted. Enough has been written about this as a tech or retail issue, but as a branding issue it meant that consumers took control of their music brands, choosing where they wanted to buy (or rip off) their products and defining their ongoing brand relationships by their own proclivities. Consumers put themselves in charge and the labels have yet to figure out what to do about it. Any of this sound familiar to you? Could it be that that purposefully disaggregating your branding into smaller pieces sold in different permutations across more channels isn’t necessarily a good thing?
Continues at: Five Lessons for Marketers From the Music Industry | CMO Strategy – Advertising Age.
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