Throwing Out the Book: The New Business Rules for the Internet. Part 2 of 2

The advertisement industry is in a bit of a tough spot. Not only are people watching commercials less, due to things like On-Demand and TIVO, but online advertisements are in my opinion useless. Banner ads, pop-ups, and things of similar nature are normally ignored or blocked by the web-surfer. They provide almost no information about the company or product, and don’t have the ability of being funny or informative. As for online commercials, posted on sites like Hulu.com, they do not have the same effect as TV. Commercials do, due to the countdown telling you when you’re programming will resume. Most people watch those commercials muted, since they are sitting in front of their computer anyways, and they know just when to un-mute them. This is why most people are arguing that Direct Marketing tactics are dead, and word-of-mouse is now the best way to inform about a product. When it comes to internet related products, or products for the technologically savvy, this is not a bad way to advertise. Also, the costs are astronomically less, which makes it very attractive to companies. However, not everyone is a blogger, and though the amount of people who blog will continue to increase, not all people are active participants, and a lot of products will not find their main consumer groups on blogs.

 

Advertising is becoming much more personal, directing their messages at the people who want to hear them. There are some products that simply aren’t that interesting, and are one out of a hundred of choices for similar products, so nothing it can say about itself other then it is the best of the choices, are going to make it stand out. I said previously that the internet is making companies provide better products or perish. The internet is doing the exact same thing for advertisements, but instead of moving ads to the internet, I think we simply need to make ads better. This is a concept I mentioned in my previous post: An Untapped Marketing Goldmine. People still like watching good videos, and commercials should be made to inform but primarily entertain. Some of the best ad campaigns barely even mention the product. The goal of any ad is to have as many people see it and enjoy it as possible so they show it to others and watch it repeatedly. I outlined in “An Untapped Marketing Goldmine” what needs to be done, and I can’t stress it enough. The quality of commercials need to go up, and to do so the TV industry needs to start giving extra reason for people to watch shows as they release new episodes on TV instead of later online. Good shows should only have good commercials. Commercials should also start being made for specific shows as opposed to TV in general. The show should provide the companies with all the information they need about what the audience likes, and they should be making commercials that adjust accordingly.

 

In conclusion, the internet can be a huge asset to a business or a huge hindrance, but either way to ignore or try to suppress its presence is a mistake. It is important now more than ever to make sure you provide a good product, and make sure you let you potential customer base know about it. Not everyone should be doing the same things, and different tactics work better for different companies. Consumers are everywhere, but that doesn’t mean you should try to reach them everywhere. Make a product people want, and advertise so people know about it, and it will sell.

 

 

 

Throwing Out the Book: The New Business Rules for the Internet. Part 1 of 2

A new era in business is emerging. As the internet gets stronger and stronger as a resource, companies are trying hard to adjust to the change. Some have oriented themselves well in the new medium, but most simply don’t understand. This is not to say they don’t know how to use Twitter or SEO, but they haven’t fully come to terms with what the internet and consumer blogs truly mean. The internet is much harder to control than any other entity big business has ever tried to face. This is because it wasn’t established for big business, it was made for the full exchange of information (created of course by Al Gore…kidding). The internet can be the best business asset ever created or it can be responsible for the outright destruction of a company. The good news is, no matter what the outcome, the company normally deserved whatever resulted or is resulting from it.

 

Quality of product is now the name of the game, not how many people you can get to buy something. As people who surf the internet get smarter, and search engines get better at finding the quality content, all the tricks of the trade are becoming obsolete. Link bombing, faking consumer reviews, e-mail spamming, these are all dying practices. Software, music, and movies now have an optional price that more and more people are turning to, and that price is zero dollars. This is not a trend, this is a permanent change. Instead of crying over spilt milk, these industries need to simply come to terms with the situation and adjust. When it comes to software, meaning computer programs, this is not as big of a problem, due to businesses purchasing the programs legally, and the fact that most people that use these programs regularly don’t tend to download. Though they should be wary, and consider making their products cheaper, because as the next generation takes the reigns, downloading of programs will become more and more prominent.

