Some thoughts on the failure of disruptive thinking in online music technology companies
Content is not king and it is not rare. Value will be created around content versus content itself - Rishad Tobaccowala
My talk at SanFran MusicTech on Strategic Brand Partnerships that I referred to here went much better than expected. I say that, as I was initially concerned that my fellow panelists (weirdly, no females) were all from the music industry in some shape or fashion.
It turns out that my concerns were misguided. In the green room before the talk I was intrigued by some of the ideas that were being kicked around. At one point, Bruce Flohr of Red Light Management who manages the Dave Matthews Band, said something along these lines - If the content holders (the bands,) the technology companies and the brands don't all execute together at the top of their game, then there is a real danger that the brands along with their dollars will step away from the table. What he was getting at was that behind execution (ie the campaign) he and his artists want to see results, metrics, data and value. Flohr gets it. The rest of the panelists - Jason Ross of The Bowery Presents, Steve Rennie of Ren Management and Jason Feinberg of Concord Music all were in agreement.
I know I have a reputation for being too cynical and outspoken about the recorded music industry, but who could blame me if we take a hard look at what's been happening for about 15 years? What I was hearing in that green room was that some major music industry players had really caught up with what's the Internet and mobile platforms can offer in the digital music space. They also accept the idea that strategy and research, not just tactics, are the backbone of a successful project or campaign.
Maybe now it's time for developers and technology companies to play catch up?
I mentioned Luke Willams and his book Disrupt in part 1 of this post. In reading it I'd become attached to the idea of challenging the "idea" of the music industry and ended up asking the conference audience would it matter if recording companies completely disappeared? The idea behind a provocative statement like that is to try and get people who are thinking about the music technology space to think differently. Maybe then we could get beyond the issue that I hear the most - 'labels charge a lot of money for licensing their content.' If you are only worrying about how much labels charge for licensing their content you are probably overlooking other issues that may actually be smaller but could be issues that you should be far more concerned about, such as: Who will use our product? Why will they use it? Who are they? Does our product/service actually solve a real problem?
What would a world without record labels look like? Would it be better or worse? And here's a challenge to thinkers, entrepreneurs, developers and music tech folks who want to deliver the next new, new thing; it's a result of kicking some ideas around over lunch yesterday with my friend David Ewald - Why would you build a music app for the iPhone that competes with the Safari App? I'll explain what I mean later in this post.
Which brings me to Why does Pandora exist?
Earlier in the day I had attended a roundtable that was hosted by David Porter of 8Tracks. David had just recently launched an 8Tracks iPhone App and was asking us for tips and suggestions about how to keep his App download numbers up. It was an interesting discussion to sit in yet I was disheartened to hear the litany of assumptions from developers. There were a lot of ideas for sure, but the elephant in the room was the fact that no one mentioned user research (David did mention that there "was pent up demand for an App from his users" but that had a few of us wondering why he had chosen to give the app away for free...) They also hardly mentioned musicians or music fans. It felt like being in a bubble.
So I asked the question - Why does Pandora exist? I want to set the record straight. I am not suggesting that Pandora shouldn't exist as many people find the service satisfactory, I simply wanted to know from some of the experts in the room what problem has Pandora solved.
After much grumbling and many people professing that they couldn't live without it, the best that anyone could come up with was "because radio sucks." - by which they meant terrestrial radio stations on the FM dial, I presume. I'm not sure that's a good enough reason to create a new version of "radio" online. In other words, was the problem solved? I would argue it wasn't. The creation of Pandora was very, very expensive - it appears to have raised around $30 million or more in the last decade if I read this Wall St Journal report correctly - and apart from some useful interactive features it's not really that far removed from the radio listening experience of terrestrial radio stations, especially as, just like terrestrial radio, it has an advertising revenue driven model as part of its business plan. It gives music fans control over what they would like to hear but is it a game-changing product?
What if all those millions of dollars had been used to support KCRW and KEXP and other stations like them? They provide a very good offline/online radio experience. The bigger question is this though - was the creation of Pandora or the future development of more streaming music Apps that rely on advertising for revenue, really the best idea that music technologists have?
Some more disruptive thoughts: What if someone built a music service that was more expensive to subscribe to than any other service, that gave the music lover an exceptional amount of value in many areas? Why not? In Disrupt, Williams points to the succes of Monocle magazine whose publishers avoided the magazine subscription "pricing cliché":
..the pricing cliché in the magazine industry is a subscription-sale model, where publishers offer a significant discount for annual subscriptions. Typically, buying a subscription is 50 percent less than buying from a newsstand. Then, along comes a startup lifestyle magazine called Monocle, and instead of the traditional subscription-sale model, it created a subscription-premium model. The disruption? "Buying an annual subscription is 50 percent more than the cost of buying from a newsstand. [Edit] In it's first year, the magazine's circulation was already 150,000, and it's currently sold in more than 50 countries.
It's not about price, it's all about the added value to the person buying the product or service.
So back to the idea of not building an iPhone or iPad App that competes with the Safari Apps in those devices? (Or the YouTube and Pandora Apps for that matter..) I ask why anyone would compete with the Safari App because a) it works extremely well, and b) there are many, many websites that provide good music services. Of course using the Safari App requires good reception via G3 or wi-fi but so do streaming music apps. If you, your tech company or startup is considering building an App that provides a music experience for the user there is much to consider. Going back to Williams' book he suggest you might consider product clichés, interaction clichés and ala Monocle, pricing clichés.
Also there could be questions like these, with a hat tip to David Ewald:
Why are we doing this?
Who will use anything we make?
Why will they use it?
Who are the people that will use it?
Will it be better?
Should we be asking this?
And finally there's the challenge around content itself. Someone in the audience at the conference mentioned studies that showed young people are watching more music than ever, where "watching" meant YouTube. Young people spend hours on YouTube exploring and digging for music. What if you created an App that helped young people find what they're looking for on YouTube more easily? Also, more and more young people are creating content rather than consuming it. How will your App rise to that challenge? For e.g., Soundcloud is very popular most likely because it allows users to make and share something..
Some of my students at the University of Oregon where I teach digital strategy, are on a trip to New York this week and one of them, Gaston Figueroa, decided to quickly build this, a site that tracks their Twitter activity, one that works very smoothly in mobile too. Yes, it's simple, but it was quick and other than the time spent building it (about 3 hours) it was free. I hired him to spend the summer working with us here at North. The idea is to design and build things quickly so we have lots of things to throw away as we try and get to the real deal; the product or service that provides a currently undefined value for our client's customers.
The future lies in the hands and minds of young people who bring fresh ideas and new thinking to the table. It is not in developing yet another streaming music service, either web-based or App-based. Clearly we should be hiring young people and allowing them to be disruptive. Or at least, music technology companies and startups should go out and research those young people and ask them what they really want.
[Update] I found this music experience worth my time - A Daft Punk mashup visualized.