Modern Marketing - Blog by Collaborate PR & Marketing

What is a Record Company ?

Ani DiFranco might be the first ever musician purely for the digital consumer.

The folk singer and pioneer of online culture -- or Internet Culture as this blog prefers -- has rejected the record industry completely to sell a million albums directly to the digital consumer online, making her an estimated $10 million.

It's not difficult to see what is going to happen to the music business. Millions of people will be downloading music from the web (either downloading copies of dubious quality through peer-to-peer, paying a small amount for the song they want from iTunes or a similar service, or buying directly from the likes of Ms DiFranco) and whacking it onto the iPod that carries their entire record collection.

It is also fairly easy to see where a record company might fit into that particular supply chain. After all promotion and distribution will still be required. However, it is very difficult to see where the current record labels will fit in. A starting point would be to stop trying to sue all their customers.

Give 'Em What They Want

When the economy grows faster as we expect it will in 2004, advertising and brand/pr sponsorship may capture some of their lost share of expenditure. But the long-term trend towards direct, especially interactive marketing, seems to us to be inexorable. The challenge for the agencies is to adapt to this evolving market and especially to provide value-added services which will persuade companies to continue outsourcing key parts of their marketing and communications activity.

Key Result from Marketing Expenditure Trends, 2001-2004, December 2003, London Business School

Big Bad Brilliant Microsoft

The tone of most articles about Microsoft these days seems to be derogatory. The sentiment is often that Microsoft is evil and that its monopolistic operations are the equivalent of 'The Dark Side'.

This overlooks the fact that the company's success is based on what must be one of the most shrewd marketing strategies ever. When IBM came to a young Billl Gates and offered to buy his MS-DOS operating system for a large sum, he said no. Instead he said that they could license it from him, like the music industry. Such was the desparation of IBM in the face of the threat from Apple that they agreed.

In financial terms this innovative approach to the marketing of a product and Gates' determination to ensure that this strategy was pursued has been mindblowingly successful. The company's most recent results show that Windows generated a profit of $2,264m on costs of just $545m. In other words, of Microsoft's $2,809 million turnover on Windows, 81 per cent is pure profit. And even on the Office suite (the prime subject of the Becta deal), Microsoft made $1,591m profit on costs of $696m - a profit margin of 69 per cent.

An inspiration to modern marketeers everywhere.

EU vs SPAM

Sometimes you have to feel sorry for corporates and their marketing staff. There was a time when all they had to do was commission a short commercial, show it on ITV, and sit back as 30 million grateful consumers watched with wide-eyed gratification and then ran out to stock up their shelves. Ok, it was never quite this easy but compared to today....

Cynical audiences, media fragmentation, one thousand products per category, all-powerful retailers and consumers using technology to filter advertising from their lives.

And now the EU introduce legislation to restrict ways in which European companies can use some of the most promising interactive channels such as email and SMS. From December 11th any company sending electronic marketing messages to a consumer without prior consent will face fines.

There are plenty of grey areas to wade through regarding what prior consent means. However, the basis for ruling is about opting-in and opting-out. The latter has been the norm up until now but the new legislation means that opting-in will become the gold standard. So marketing messages can only be legally sent to consumers who have given their prior consent in some way.

Those opposed to this legislation cite the fact that it will be ignored by the bad guys who produce most SPAM , and that most of it comes from outside of the EU anyway. So it will have no effect on cleaning up the most offensive messages that clog up the internet and peoples' inboxes.

For modern marketeers, it means that creativity and relvance will be obligatory for marketeers wishing to attract consumers out from their increasingly, well-defended citadels.

An Uprising on TV

'Technology is now putting power in the hands of the viewer -- they can not and will not be dictated to ever again.'

'Digital technology is shifting power dramatically to users'.

These are excerpts from a speech given by Peter Bazalgette, Chairman of Endemol UK, at the Fitzwilliam College in Cambridge entitled, 'Whatever you need, whatever you want': Television's shift from paternalism to populism'.

The speech is very much in line with the idea this blog has explored of a new powerful consumer mobilised by technology. In this case the PVR and unlimited 'internet spectrum'.

The main theme of the speech was that a UK cultural elite has hijacked a Reithian agenda to pour scorn on all today's programme makers. However, Bazalgette see this as a puritanical reaction to popular choice that echoes similar sentiments expressed about popular books in the early 19th century and cinema in the 20th.

This blog would suggest that interactive TV, like Fame Academy and Pop Idol, where people can effect outcomes though voting, is in fact a kind of open-source TV.

For modern marketeers, the question is how to set the agenda of open-source consumer activity in a way that supports a desired set of communication objectives.