Lately, I’ve noticed a trend in how products are marketed to consumers, most notably, service. No longer is it just a product’s features which make it sell; it’s the service that goes along with it. Let’s take a look at a couple examples of this “new” product.
For many years, music was a product that people would have tangible value, such as a Vinyl, Cassette or Compact Disc. Consumers would drop by their local music shop and pick up the latest works from musicians and play it.
The tangible music wasn’t enough. Consumers demanded additional sustainable value along with it. We want to get the most value for our dollar. We’ve learned that we played that $15 CD about four times since we got it, and it has little value to us.
Peer-to-Peer (P2P) software like Napster, KaZaA and eDonkey were the enablers for empowering consumers in their acquisition of music. A lot of people reasoned that if they purchased the music years ago, they should have the right to listen to it on their computer or their hand-held music players. This is what venture capitalists call “Disruptive Technology.” P2P software paved the way for digital delivery of music while nearly killing an entire industry overnight.
Later, Apple debuted their line of iPods with their multimedia service, iTunes. iTunes was the key to monetizing music the way consumers agreed to. When Apple connected a product (a hand-held MP3 player) to a sustainable service (iTunes), they literally saved the music industry while maintaining the consumer empowerment in selecting music.
Conclusion: Record companies leveraged the long-tail of consumer needs, offered affordability, accessibility and usability via iTunes to monetize and track sales of music. Consumers also receive a higher perceived value when selecting music a-la-carte instead of purchasing a CD for one or two hit singles.
Consumers also felt the same way about television shows. At the peak of P2P distribution, record companies aligned with the RIAA and movie studios aligned with the MPAA, who later contracted policing of illegal music/movie distribution to digital bounty-hunters like MediaDefender. The industry unanimously held an aggressive stance as they targeted consumers who acquired copyrighted works and shared it (most of whom, unknowingly) with other people. Behind the shadow of music and movie enforcement, a new digital delivery market emerged: Television.
For those who couldn’t afford TiVo, consumers would simply miss their favorite television programs. A newer technology became immensely popular, BitTorrent; which enabled fast and reliable transfers of high-quality recordings of TV series. Consumers felt compelled to download television programs on their own because there wasn’t a price tag on it, unlike music and movies.
Despite the fact the distribution of such content was still illegal, there are a wide variety of programs available, with many videos being downloaded by more than 100,000 people simultaneously across the globe at any given time. The TV industry didn’t go after pirates nearly as aggressively as the music and movie industry did. I suspect they realized the potential value that the advent of “TV on the Web” could be their own savior with consumers.
To combat illegal downloading, television networks have worked with online video distributors (like Hulu and AOL Video) to deliver syndicated content to consumers. In addition, many networks direct viewers to their own Web sites to watch episodes at the viewer’s convenience. By doing this, networks monetize viewers with interstitials, and are able to count viewers into their Nielsen ratings; which is important, especially during the Sweeps throughout the year.
Conclusion: Television networks provide the service of simulcasting programs onto the Web; which leverages the wide audience of the Web and monetizes them via advertising.
WHAT DOES ALL THIS MEAN?
Are CDs and TV dead? No, but traditional products need to be rejuvenated with innovative services that exceed consumers’ expectations. This includes — but isn’t limited to:
- Making content accessible to anyone, anywhere.
- Minimizing barriers to premium content.
- Accept this quote, “Fear the consumer and they will fear you.”
- Consumer-driven buzz is the best marketing.
- Above all, adapt to your users, no matter what the heck the BRD/PRD states. Be your end-users’ advocate
My inspiration for getting my thoughts out on this entry was when I first listened to MC Lars’ hit single, Download This Song, about a month ago. You can read the lyrics, here. Enjoy the video!