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Thursday, March 09, 2006

RIAA Think Customers Suck

Today the RIAA announced a new victory in its on going string of pyrrhic victories attributed to the Family Entertainment and Copyright Act. Two men, one in Florida and the other in Milwaukee, where indicted on charges of violating criminal copyright law for posting Ryan Adams & The Cardinals songs on a website.

While I agree that listening to alt-country should be criminalized, there has been little evidence that supports the RIAA assertion that "pre-release piracy" as they have termed it, negatively impacts sales. Mitch Bainwol, Chairman and CEO of the RIAA, seems to be overstating things a bit when he claims that "pre-release piracy is a particularly damaging and onerous form of theft." It is just as likely that pre-release material spurs interest in the artist and their work. What is certain is that suing or helping to imprison your customers (their friends, relatives and/or neighbors) does negatively impact sales. As the RIAA continues to become increasingly strident and ossified in its position towards digital distribution it also increases its trend towards irrelavence.

Despite their questionable taste in music, their lack of permission and their poor sense of timing the men who posted the Ryan Adams songs may deserve to be forced to spend a few days being forced to listen to only Britney Spears, Keith Urban and other major label dreck but facing "up to five years of imprisonment, a fine of $250,000, and three years of supervised release" sounds excessive. Even if the RIAA wins everyone one of its recently announced "songlifting lawsuits", it will ultimatly only suceed at driving away the customers of the record labels it purports to represent. As Sam Ford writes in the C3 white paper on fans "developing emotional capital is more profitable in the long run than being overly concerned with intellectual property."

Tuesday, March 07, 2006

2 reports, 16 steps and 3 Themes: A summary

Everyone loves research. Big companies, pay big money for people with big brains to "just figure it out!" Some companies hit the mark and others dont but they all have some kernels of insights and flashes of inspiration worth noting. Capture a few of these kernels and spotting some of the flashes, for your general edification and enjoyment, is what I'm going to attempt to do in this article.

IBM bigwig and Internet conference staple Dr. Saul Berman, and two credited co-authors put out a white paper earlier this year entitled "The end of television as we know it". A little somewhat less known Masters candidate at MIT, Sam Ford, writing for the Convergence Culture Consortium (C3) also put out a report worth noting entitled "Fanning the Audiences Flames". What these reports share, in addition to pithy writing and blunt critique, are a number of common threads.

The 6 "priority actions for executives" enumerated by IBM and the "ten roles for fans" to be used by media companies promulgated by the C3, could all be summed up in three basic ideas: relinquish control, take risks and listen. I can only guess that the scholarly penchant for verbosity is why the C3 needed 10 principals spread-out over 73 pages to explain what IBM was able to do 24 pages with a scant in 6 principals.

Lets start off with Sam Ford and the C3's report on fan communities. The C3 report is squarely aimed at challenging assumptions and changing behavior within media companies. Its starts off by throwing down the gauntlet with the statement "The most important take-away here: call off the lawyers! Stop reading fans primarily in terms of a prohibitionistic model which seeks to protect intellectual property at all cost." Ouch! A bit catty but the point is well taken. The C3 report makes a pretty compelling argument, especially when you peruse the 6 pages of references and 120 footnotes that are included with it. With a number of incestuous references to other MIT researchers, the report outlines 10 ways that fans use and enhance media properties, they are:
-Fans are Loyals - think Guy Kawasaki's evangelist
-Fans form collective intelligence communities - people share info across interest and media
-Fans are grassroots intermediaries - people promote what they are passions about
-Fans are lead users - folks adopt and adapt what they like
-Fans include surplus audiences - 50% of WWE's audience are women?
-Fans enhance Long Tail economics - the abyss of choice is mediated by fans
-Fans become tourist - people seek to make their virtual experiences real
-Fans perform - think Gilmore and Pine's experience economy
-Fans create - UGC anyone? Listible , Gracenote, youTube,
-Fans train and recruit - Think invites to Facebook, Myspace, IMVU
While each role outlined by the C3 are worthy of serious consideration, if you get the basic idea of an evangelist then you get the kind of fan that the C3 is referring to. What the C3 misses however is that not all fans are constructed the same. In fact, C3 seems to assume that all fans are what urban marketers have termed, trendsetters and IBM terms, Kool Kids. While this is an influential bunch, that does indeed have most of the traits highlighted by C3, its not all fans. In fact the vast majority of fans are not as engaged, involved or passionate about the most products as trendsetters tend to be. While the analysis is a good description of a particular type of fan, it does not highlight the difficulty of capturing and engaging that fan, which tends to be less responsive to many standard marketing messages. The report notes the challenge of legitimacy and authenticity without really addressing it.

