SMUG Social Media University Global

Priceline Music

Sometimes the juxtaposition of news events is, as one of the major credit card companies says, “Priceless.” This is one of those times.

In TechCrunch, Erick Schonfeld put it well when he said “Court Victory for Music Labels Won’t Save Their Industry” in regard to the RIAA winning its first copyright infringement case to go to trial, and getting a $220,000 jury verdict against a Minnesota woman.

Over the past four years, the RIAA has sued 26,000 of its customers, but it won’t get the same windfall from all of those cases, since most settle for about $4,000. This was the first to go to trial. So the verdict (if it is not reduced on appeal) sets an important precedent. All the music industry needs to do now is win another 52,000 lawsuits with the same size penalty to match its revenues of $11.5 billion last year.

Someone should create some software for the RIAA that automates the serving of subpoenas, because they really have to step up their efforts if they want to save their industry. Or, the industry can spend its time and money trying to find new business models that encourage and profit from the way people actually listen to music today—on their ipods, streaming from the Web, shared among friends and peers. As music goes digital, it becomes more fungible. People are going to do with it what they want because they can. The law may be on the RIAA’s side, but the market is against it.

But while the RIAA anchors its hopes on the deterrent effect of lawsuits, recording artists are dropping the record labels like, well, an anchor. Two days after Schonfeld’s post, the UK Sunday Times Online reported that Radiohead had developed a Priceline-esque “name your own price” model for its newest album.

Having waited four years for their heroes to finish another record, Radiohead fans were understandably excited last week to learn that the band’s seventh album, In Rainbows, will finally be released on Wednesday. But what really rocked the fanbase – and heightened the air of gloom enveloping the global record industry – was the news that In Rainbows could be preordered and downloaded perfectly legally for as little as 1p at Radio-head.com.

Currently out of contract and thus entitled to dispose of their recordings as they see fit, one of the most popular bands in the world had decided to let the fans decide how much their latest album was worth. An MP3 file of In Rainbows would have no price tag. Honesty boxes, it seemed, were the new rock’n’roll.

And the very next day TechCrunch reported that the record industry’s coffin is being sealed Nine Inch Nails.

Nine Inch Nail’s Trent Reznor wrote on the NIN site that the writing is on the wall for the traditional music distribution model, saying that the music business has radically mutated from one thing to something inherently very different today and that “it gives me great pleasure to be able to finally have a direct relationship with the audience as i see fit and appropriate.”

As the incremental cost of providing the goods or services approaches zero, free can actually be a compelling business model. Especially if the fixed costs aren’t that high.

That’s why bands are ditching the record labels’ scarcity model and going for a more direct relationship with their fans. Once they’ve recorded a song and converted to mp3, the cost of letting people download it is almost zero. So they can put their fans on the honor system with a “name your own price” proposition. And that way, they create more goodwill and find more fans, because the promotional value of having their songs widely distributed far outweighs what they can get by restricting access and attempting to charge premium prices.

It’s much better to attract bigger crowds for concert, to sell more souvenir T-shirts and otherwise profit from an expanding fan base.

The music label model worked when fans had few options for hearing new music (FCC-limited radio station licenses.) Now, with the web enabling anyone to distribute music directly to consumers, the value added by the labels is declining. Sure, they have promotional power, just as the mainstream media do. Both mainstream media and music labels are still the biggest things going. Most artists would love to have a recording contract with a label, and mainstream media enable you to reach a mass audience to which only the most contagious viral phenomena can spread.

But just as the mainstream media have lost their oligopoly and therefore are seeing continual declines in audience and circulation, so will the music labels see their market share dwindle in the new world of democratized media.
Technorati: Nine Inch Nails, RIAA, music, music labels, Radiohead, Priceline

Fred Vogelstein Facebook Essay in LA Times

Fred Vogelstein of Wired magazine has an interesting essay on Facebook in yesterday’s Los Angeles Times. Here’s an excerpt:

You can’t change the look and feel of your Facebook page as much as you can on MySpace, but since May you can do something much cooler: choose from a giant list of free, non-Facebook-produced programs that will run inside your page the same way Microsoft Word and Excel run on your PC. There are more than 5,000 to choose from. Zuckerberg and Facebook don’t have to anticipate all the things Facebook users want to do with their pages, but instead will let them bubble up from the global marketplace of ideas. Two of the most popular — iLike and Movies — allow users to know what music, concerts and movies their friends like best. Another, Causes, makes it easy to tell your friends the causes you care most about and solicit donations.