 

When it comes to the movie and music industries, I fully believe that they deserve what is happening to them. CD’s should not cost twenty dollars, and it should not cost so much to go to the movies. Luckily for us, the internet changed the market completely, adjusting the prices of all movies and CD’s to zero. Granted, this is an illegal act, but it has reached the point of jay-walking. What these industries need to do is adjust, and provide people with reasons to pay them for their products. In terms of the movie industry, they have the advantage of being able to offer high quality movies on bigger screens than your computer can provide. However, I think they need to lower their prices, or they will further alienate their customers, because a free movie on your computer with microwave popcorn sounds pretty good when compared to 20 dollars at the movie theater.

 

The music industry has a much bigger problem on their hands. Quality used to also be on their side, but now you can download almost any CD in FLAC quality (same quality as CD’s) for zero dollars. Other than the fact that it’s illegal, there is no reason to buy CD’s. What is even worse for the music industry is that it isn’t going to get better; it’s going to get worse. As the Baby Boomer generation dies off, and a new generation emerges, they will be ingrained with the idea of downloading being the proper way to obtain music. However, there is good news; the record industry will never truly die. It may not be in the form (CD’s) that it currently is today (kind-of), but new music will always be demanded and there will always be a market for it. The record industry needs to provide incentive to make the value of purchasing a CD more than just the CD. I have come up with a way to do this, but I won’t write about it here, due to me not wanting the idea stolen from me.

 

Downloadable products are not the only industries affected by the new face of the internet. Due to blogging and social networking sites, people can exchange information about products much easier than ever before. This means bad products are isolated immediately, and as more and more people are born and brought up internet savvy, products will be forced to get better and better. This is a great thing, as it makes businesses run better and adjust to consumer needs. The internet is also a great asset to businesses who wish to make their products better and directly connect with their customers. However, there is one industry that is trying to move to the internet, and though most people disagree, I personally think the move is the wrong one.

A New Market to Stimulate the Economy

We currently have an untaxed, extremely profitable product in the market which not one company produces. It has multiple uses, has caused zero reported deaths from personal use, and is used by a huge percentage of the population. This product is marijuana, and I’m sure you have all heard arguments similar to the ones listed above as reasons to legalize it. I can compare them to cigarettes, or state how many more people alcohol has killed, but that is not the point of this article. In the following paragraphs I will state why we need to legalize weed from an economic standpoint.

 

As we all know we are in a recession, and it’s a big one. We are currently inventing money as we go, trying to stimulate the economy. However, we are only giving the illusion of stability, but we are still losing money. What we need is a way to generate a new source of revenue as a country, and marijuana is a great choice. It is easy to grow, has a huge customer base, and currently has a ridiculous price attached to it. The price is due to the 5-10 people that actually buy the weed from the grower before you buy it from them. All of these people are trying to turn a profit. My proposition is to keep similar prices to the ones we have now. You do this by making companies compete for the market, driving the price down, and then simply do what we do with cigarettes, tax it to an extreme level. On every purchase, the government will be taking the money that the middlemen should have received. Though I would have no way to approximate the amount of money that could be earned in this way in a year, I can safely say that it would be extremely high.

 

The argument is often presented that the drug is used by so many people already, and it is so readily available that we should just legalize it. Most advocates against its legalization argue that frequent use is no reason for something to be legal, only that we need stricter laws. I argue that since it is used so much, we should simply tax it, and make it available to those we deem mentally capable of using it. It was so much easier when I was in high school to get weed then get alcohol. Before I was 18 even cigarettes were harder to obtain. Legal restrictions are way more enforceable because if you can obtain something legally there is no need for an underground market. Underground markets have no age limits or restrictions; they are a come one, come all establishments. By legalizing its use, we can at least put a damper on underage use of the drug.