There is a great deal of over-lap and some might prioritize or place things in different buckets but the big themes are:
Relinquish Control - Let users/fans create, modify, extend and enhance the content and brands. Highlighted by roles 4 and 8-10.
Take Risk - Accept that users create meaning through their experience of the product which can modify its original intent. Learn to run with it. Test, experiment, iterate. Initiate partnerships and relationships as dictated by users. Highlighted by roles 5 and 6.
Listen - "Active listening" is required to achieve either of the above. The actions of users and their adaptations of the product is one of many ways users speak back to the company. Not just focus groups! Roles 1-3.

Attempting to summarize (and even critique) the work of a Master's student at MIT is bad enough, but to do the same with an industry heavy-weight, published author and acknowledge expert, like Dr. Berman and his team at IBM is, well, frankly heretical. But, I was raised in NY so I'll do it anyway. The title alone highlights the tone and approach of this report. If you think of the C3 report as gently prodding the industry. Then consider IBM's report as a shove into oncoming traffic. Both aim to create a deeper understanding of the evolving media user and promote a sense of urgency but with Dr. Berman and his team the point is brought into somewhat sharper focus.

Not as research based as the C3 analysis, IBM used interviews and surveys to get a sense of what people in the industry saw as its future direction and current challenges. They came away with 6, somewhat redundant, "priority actions". These are:
-Segment - innovate business models, know the users, tailor model to user
-Innovate - innovate around risk, relinquish control, change
-Experiment - innovate around iteration, partner, involve users
-Mobilize - innovate around platforms, partner
-Open - innovate around content, relinquish control
-Reorganize - innovate organizational structure
Are you noticing a theme? The full report goes into significant detail on each and it is a very worthy read. A somewhat glib summary of the 6 "priority actions" might be that media companies needs to change their thinking, their structure and their approach to the world or they wont survive. While, I think this is probably a good assessment of the industries future options, I dont believe Dr. Berman would couch it in these terms. He does however identify what he terms a bi-modal future of media consumption. He foresees a world split into two audiences with different levels of involvement in their media experiences as well as access to media channels of varying openness. He sees an older group of consumers, termed "massive passives", that prefer a "lean back" experience and are content to be fed programming and have little involvement with it. Another group, termed the "Technology and fashion forwards", personified by Kool Kids (a clear indication of the generation of the authors) and Gadetiers, are highly involved with the content and require open access to it.

Obviously, there is a tremendous amount of insight in the report but the basic assumption that there will be two wholly distinct audiences, one that is completely "lean back" and the other that totally "leans forward", seems wrong. It seems more likely that users will have aspects of both "massive passive" and "fashion forward" behavior, defined more by context and desired experience then by age. An age driven approach to the user change also doesn't adequately capture the significant in group variances of audiences and the impending "dominance of difference", (I just made that up). The IBM report seems to assume that their will continue to be a mass-audience for media companies to address, which makes sense if you but things in age buckets, but is is most likely not reflective of a digital future. In the era of audience fragmentation, channel proliferation and long-tail distribution it seems that strategies based on mass audiences are in a difficult time.

Again, we can argue about the buckets and the overlap but in essence the summary seems to be:
Relinquish control - As a DRM vendor, advocating openness doesn't seem to come naturally to IBM and this seems reflective in "priority action" 5. But giving users options and allowing them to lead seems like a pretty universal theme even at Big Blue.
Take Risks - This is another no-brainer which is easy to say when the business and bottom line aren't yours. So IBM makes this point several times in "priority actions" 2, 3, 4 and 6.
Listen - While for IBM this seems to mean "profile" more then it does "tune-in" the point is made in "priority action" 1, that the behavior and preferences of the users is where tremendous amounts of value can be found.

After 97 pages of text across 2 reports, with 8 pages of references, 120 footnotes, 16 "to do' items, 25 acronyms and 8 charts we come to the conclusion that media companies ought to relinquish control to its users, listen to both what they say and what they do and take risks with their content and their businesses.