The Internet, a friend or an enemy of music?

At least for the past two decades piracy in the music industry has been practiced in one way or another. Before, it was practiced through tapes, then through pirate CDs, and now through the internet. The most sensitive point to the music industry (besides the damage caused to intellectual property owners) nowadays is the speed of piracy, which is what has hurt in a several way the music record label industry. But there are two faces of the coin here, those “in favor” (not really “in favor” but that don’t claim about piracy) and those against piracy and the internet is a determining agent in this dilemma.

On the one hand, there are many people to whom piracy is beneficial: general public and emerging artists (generally). Consumers have two options, to pay and not to pay. Therefore, is it difficult to know which will be their preference? From the point of view of the consumers there are two advantages of “sharing” (usually called pirating) music. First, as before mentioned, the main advantage is cero costs (although a few would feel that the “cost” is knowing that piracy is not right, but just a few). Another advantage is that people can discover new music without the need of buying, and that can barely be found in a local CD store. Let’s say an example of a Pagode (a type of samba music) group, would never be found in an European CD store, but easily found in the internet and then downloaded (depending on the P2P program).

Furthermore, digital technology has given incredible ease to emerging artists, who would not need to have an enormous expensive recording studio to make their music. Digital recording has facilitated everything, making it so easy to record one song in different countries without physical movement (in a general way depending on the needs). Therefore, nowadays to the artists there’s no need to incur in “extra” costs to reach their fans or audience. In this case the “extra” costs would be the intermediaries in this process: all the fixed and variable costs (and margin) of the CD (“packaging”) industry. Many musicians would be benefited by the efficiency and speed of piracy to be known, others would prefer to share their music through their web pages for a lower price, but still they need the internet.

Independently of piracy or not piracy, with all these examples is that in one way or another, THE INTERNET IS PREFERRED. And once having mentioned that, I come back to the main problem of the internet: the ease of piracy.

On the other hand, the record label industry has been seriously hurt. Maybe these are those days in which CDs are becoming collectible items in the same way the LPs became. It is necessary to move immediately to the digital era and as fast as possible. To fight with music piracy is useless. As a matter of fact, according to an interview to Sean Parker in CBS news (the head of what once was Napster) approximately 4 billion legal downloads fight against approximately 3 to 10 trillion illegal downloads. His Spotify project is based on a “convenience and accessibility” basis, which includes enormous music libraries available for people for a price. This could definitely work, but there’s no clear answer of how he’s going to compete with Apple and with free music (Kazaa, Ares, Limewire, etc). Maybe wireless technology along with portable devices would be interesting innovations to get those enormous music libraries mentioned by Parker.

A couple of things have to be clear: fighting music piracy is useless, the industry has to offer something better than what piracy can do (a hard job, isn’t it?); and internet is fundamental for the music industry growth (although for the moment has been kind of bitter for the record label industry). Innovation is necessary to keep this industry going although piracy is not justified under any concept. But what is most important of all is that somehow we have to find a way to keep the music industry business healthy, remunerating all those geniuses behind the creation, arrangement, recording and production of each song we enjoy in our car, office, bar or whichever place we are.

To keep our profit, let's be careful

     New forms of e-commerce keep on appearing, and one good example of this is Groupon. To Mark Zuckerberg’s jealousness, Groupon is the fastest growing company ever according to Forbes and still keeps on growing. As we know, this company’s business model is based on discounts (coupons) by sales volume (group), so the attractiveness is going in all directions: to the customer, to companies working with Groupon, ant obviously to Groupon.

     Unfortunately this e-business model leaves an enormous gap regarding competitors. Since there is no major protection in this way, competitors are reproducing in a geometric way. Despite the still Groupon’s doubtless leadership, its main competitor, Living Social has got more web traffic according to a report on comScore published by Businessinsider.com. There isn’t yet any number or argument that proves how competitors could affect Groupon, but still this gap is something they must consider for the long run. As a main part of the SWOT analysis, competitors should be taken seriously, especially in web-designed business, where market entrance is much more viable. 

