Music Piracy = Less Sales - a myth?

There are multiple ways to obtain digital music online - legally and illegally. Some of the legal means are iTunes and Amazon. I will not tell you how to do it without paying some dollars (but I’m sure you already know how, right? Guilty!)

Some say online music piracy translates into multimillionaire losses to the industry, yet others claim it actually serves as the means to gain some reputation and fame to before-unknown artists and bands. There are studies which also argue that there is actually no direct relationship between piracy and the decline in music sales.

Felix Oberholzer-Gee and Koleman Strumpf performed a statistical study of sales of 680 albums over 17 continuous weeks and found that illegal music sharing actually increases sales – 150 downloads mean one more CD copy (original) sold. I guess that is too much. They also claim that the relationship between loss of sales and music piracy is not direct but that there are other causes. Additionally, they argue that “illegal file sharing would have accounted for only 2 milion fewer compact discs sales in 2002, whereas CD sales declined by 139 million units between 2000 and 2002.”

On a particular history note, Radiohead’s album "Kid A" leaked into Napster three months before it had to be released but yet it sold over 200,000 copies the first week and got onto No. 1 on the Billboard charts. Some say this means illegal downloading helps bands promote their albums. I think this was just pure coincidence, but who knows.

However, we still need to do something to reduce music piracy and get those sales back as profits. So only follow these instructions and you will be "safe". After you read the instructions, you will think “um, but how do I digitally watermark my songs?” Here is one of the multiple companies that do it: The PAN Network.

The RIAA and music companies must work together to develop and continuously improve technology to keep decreasing illegal downloading. I don’t think new legislation will do any good, since it cannot keep in pace with technology.

The virtual battle over bargaining

For any company, a sharp increase in revenues combined with a considerable growth in a short time, means that competitors are on the way. This fact encourages that company to continuously improve and keep innovating to stay on the front edge and defeat its competitors.

One great example of this is Facebook, which started as a college project and turned out to be a 500-million user corporation. From the beginning, a number of competitors appeared, such as Hi5, MySpace and Flickr, but Facebook was always one step (or two) ahead. Offering appealing new applications or products to its users almost in a daily basis was and has been its recipe for success. Currently, Facebook (close to 1 billion revenue) is starting to think about Google (20+ billion revenues) as its main competitor. Unfortunately for Google, the social network’s growth is strong enough to think of this as a reality, at least someday in the future.

Now, let’s look at the Groupon concept. It offers coupons with huge discounts. As simple as that. The key factor here is that you will only obtain that coupon if enough people buy it, so you better spread the word. Groupon would then obtain a part of that discount if the coupons are finally sold. This has been easy enough for the Chicago-based company to have an amazing increase in revenues and new users.

Groupon’s growth has been so important that Google recently offered it $5.3 billion for its purchase (note that it’s five times the revenue of Facebook). What happened? Groupon seems to understand its opportunity and strengths so it has said NO to Google. This could be because it has some plans for expansion and some new offerings for the consumer. Let’s see how it goes. But it better step on the pedal since competitors are keeping up, especially LivingSocial.

But how can you innovate in such a basic thing as coupon sharing? Again, ask Facebook and its Places + Deals idea. The first part was launched around August, with which you could share your location (place) with friends using your mobile phone. The second, introduced less than a month ago, allows companies to advertise and offer coupons using the concept inside Facebook Places. Hence, if you are walking on South Beach you can log on to Places and, depending on your location, you can look at coupons and deals in stores or restaurants close to you, and of course share them with friends. Then you walk to that place, and only by showing the mobile screen in that store, you’re in.

There are yet no figures over the success of this new application by Facebook, but it is to imagine its potential to dethrone Groupon from the top, especially when we think about the Facebook’s 500 million users.

What are Groupon’s plans? Surely it must have something in mind after rejecting Google’s offer, but it better speed up. What do you think?

Social Media Marketing, as complicated as offline marketing

Social media is here to stay and has become a huge asset for companies to advertise themselves and build a relationship with existing and new customers.

