Wednesday, July 04, 2007

Selling content sucks - if that's all you do...

The difficulties facing yet another vendor of content marks another milestone (gravestone?) along the road to the new media ecology.
There are lessons for all of us who sell content. There may be lessons for everyone who sells.
Fopp - one of the UK's biggest music store chains - is the latest to be hit by what is reported by the mainstream media as an issue that's all about competition from downloads and online supermarkets:
"All specialist retailers of CDs and DVDs have been hit by growing competition from online downloads and supermarkets. HMV today reported a 70 per cent fall in profits. Music Zone’s demise was blamed on the same factors..."
Supermarket competition impacts at the mass end of the business. Smaller retailers can respond to this. It is not to go head to head with the high volume - top 50 sellers. It is to serve the long tail and respond to local (community) needs. It is to provide a very different experience.
When I was a kid the local record shop (and even the small town where I grew up had one) was one-part youth club, one-part information exchange and one-part market place. I could sell old records I no longer wanted, order something obscure (they couldn't carry everything!), hang out, load up on some vicarious cool, share what I thought, form a band, etc etc
How far removed is this from the experience of buying in a supermarket?
Online vendors of downloads have (where they succeed) replicated this far better than bricks and mortar rivals.
They have understood that communities form around music - communities who want to share (is that the new marketplace of buying and selling secondhand records?) information, recommendations - and just spend time together discussing what they love and why they love it - and marketing their favourites to each other.
But that's not to say a music store couldn't capture much of the same. And by facilitating the physical meeting of communities they could take what online retailers have discovered and make it still more engaging.
Perhaps they have to accept two things:

1. Turn yourselves into a music marketplace - where people can come together to exchange information, buy (and sell/share?), and be entertained (God forbid, perhaps they could even put on the occasional gig?)
2. Offer downloads. Seriously - it is the disaggregation of digital content (the ability to choose which tracks you want, rather than buying whole CDs), that's driving download sales. Convenience is important, price is important. But serving of long-term diverse choice is the biggest factor. And it's the part of the market that is emphatically NOT served by supermarkets.

Fop, HMV, chains in general... seem to have forgotten that the marketplace was always about much more than buying your goods.

4 comments:

  1. The link to the Times is broken...

    One of the main problems with HMV etc seems to be that they've expended heavily into DVDs and video games, and therefore not had the space to stock a wide enough range of music.

    I actually much preferred Fopp, but the problem was the nearest stores were an hour away, so not really convenient...

    I do wonder how many people are able to legally, or illegally back up their downloaded music collection though, otherwise there could be some serious complaints when Hard Drives fail, or Ipods get stolen...

    ReplyDelete
  2. The title of your post is a wonderful truism that is not understood by so many players in the market - especially new entrants who work on an "I can do it so it must be good" basis.

    HMV in particular has a great opportunity to re-invent itself along the lines you describe. It has the perfect brand for it. One just wonders whether it will get there fast enough to survive.

    I agree also that the demise of the CD market is multifaceted, and not just down to the growing download culture.
    1) As the previous comment points out, shelf space in retailers has increasingly been taken up by DVD and Game content at the expense of CD
    2) The recorded music industry have lost their way - little innovation in content, too much repackaging of old faithfuls, no appetite for risk. How many new acts are labels signing up these days? A colleague told me for EMI the pipeline has stopped.
    3) The dominance of the supermarkets - again encouraged by the labels who saw quick gains, but at terrible long term damage.

    Items (2) and (3) are linked in that you can't take risk if you have no distribution. By getting ito bed with the supermarkets, the labels have undermined the independent distributors who would have carried the new acts. I remember Kevin Swint who runs Entertainment for Walmart Inc telling me last year that they only carry a catalogue of 3000 titles. 17% of all CD sales globally are sold through a Walmart store! To me those statistics say it all.

    ReplyDelete
  3. Hi Badger, Simon,
    Thanks for taking the time to comment - and great thoughts from both of you.
    Funny how they piled into DVDs. I guess they thought it delivered short term protection from the disease of download. But that business just HAS to go the same way as CDs before too long.
    So where is there long term strategy?

    ReplyDelete
  4. The answer to the last question can be found here http://www.hmvgroup.com/files/1156/Strategic_and_operational_review_pres.pdf. Quite an interesting read, and a good step forward from an "I wouldn't start from here" position. It's still missing a lot of bits and and not joined up nearly enough. Why DVD's though is interesting. I don't think it had much to do with downloads actually. This all happened well before the "old" part of the industry had recognised anything serious was happening on that front. I think two things happened. One was that there was no innovation in music from the major labels - all innovation was in the fringe independent sector (ie long tail) which physical retailer stock at huge risk. On the other hand from 2000 onwards DVD sales hit a consumer sweet spot and sales boomed. If you were in retail with shareholders watching sales per sq foot there was no option but to swap out CD shelf space for DVD.I think DVD migration to digital will follow a different path because (i) DVD's are protected whereas CD's never were, (ii) the studios have learnt some of the lessons from the music industry and are not going to get screwed by Apple (iii) DVD's have a future life because of HD and flat screen technology (iv) Whilst innovation is under threat in Hollywood as judged by the number of sequels etc, it is not as bankrupt of new ideas as the music labels, and (v) music is a different medium - eminently sharable, enjoyed many many times and very portable. Movies tend to be watched less, and best enjoyed in a high quality environment.

    ReplyDelete

FasterFuture.blogspot.com

The rate of change is so rapid it's difficult for one person to keep up to speed. Let's pool our thoughts, share our reactions and, who knows, even reach some shared conclusions worth arriving at?