The Apple and the Amazon (or the importance of platforms)

News just broke that Amazon will launch a music download service offering tracks without DRM. This announcement has sent shockwaves through the industry because:

• It is expected (or rather hoped) that Amazon's online muscle will allow it to become the first credible competitor to Apple's iTunes store.
• With such an influential player offering DRM free music, it is likely that days of DRM protected music are numbered.

I wholeheartedly agree that Amazon's move drives a nail into the DRM coffin. The industry simply has not been able to pull together to come up with interoperable DRM standards that offer an acceptable user interface with sufficient interoperability to make it viable.

One of the reasons that Apple has been so successful in the music space is that it put in place a DRM that allowed it to reassure the record labels while its control of the hardware, music management software and the IMS has ensured that it could provide a hight quality user experience. This raises a question about Amazon's prospects as a credible challenger to Apple. To the best of my knowledge, Amazon will focus on content sales and not the whole of the music delivery chain. Without control of music management software (the equivalent of iTunes or Windows media player) it will face severe challenges in creating the seamless user experience that put Apple where it is.

My prediction is that unless Amazon makes a number of special deals to integrate seamlessly with media players on PC's and mp3 players, its success as a music retailer will be limited. This underlines the importance of a well thought out and integrated software platform to support any consumer-facing content service. Its the only way to build a coherent value proposition that can seduce the customer. These platforms will continue to grow in visibility and consumer value and over time will be what consumer goods manufacturers will want to tie their brands to.

JMH

Entertainment for dummies

A few days ago, I spoke of the need to create new digital entertainment value propositions to rebuild consumer willingness to pay for something that many perceive can be obtained for free (See "entertainment wants to be free" May 1st).

The industry on the whole "gets" this point and has been working on ways to add value. The approach I have seen most frequently has been to offer more content; digital exclusives, remixes, behind the scenes, making of's etc.. This is all well and good but to my mind, offering even deeper selections of content appeals mainly to aficionados (music buffs, hard-core gamers, etc.) rather than casual users.

This is unfortunate since casual users are probably the most lucrative slice of the market. They are most likely to value help in discovering content they enjoy and the least likely to spend time learning to download. Sure individually these consumers represent a smaller revenue opportunity that heavy users, but there are a whole lot more of them.

So what is the "killer app" for casual digital entertainment users?

JMH

Is content the marketer's silver bullet?

It always amazes me how little brands use digital content as a marketing tool. This is surprising as content has a lot going for it.
1) Consumers are embracing digital content en-masse
2) The current models of paid digital entertainment are so unsatisfactory that most consumers avoid them
3) Content has an emotional charge that can support marketing messages and brand values
4) Content is much more sticky that brochure-ware websites creating stronger consumer affinities.

So why are so few content based campaigns out there? My theory is that without specific tools and the right partners, they can be very complicated to put together. This is one of the reasons that DigiCompanion developed a content delivery platform specifically designed for brands.

Integrating content to marketing campaigns

There are four ways for a brand to use content in their marketing activities:
- Ad funded content: the brand places and advertising message in the content stream
- Sponsorship or association: the brand sponsors a section of content or the medium that delivers it (this programme brought to you by...).
- Placement: references to the brand are built into the content (e.g. the brand's product is used by the hero of the film).
- Gifting and media: The final option is to reward consumers with gifts of content (eg. when you buy my product, download premium content off my company's website).
Note that licensing content, using images related to content (eg. a Spiderman visual on a box of cereal) is fundamentally not a content play at all but simply the association of a content brand with a commercial one.

Since the invention of the remote control, consumers have had an increasing number of ways of zapping away from unwanted commercial messages and more alternatives to zap to. This is one of the reasons that marketers have a growing interest for techniques that tightly link the message to the content.

The key in this is to integrate the brand’s message as tightly and unobtrusively to the content as possible to ensure that the consumer does not try to cut out unwanted promotional messages.

DigiCompanion believes that the best way to achieve this is for the brand to create its own content stream rewarding consumers for their loyalty by offering them the content they want.

Will brands become media?

Dictionary.com defines media as: the means of communication, as radio and television, newspapers, and magazines, that reach or influence people widely" and brands as "kind, grade, or make, as indicated by a stamp, trademark, or the like: "

Until recently these were distinct concepts; specialised companies published our media and brands invested sizeable chunks of their advertising budgets to convey their messages to consumers who formed the media's audience.

But new digital technologies have muddied the distinction. Firstly by reducing costs and other barriers to entry, it has enabled the number of media to explode. Consumers now spend their time between traditional media and newer more specialised offerings that where unavailable a few years ago. To complicate the picture still further, the line between author and audience is blurring with the emergence of user-generated content.

The result of this is that the audiences are more fragmented. For a brand this creates a huge problem in deciding where to invest one's media spend. The old marketer’s joke that says that 50% of a marketing budget is wasted but that marketers never know which 50% is even more true today.

Some brands are beginning to adopt a "if you can't beat them join them" approach and by moving to become media themselves. This sounds like a crazy idea at first but it has merit for a couple of reasons:

1) Consumers still, and perhaps more than ever, need media whose values they share and whose editorial viewpoint they can trust. Brands have a clearly defined set of values that can form the basis of an editorial line. If you trust Nike as a stylish performance enhancing sportswear, surely you would be interested in hearing what they have to say about your favourite sports, athletes and keeping in shape?

2) By creating a media, brands reinforce the relationship with their consumers. Modern technologies mean that consumers can access media anytime and anywhere. By creating their own media, brands can increase the interaction with their consumers hence influencing attitudes towards the brand.

3) Its getting to the point where for many brands with clear position and target audience, it is cheaper to build media of their own rather than to pay to place messages in existing ones.

There are numerous examples of brands building media such as Audi, Salomon or Nike and many others. This trend has been accelerating as the consumer usage of online media grows and the tools that facilitate the creation brand channels become more readily available.

Entertianment wants to be free

It has been interesting observing the trends in the music industry of late. The industry has failed to innovate as fast as the consumer electronics companies and the consumers themselves. As a result of this, revenues are falling in most markets. There has been a hue and cry about the inpact of piracy and the dishonesty of consumers. A side effect has been a series highly mediatised raids on consumers which have done more to erode consumer goodwill.

This approach does not really address the root of the problem. Consumers download not because they don't want to pay for things but because the consumers want to see value and innovation in what they are offered by the entertainment industry. A lot of evidence indicates that given enough value and enough innovation, consumers have no issue paying.

If this is true, then what is the formula for creating new business opportunites in the entertainment space? DigiCompanion beleives that the key is to subsidise the content provided to the consumer at first and to pack into it so much innovation that he wants to invest.

I'll speak of some examples of how we are doing this in my next post.

JMH