It all sounds way too complicated for mortals to understand until you hear Zuckerberg explain it. Boiled down, it goes like this: Humans get their information from two places — from mainstream media or some other centralized organization such as a church, and from their network of family, friends, neighbors and colleagues. We’ve already digitized the first. Almost every news organization has a website now. What Zuckerberg is trying to do with Facebook is digitize the second.

Think about what this means. Right now, the interactions among friends, neighbors and colleagues — a.k.a. word of mouth — is still analog. You go to a cocktail party, and a friend tells you about this incredible pediatrician he’s found. You ask a few other friends to confirm that data and eventually two things happen: You switch doctors, and the physician becomes a favorite in town. Now imagine that information automatically pushed out to all your friends, tested, verified and returned to you in 24 hours, and you have Zuckerberg’s vision for Facebook.

You can read the whole essay here. I think Vogelstein does a great job of capturing the essence of why Facebook is a landmark application. There have been other social networking sites, but Facebook’s combination of (mostly) true identities and an open platform upon which third parties can contribute applications is something completely new. Of course not all of the 5,000+ applications are useful. Some are just silly. But just as Windows has both Solitaire and Minesweeper (or so I’m told) as well as productivity applications, so with Facebook’s platform.

I will grant that most of Facebook’s applications to date have not been industrial strength or business focused. But as the user base continues to grow and spread like E. Coli on Topps Meat (but with much lower toxicity), and as the promised grouping of friends into different levels of familiarity (personal vs. professional vs. family) becomes a reality, the business applications of Facebook will become powerful indeed.

Hat tip: Mari Smith via (you guessed it) Facebook.

Technorati: Facebook, Fred Vogelstein, Wired, Social Networking, MySpace, Zuckerberg

Blogging My IPR Presentation

Because it’s really hard to do a blog post while you’re presenting, I’ve done this post in advance based on what I think I’m going to say. I’ll plan to update it later based on the discussion, and invite comments or questions to clarify what we’ve presented.
First, I took issue a bit with Shel Israel’s advice in yesterday’s panel to hire young kids to do your social media work, because they just naturally “get it.” I think that’s fine to a point, but it can’t be an excuse for not becoming conversant with social media. This area is growing so quickly and will be so important, that it amounts to “media malpractice” if you are a professional communicator who doesn’t have first-hand knowledge of Facebook, MySpace, YouTube, blogging, Twitter and other technologies that are quickly becoming mainstream means of communication.

If you want to stay connected with me and learn about this together, you can Friend me on Facebook and go to my 12-step social media program for PR pros.

For more than 100 years, word of mouth of satisfied patients and their families has been the main way people find out about Mayo Clinic and therefore see it as a place they would want to go with their complex medical problems.

Another key driver of Mayo Clinic’s reputation, since we don’t do national advertising, has been news media stories. That is the main topic of my presentation, since I work in media relations. But in the future, we will see a synergy of word of mouth with media through “prosumer” social media. It all comes down to people telling their stories, either directly face-to-face or potentially globally through news media or social media.

My co-presenter, Angie Jeffrey of VMS, gave some background on the Share of Discussion metric for news media that she has developed, and showed how it has correlated to business outcomes.

Then I showed a few high-level slides from syndicated Share of Discussion studies Angie’s group has done that involved us, and related results from media to public perceptions about Mayo Clinic and some other outcomes.

Finally, I think it’s overly ambitious to try to boil down all media, both mainstream and social, into a single PR metric, as Microsoft described yesterday. Communications is mind-numbingly complex, as Jim Macnamara said yesterday, and today’s prosumers get information from lots of sources. Some we can measure and others we can’t. But just as physicians use tests of blood pressure, LDL, triglycerides and other indicators which correlate with health outcomes (but may not actually be the causes of disease) to decide how to treat patients, so a set of measures like Share of Discussion and appropriate social media indicators can be used as “screening tests” to identify potential problems and opportunities.

