I want it now, why isn’t it here yet?
Digital, always-on always-connected has driven our need for instant gratification. Everyday our customer’s expectations of service increases. As your business models transition to the digital world, a lot of businesses are clinging to their old paradigms and putting up barriers for customers to adopt the new model. By pushing against the tide you could actually be losing out.
The music industry provides a perfect example.
As Spotify listed on the Wall Street it is interesting to see how far music has come in the past ten years. The big debate has always been whether musicians and creators are getting the rewards they deserve for getting us grooving.
Don’t Download That Song!
Back in the early days of digital, we use to rip CDs to our computers. Maybe we’d burn a couple of copies for friends. We knew it was naughty, but no different than creating a mixtape, and we did it because we could. One legal copy of a CD could get a lot of mileage among friends. Then the net made sharing a CD mass market with the advent of illegal and hugely efficient file-sharing and torrenting.
Back in the day it seemed like everyone was getting their music for free, and there were genuine fears that the music industry would curl up and die in the face of the onslaught.
But here is the piece most people missed, it was just easier to torrent an album and load it onto your iPod. If you did want a legit digital copy, it was a whole lot harder to take the high road – in fact the product was worse as it had digital rights management so you couldn’t share across devices.
So, what do you prefer? The hard way, or the easy way?
The effect of file-sharing and illegal downloads smashed the music industry and in 2010, the music industry was worth less than half of what it had been in 1999.
iTunes and Spotify to the Rescue?
Then along came iTunes and at $1.99 a song, it was great for getting a single song or even whole albums. And it was easy, bought and delivered straight to your iPod. Consumers loved it, but the music industry was dubious. What if people only bought one hit song and never bought a whole album? And here’s the rub for the industry, the average album sale gets an artist between six and seven US dollars, and single-track download fetches sixty to seventy cents.
Subscription streaming services like Spotify Amazon Prime Music, Apple Music, just made it even easier. Why buy individual tracks, when you can have access to nearly every song on the planet. And why clutter up your storage if you can just pick what you want to listen to anytime you like.
Great for consumers but what’s in it for the artists? The average per stream pay-out is $0.004891. You’d be hard-put to pay less for music, and you’d probably throw more into an inept street busker’s hat in passing.
Making it Easy, Growing it Big
Streaming is easy. It’s so easy that just about everyone’s doing it, and the music industry is as pleased as punch. Streaming is where the money is and now accounts for 62 percent of music industry revenues in the US. Meanwhile, iTunes seems to be on the way out with sales down by 24 percent.
The market is growing again. Just check out this graph from Recode:
How Does All of This Apply to You and Your Business?
- The music industry wasn’t prepared for digital – are you?
- Customers didn’t want to steal music – it was just easier – have your customers found an easier way to get around you?
- When the industry did try to compete they put barriers in place, like digital rights management, that added friction to the process, making their model inferior – by protecting your business how are you actually making it worse?
- Customers are constantly looking at the value equation: Value = (benefits – costs) – it is more than price; it is time, ease of access, and user experience that matter most. With the rise of amazing App experiences, and the belief that everything should be at your fingertips, the cost can be more about experiences than price.
So, ask yourself:
- Is my business making it easy?
- Where are we adding friction?
- Are we inadvertently incentivising customers to work around us?
Because if you don’t, somebody else will.
KS
