Many young people become enamored with music during their teenage years. They listen to songs intently and seek to decipher meanings or messages they believe are contained in the lyrics. That description fits many of my friends and me in the early 1980s. We were eager to take away something substantive from the songs we heard. Sometimes we could, and sometimes, well it was harder!
Fast forward to 2010, the adolescent experience of learning from music can be extended to businesses learning from the music industry. A recent article appearing on FastCompany.com painted an interesting contrast about the state of music in the United States. On one hand, data shown in the article reflects a woeful state for music sales. Annual sales volume is less than half of dollar sales 10 years ago when adjusted for inflation. Such a dramatic slide in sales would usually trigger red flags that product interest is waning, but we know better. The article leads with a quote from Tom Silverman, a music industry executive, who says "More people are engaged with music than ever before." His view is based on the our options for consuming music today without paying for it (Pandora, iTunes, and Internet radio, to name a few legal options).
What was broken in the music industry for some time is not the consumer’s interest in music, but the long-time product kingpin: the album. Artists and music companies packaged a collection of songs in a single product, but in many cases music lovers may have had an interest in only one or two songs. Now, rather than paying $14.99 for a CD to get a few coveted songs, consumers can buy single tracks for $1.29 and get only the songs they want to pay for. So, instead of music sales being driven by what the labels want to sell (but consumers do not want to buy), the product that appeals to most buyers is the individual song.
As I read the article and thought about the transformation of product sales in the music industry, I could not help but wonder “are there other industries that suffer from an out-of-touch sales model”? Did a similar situation lead to a decline in the American automobile industry? Are lack of offering new approaches to products and distribution responsible for stagnation in the soft drink industry? It seems that opportunities exist for businesses that are willing to depart from the status quo if selling products differently will positively influence consumer acceptance. It requires listening to the music (as performed by customers) to interpret the meaning.
Labels: Marketing Strategy, New Products, Pricing