To be affordable, especially for non-profits and not-for-profits, these tools need to take advantage of automation to deal with the immense amounts of communication that is happening in the “everyone is a publisher” world.

Thanks to the Institute for Public Relations for putting on this Summit on Measurement and for the opportunity to present and to connect with so many interesting people. This has been a valuable learning experience for me, and I hope our presentation has been helpful for others.

IPR,Institute for Public Relations,PR,Media Measurement,Social Media,Microsoft,Angie Jeffrey,VMS

Measuring Blogs and Consumer-Generated Media

The first afternoon session at the Institute for Public Relations Measurement Summit is entitled: How to Measure the Impact of Blogs and Other Consumer-Generated Media. Panelists include Shel Israel, co-author of Naked Conversations, Kami Huyse from My PR Pro and Todd Parsons, BuzzLogic. Donald McLagan from Compete, Inc. is a late addition. His firm monitors (with permission) every click online for 2 million people. Katie Paine is moderating, and she’s something of a legend. This is the first time I’m getting to hear her or meet her, and I guess we’re going to dinner at her house tonight. It’s a really big house.

Shel says blogs and social media aren’t really about measurement, but instead are about conversations. They are “push” media, and the real value of what’s happening is their two-way nature and the ability to listen.

Should there be standards for measuring social media?

Todd sees standardization as a weapon that kills progress, and that with the speed of change with new products being introduced so rapidly any standard is always somewhat behind the times. For instance, Kami said she used to count her comments on her blog, but now she often gets comments through Twitter, so it’s difficult to get your arms around these fragmented data.

Don said MySpace has lost 16 percent of attention in the last year, while Facebook has more than doubled.

How can you get ROI for social media? Don says ROI can be complex and doesn’t just come from the web (e.g. Auto sites get lots of traffic but almost no one buys a car online.) Todd says it is hard to make the value of social media explicit, so he tries to find some simpler means. He works with a job site that he describes as a mash-up between Monster and eHarmony.com. People listening to people they trusted (through social media) were 45 percent more likely to sign up for the paid service. They went from spending money on Google Adwords to spending less on “influencer relations.”

Katie asked, “Is it easier to measure ROI for social media than it is for PR and advertising?” Kami says it seems so, and Todd agrees. There is just so much data available that you can’t get with counting eyeballs in advertising and PR. You can make connections that simply aren’t possible in traditional media.

A question was asked about people with seven tabs open in Firefox, each refreshing regularly via AJAX, which gives an overstated estimate of how engaged people are. Kami says she hasn’t seen time spent on site change much with adoption of Firefox.

Shel had some interesting anecdotes of what he has found through his blog:

Having a big picture on a post increases time on site by 34 seconds
A medium-sized picture is only worth an additional 14 seconds
If he has two links in a row to a site he wants to feature, it’s much more likely someone will go there. Adding a third link in a row makes people tend to stay on Shel’s blog because it confuses them; they can’t decide which to click, so they don’t click any.

Shel changed his blog name from Naked Conversations to Global Neighbourhoods because people Googling the term “Naked” who were looking for something very different from social media. He also told the story of the guy who was on the Alaska Airlines flight who took a picture of the hole in the side of the plane, who had almost no traffic on his blog previously, but whose picture ended up on national TV. People who are not in the top 2 million blogs in Technorati today can suddenly be incredibly influential.

Shel says we haven’t been doing this long enough to have “best practices.” People need to get comfortable with experimentation, be responsible in what they do, avoid standardization. “We’re just at the ‘good ideas’ stage.”

He also told of how when hot movies open, what happens is that one kid goes in and sends a text message 15 minutes into the show to all of his friends, and if he says “sucks” it doesn’t matter how much the studio spent on promotion. It ripples through Facebook, MySpace and Twitter, and the movie is toast.

As Shel says, “We are in a transformational time.” And for those who are concerned about getting into blogging from a corporate perspective, he says “It’s much better to be shouted at than shouted about.”

Technorati: Blogs, PR, Measurement, Shel Israel, Todd Parsons, Kami Huyse, Don McLagan, Facebook, MySpace, Twitter, Katie Paine