 

There is rarely a prescription drug advertised on TV that lists possible side effects that are less scary than those associated with weed use. Drunk driving is the number one cause of car accidents. Cigarettes are the number one cause of cancer. These are things we know as facts. These are all things that are legal solely because of economic gain, disregarding all obvious negative affects that we know for a fact kill people. Not one death has ever been associated with overdosing on weed. It’s actually physically impossible. Therefore, if we are willing to give lives to make a profit, I see no reason why we wouldn’t legalize a much safer drug for the same economic gain.  

Ticketmaster/LiveNation

I know this feeling is shared by many other people, and it isn’t original, but I hate Ticketmaster with a fiery passion. The only reason I don’t hate Live Nation as much, is I haven’t had to use them. I don’t really know how this happened, I guess its some sort of testament to the type of music I listen to or something. Though when Live Nation fully merges with Ticketmaster, I’m sure ill get the pleasure, which from what people tell me is about the same experience.

These companies have a solid lock on the ticket sales industry. Like most monopolies, they are also extremely greedy. For an accurate example, I searched for an Infected Mushroom show on Live Nation, since they will be absorbing Ticketmaster and are therefore more relevant. The tickets were 35 dollars for the ticket, 12.20 was the ticket fee, and 1.50 was the facility fee. This does not include any type of shipping and handling. Isn’t the venue already getting paid? Isn’t that why they have shows? How is 12.20 an acceptable fee to charge me? All they have to do is print the ticket, unless I want to print it for an extra fee.

The record industry has recently been in shambles. The price of music has changed, if you want to take advantage of it, all music is now free and available with web access. To be honest, I buy CD’s, because I like collecting them. But those record industries were really greedy for a long time, taking advantage of artists and fans alike, and they made a ton of profit. But music was taken back by the fans. Music is not hurt by this, people will always make music, and more then we need. However, the aspect of music I’m concerned with here is how tickets are distributed, and I say it’s wrong. I say, we take this aspect of music back as well.

My proposal is this: Make a site that does exactly what Ticketmaster and LiveNation do, except don’t charge a ridiculous service charge. Now, this is a company, so it is understandable to charge a fee. But there is no reason that it should be 12 dollars. I would say 5 dollars is the max, and it should be consistent. Charging more for a more expensive ticket is absurd, as the company is still doing the exact same thing as with a cheaper ticket.

To be honest, you don’t even need to charge a convenience charge for tickets. Advertisements could be used to support the site, or at least help subsidize convenience charges. There is no reason fans should have to pay so much.

Speaking of paying a ton of money for tickets; it seems that is the only way to be a true fan nowadays. If a band is popular, it seems the only way to see them is by paying incredible amounts of money by buying tickets from scalping sites for way more then the bands intended to charge. You used to be able to go to venues or Ticketmaster locations and camp out till they went on sale. However, they have a new policy that uses a lottery system, so coming early only makes you the person that waited longer. How are you supposed to get tickets without paying scalpers? It’s a terrible policy and should be changed back. Lines tend to manage themselves, so I don’t know what they are so worried about.

Basically, I think that Ticketmaster and LiveNation have a monopoly that can easily be toppled, because there whole customer base hates them, and they don’t do anything that is hard to do at all. Therefore, the industry is ripe for the picking; just don’t be a really greedy person.

Note: When Live Nation was first made, the conviencence charge it had when you purchased a ticket was 2 dollars.

Iphone App. Idea

NOTE: I RECENTLY FOUND THAT THIS IDEA HAS ACTUALLY ALREADY BEEN MADE. IT IS CALLED BACKUP ASSISTANT: http://tinyurl.com/ctflra

 

The amount of invitations I get to groups for people who lost or broke their phone and want numbers is quite numerous. I find it hilarious that most of these come with a disclaimer: “I hate these groups, but I lost my phone and need your numbers.” What exactly do you hate about the groups if you are currently making one? Everyone has this same problem.