The key part of marketing in social media networks is to determine the goal of the online venture. Of course, this will depend on the type of business. A mass consumer product company may want to increase brand awareness and loyalty, promote discounts, products, or simply stay in touch with customers and receive all the feedback as possible from them. For a service company, it becomes difficult to determine these goals. For a business-to-business firm, the real objective of using social media turns into a lot more complicated question to answer. Why? According to a study performed by White Horse, not really a lot of management-level individuals hop (or want to) on Facebook to check “what’s going on”. 

The marketer will then need to create appealing, interesting and catching content that customers will reward with attention and hopefully with feedback. The company will also need to understand the level of the tech-related requirements for the site to work correctly, and how literate the users need to be regarding this. For example, will it use Java or Flash applications? Which screen resolution is optimal for maximum site appearance?

It is also imperative to think of the level of control the customer will have in the site. I believe that most of the time, people sign in on customer service websites, forums and discussion communities to complain about a product, and try to convince others to not acquire it. The marketer must keep an attention to detail in the wording and content in the website, so it brings positive memories from visitors and engages them to make comments about it. My point is: satisfied customers seldom comment on websites or Tweet about it, so encourage them to!

As any good online marketing program, it is imperative to keep the target in quality content instead of quantity of users. People who regularly check and interact with your site is better than having hundreds of followers that never do anything in it.

An arising issue with Social Media is privacy. Generally people would say that companies can access your information if you follow their pages on Facebook. They can, if you don’t take care of the settings. Facebook offers plenty of privacy settings so you can specify who is able to see what in your profile. However, the blasting majority of users only have the default privacy settings. Therefore, a lot of the 500+ million Facebook users are open for marketers to check their profile. Nonetheless, even if people were careless about companies checking up on their profiles, marketers would need a lot of spare time to check them in a one-by-one basis, so I don’t think anybody should take so much concern on this.  

Companies from medium to large-size with important marketing efforts also need to maintain a balance between offline and online strategies and take care of both at the same time. The content must be coherent between both worlds. This increases time and efforts, which turn into additional costs.

Finally, firms must understand the increasing power of social media these days. So hop on the train, or be left behind.

The Power of the Consumer’s Mind

The main component of marketing is to read the thoughts of consumers to plan enduring relationship strategies. In order to do this, marketers use hundreds of different techniques such as surveys and focus groups. However, this information is never fully reliable and there is no guarantee the actions taken will be successful. The problem with this approach is the marketers’ nightmare: your thoughts could be biased.

We marketers need a way to get into the consumer’s mind, and one of trends is the use of neuromarketing, which is just a scientific approach in a discipline that has always relied in artistic forms of expression to gain the consumer’s preference.

Currently the majority of studies regarding neuromarketing are performed with the standard procedure: they are under the consent of the test-takers (who also get paid) and the tests are performed in controlled environments. Marketers and neuroscientists will make you wear some MRI equipment and take you to a dark room to watch some commercials. They will turn up the volume and record your brainwaves changes, your pupils’ pointing (that is, specifically what are you looking at), and changes in your salivation. Easy enough, right?

There is nothing wrong with this, as it is just the same as when they call you for some market research, making you take some samples and state your opinion on them. But remember, that opinion may be based in things other than what you really think of the product. However, with the implementation of neuromarketing that would not happen because you cannot fool the system – for now. Do you know how to trick a lie detector?  

Some people would say this is a potential invasion of privacy, yet others would claim this could improve our quality of life, by only giving you the stuff you want, and reducing the spam and excess of information you receive. Now another question pops up: do you know what you want and what you need? What is the different between both? The questions are not that easy to answer.

What is neuromarketing’s objective? One thing for sure: get more info to sell more, not necessarily what you need, but what your brain thinks you want. What is the next step? Will they take DNA samples to see a potential disease, and then sell you insurance? It then gets a little creepy.

In the near future, consumers will not know they are being watched and monitored, so a lot of ethical issues will arise. Will neuromarketers be able to change the way you think by “reverse-engineering” your brain’s responses and reprogram you to do what they want?

Let’s hope not - I guess I have been watching too many Matrix movies.