     According to Latest Technology Trends.com, a couple of juicy offers ranging between $1.7 and $4 millions have been made to Groupon from Yahoo, but they just passed. But what is important with this numbers is to be aware of the huge importance of this business model: promotes volume sales, lower prices, ensures demand (which helps have more contribution margin), and all this means in a general way health to the economy. Hopefully, everybody wins, but the only condition is to complete the target consumption. This last sentence is the one that glorifies but at the same time condemns this business. Having said this, it’s crucial for Groupon to keep themselves safe from competitors, because if not, they’ll steal volume (something is currently happening in fact), which will higher prices, and therefore will make this business model unattractive. The inconvenient will not be only for Groupon, but for the whole rising industry and market.

     As businesses, let’s take this example as an experience to learn (from every point of view: the incredible growth, but also the potential crisis it’s being menaced to). As consumers, let’s think about buying these coupons, market could not be as beg as we may imagine, in some time this perishable product is going to expire.

Links:
http://www.forbes.com/forbes/2010/0830/entrepreneurs-groupon-facebook-twitter-next-web-phenom.html
http://www.businessinsider.com/livingsocial-groupons-biggest-competitor-now-gets-more-web-traffic-than-groupon-2010-8
rhttp://www.latesttechnologytrends.com/2010/10/why-groupon-is-no-ebay/

Eureka! Social network is a gold mine... let's keep it safe!

     Beginning with the idea of a “tribute to curiosity”, social Networks have been seen in different creative ways among the years and nowadays everybody is connected to each other. As a matter of fact, in virtue of the multiple uses people have seen on them, the creators of these social Networks have been adapting their products to the current and potential needs of their users. One of the most significant ones is the use of social networks as a tool for online marketing, which becomes a great opportunity for companies to get a better approach to their customers and keep in contact with them with less effort, money and in a more efficient way since the information about the market is already given by these networks.

     Although social network marketing is something still new in the market, trends show the tremendous importance this has in the business world. According to an article in mashable.com, written by Adam Ostrow, in the US it will be spent $1.7 billion on social networking in 2010 and worldwide it’ll be $3.3 billion. And it’s nothing new to us the awareness of the tremendous growth of social networks, therefore, for companies this is an opportunity to get a better approach with the market. According to BBC News, and based on a research made by the Nielsen company, the growth of social networks from 2009 to 2010 is almost a 19% in general, becoming from 360 millions of users to 426 approximately. The market is there, the companies are taking profit of that. Who wouldn’t like to promote its products to these people? The invitation is made and the database is already created for you… I bet you will consider this.

     Social network is definitely a great tool for nowadays businesses, numbers say it all. However, it’s imperative to think on creative ways to keep this tool useful among the years, not only for our own business but also for the whole market. What do I mean with this? Well, maybe more than a decade ago the e-mails were found to be a great way to have access to data bases and therefore promote products. Today, we actually have options to consider mails as spam due to the large amount of useless mails and also dangerous ones with virus. Therefore, it’s up to us to take care of this opportunity. We must be creative, innovative and look (as companies) to give some value to our customers via social network to keep them “logged-in” with us.

    Let's keep the mine safe for all of us.

Ignacio Man Ging

Neuromarketing = Targetmarketing

   Is there anybody that knows in a 100% what he/she wants all the time in all the aspects of his/her life?

Since life by nature is complex due to the infinite number of aspects the human being has to face, indecisiveness is much more common in people than what it seems to be. Actually it’s something natural! But what matters the most is the fact that indecisiveness becomes as an immediate bandage that blinds people from recognizing what they like and therefore what they want. These are the reasons why surveys (the main source of data for marketers) could turn on non-reliable sources. People become conscious of what is being asked to them and why, and it takes away the spontaneity and naturalness (the diamond of surveys) of the studied people.

    Neuromarketing, as a research discipline that scans the brain of people (through different types of body reactions), helps not only companies to sell their products but also customers to get what they really want but weren’t able to discover by themselves. In that way, everybody wins since we target what is really needed and wanted. According to Martin Lindstrom Martin Lindstrom - Buyology a 90% of human behaviour is unconscious, which explains why people may not discover their preferences clearly, and the nowadays Neuromarketing is trying to help us to do it, not only based on marketing but also supported by scientists and specialists in neurology.

    Therefore, in a nearer future consumers and customers will be able to enjoy better products and services thanks to these new techniques of marketing (obviously when used for better product development in order to give better added value to customers). Neuromarketing may also be used to trick customers, but that’s the nature of every good invention such as the internet, TV, weapons, etc.; they all were initially created for good purposes but their used has been negatively modified over time. However, I prefer to take the positive and productive part of this intelligent tool.