However, it strikes me as being a particularly silly one considering what phones are capable of these days. All you need is an app that takes your list of contacts and backs it up online.  I can’t say I know any programming, but I can’t imagine this would be a very hard thing to do for the Iphone or Blackberry. It should also have the capability of uploading your contact list to your phone, so you don’t have to pay the phone company the 50 bucks it costs to transfer contact lists at the store.

Soon, all phones are going to be like Iphones and Blackberries, so eventually everyone will be able to do this. There is almost no reason to not use this app, so it should be pretty popular.  Therefore, someone should design it. If there is a programmer interested in doing this, I have some other ideas related to the Iphone, and I’d be interested in forming a partnership of some kind. Either comment here or DM me on Twitter.

Hulu: Embracing A Changing World

Hulu is a site I want to talk about for two reasons. The first will be its recently aired superbowl commercial, and the second will be its role as a site in general, and how it should be used as a template for the music industry.

This year I found myself quite disappointed with the superbowl commercials, as I found many to be continuations of past campaigns, or a lot of the same old advertisements that I’ve grown accustom to. However, Hulu’s commercials we different, and I definitely think it was the best commercial I saw.

            The commercial went for absurdity and comedy as the main drive of the commercial. However, it was made very clear what the company does, while not making it the central focus of the commercial. What I mean is, Hulu didn’t talk about all the different shows it has, or constantly say all the great features it has. It concentrated instead on making the commercial funny, and it worked.  This commercial shows great knowledge on the company’s part of their customer base. I know, because as a 22-year-old college student, I am their customer base. I also know this commercial was good, because all my friends thought it was and they use Hulu.  Commercials do not have to make you want the product, though I think this one does in a subtle way. Commercials just need to make you aware of the product and remember it, but in a positive way, and comedy is a great way to do that.

            The more important aspect to discuss regarding Hulu in relation to the music industry. For those of you who don’t know what Hulu is, it’s a site where you can watch T.V. shows and Movies for free online. However, not all movies and T.V. shows are available all the time, they seem to rotate them, which leads to customers coming back to check out what’s new. In relation to T.V I’m sure the hope if to get people into certain shows that are currently airing, and get them to start watching them on T.V. They have links to the T.V. shows websites, as well as information regarding when the show next airs. Individual networks have been doing this for their shows for a while, letting people get caught up online so they start watching the shows when they actually air, which I think is a good strategy. It currently worked for me using NBC.com to get me into the Office, a show I am now obsessed with. However, this is a way more complex problem in relation to music.

            While we have sites like Pandora that let us listen stream music that we like based on our favorite artists that we can program in, this has not stopped people from downloading music. As the economy gets worse, illegal downloading will only become more and more prominent. Why pay for something when you can get it for free? There are now too many ways to get music online, we can never police it, and we can’t control it. I personally stick to buying CD’s, as I collect them, but when it comes to music I don’t love, I’m ok with taking music off someone external hard drive and putting songs and CDs on my computer.  For many people, music has become a free commodity without the music industry’s permission, but music is still a sought after thing. Music will be listened to forever, regardless of it being regulated by huge industries or if it’s made in band’s basements. What the music industry needs to do is embrace it, and start offering quality downloads to people for free, if only to get control of the web traffic that is going to all these pirating sites. Even offering a Radiohead type of pay what you want offer would be better.  The true music fans will still buy CDs, because they will want to pay for them. I for example bought the Radiohead album both online and in CD form, and I was not the only on to do this. Also, as much as people use these illegal sites, if a legal option becomes available, as long as it’s as good, people will always chose the legal option. They could use a rotating library as well, like Hulu, but it would have to offer full CD’s at a time, or people would go elsewhere. Either that or they need to start offering something when you buy a real CD that you can’t download online.

            Hulu is a good step in the right direction for how to deal with downloading and pirating, embrace it. Web traffic is an underestimated commodity, and will become more and more important as the Internet becomes a more and more important medium. Its important to gain control of your customer base, so even if this isn’t the best solution to the music problem, its important to do something before you have no money, which is the direction most major labels are heading towards.