Category Archives: apple

EMI group moving from retail to media

Back in October, I wrote a post about how the music industry had lost control of the music distribution and retail game to Apple… and how it would probably have little choice but to evolve into a content business funded by advertising. Well, it looks like this transformation may happen at a much faster pace than anticipated.

Recently published numbers have shown the extent of the music industry crisis: record sales fell 15% in 2007 compared to 2006, and even the 45% growth in digital downloads does not seem to be enough to reverse the music industry’s retail fortunes.

Like many other companies, EMI Group was acquired last year by a private equity group and that usually translates rapidly into a dual effort to cut costs and increase revenues. In EMI’s case, what caught my attention are the plans to aggressively seek corporate sponsorship arrangements beyond youth / lifestyle brands like Pepsi and Coca-Cola.

From time.com: “Dreaming up new ways to make money is vital. One solution: teaming willing artists’ albums up with corporate sponsors, as EMI plans to do. That might have some artists turning in their grave — just imagine that, John Lennon — but with music arenas often branded these days, EMI is confident it can sell the idea to some of its talent. Coldplay’s next CD, brought to you by ExxonMobil, anyone?”

Full article here.

Six years of Ipod 2001-2007

Came across this short photo gallery on the Guardian that shows how the iPod evolved over time. What will the iPod look like in 2013?

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Mobile phones and MP3 players are probably the most fascinating examples of the pace of technological innovation. The pace may not be that different from that of Moore’s law, which was invariably demonstrated when the computing power of microprocessors doubled every 18 months or so. But just like what the advertising emphasized, it was “(Intel) inside”. Nowadays everyone makes sure that innovation is clearly visible on the outside.

Talking of the Guardian, they launched their US edition – Guardian America – at the end of October. A bold international expansion move at a time when most newspapers are either shrinking or reinventing themselves as multimedia content conglomerates (like the New York Times company).

It is still to early to see if this formal launch helped increase their US reach (currently around 2M monthly visits), but we should revisit this in a few months when audience data becomes available.

Creative and focus groups = no love lost

In advertising there is something called the “torture test ad”. Usually torture test ads put the product under extreme circumstances to prove its worth. One recent example that comes to mind is the US Superbowl ad for the Toyota Tundra.

Here is a new twist on the genre … the video below is in a way a “negative torture test ad”. It was put together by creatives from the Boston-based advertising agency Arnold, who have opted for this impactful approach to express their disdain of focus groups.

If you want to read more about the authors’ motivations, read the interview on the Influx Insights blog.

It is clearly worthwhile to revisit the role and value of focus groups, and if / how consumers should be involved in the process of creative development.

However I would like to highlight a few things about this video that made me feel uneasy.

When I first saw it, it made me think of Michael Moore’s approach to documentary: a focus on real important issues, but a sensationalist and biased way of presenting things that can defeat the purpose.

Arnold’s creative team chose this Apple commercial by Chiat/Day (nowadays TBWA\Chiat\Day, please note the backslash) because of its emblematic value.

Apple was truly David against the IBM Goliath back then. Their meager advertising budget could only allow for one single airing of the commercial which took place on Superbowl day, 1984. This back-story helped make it one of the most famous TV commercials in recent history. Not to diminish the strength of the idea, nor the inspired cinematography of Ridley Scott.

So now that we have set the original context, here are at least three key reasons why testing this commercial in 2007 is bound to be a misleading exercise…

  • Apple and Chiat/Day captured the zeitgeist by picturing an imaginary totalitarian environment. Back in 1983, the George Orwell book played a key part in the media and political conversation. Most people could relate to the meaning of the line “why 1984 won’t be like 1984”. In 2007, the dark environment and the reference simply are out of context and get completely lost.
  • The original Macintosh was priced at $2,495 – or a bit less than $5,000 in today’s dollars. This is hardly a product that everyone could afford in 1984, and as a matter of fact it was originally targeting a business audience rather than a consumer one. It would therefore make sense to pay particular attention to how an educated professional would react to the commercial. Obviously not the focus group crowd described as “I’m here for the 50 bucks and the free food”.
  • The paradox of this commercial is that it was not intended to be a regular piece of advertising. It was designed as a PR coup, to generate conversations in the press and amongst the audience thanks to the shock factor. Most of the effectiveness of this campaign was because it begged for commentary. It was clearly successful in that regard, and Apple has more recently accomplished a similar feet with the buzz surrounding the launch of the iPhone.

I do agree that research must be used carefully when it comes to advertising. I have seen clients and agencies spend hours and hours scrutinizing insignificant tidbits and findings from preview tests – getting the best research score had become an end in itself, rather than simply a tool to help improve advertising.

I’m not sure that this video is making the right points, but it has however the merit of opening the debate. What is your point of view?

The Music Industry – From Retail to Media

A small hiatus on the blog, because of an intense workload over the last few weeks!

I recently met an executive from Warner Music who is exploring new directions in response to the radical digital transformation that has taken the music industry by storm.

After this discussion it occurred to me that there is a parallel to be drawn between the music and media industries. In both cases the most common business model was about combining content production and content distribution. And in both cases, the digital transformation changed the game … distribution came first. Then once the distribution lock is gone, it opens the gates for a lot more people to produce a lot more content. Natural selection based on talent does the rest.

The media landscape is being deeply reshaped in the digital era – these are not breaking news.

Newspapers are losing classifieds revenue to the likes of Craigslist, paper versions of magazines disappear (good bye Business 2.0), radio is increasingly listened to digitally, and network television shows are migrating online.

There have been several examples in the past where content owners clashed with online content distributors about intellectual property – and how to split advertising revenue. Google was sued in 2005 by AFP, a news agency, over copyright issues. The Google Books initiative was attacked by book publishers and authors. Viacom asked Youtube to remove thousands of copyright-infringing videos, following in the footsteps of NBC and CBS.

Back to the music industry. Those companies were used to operate with a retail (e.g. distribution) model and “moving product” (vynils then CDs). Getting airplay and maximum repetition was a means to an end… not unlike advertising, a way to promote record sales.

Now Apple has the upper hand in music distribution – with no serious competition, except maybe the recently launched MP3 download store on Amazon.com.

Look at the 20 most seen videos of all time on YouTube.

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Nine of them are official artist music videos, including bands like My Chemical Romance and Linkin Park that are signed by Warner labels. Those hundreds of millions of views are proof enough that music companies own the rights to content that is extremely attractive for online audiences. So are these companies the next in line to use legal action to force Google to share some of its advertising revenue? That’s quite unlikely – old habits die hard. They have always sought artist exposure and were all too happy to get this exposure for free.

Artists have discovered that the Internet is also a way to bypass middlemen, not just for marketing but also for sales. Radiohead has created the sensation once again with their recent announcement, and many bands have jumped on the publicity bandwagon.

Talking of Radiohead – this reminds me of John R., a former colleague of mine when I worked in London. John had previously worked as a talent scout for Sony Music and he liked to joke about the fact that he passed on the opportunity of signing Radiohead!

If you want to read more about artists embracing the digital age, Wired had a fascinating cover story on “the rebirth of music” in 2006.

Can artists do entirely without record companies in the near future? Probably not. After all, the music industry has a proven track record in discovering and nurturing talent. If anything the Internet makes the talent easier to spot. There are many hopefuls posting their webcam musical performances on Youtube like Esmee Denters, Mia Rose or Lamiyah. Audience ratings and comments are a transparent way to assess their growing popularity.

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As a conclusion there is some irony in the current situation of the music industry.

When Apple introduced legal music downloads and a robust Digital Rights Management system, the music industry saw this as an opportunity to finally solve the problem of piracy on peer-to-peer sharing platforms like Napster and Kazaa. Yet today, Apple is in such a dominant distribution position that it has become a major threat to the industry.

Google’s stronghold on search is seen as a threat by most content owners. Yet Google is probably the very opportunity for the music industry to achieve its transformation into a media business that leverages an enticing and exclusive content.