An interesting post on Andrew Sullivan’s blog about creative destruction in the music industry and ….Why Music Matters 

Why Music Matters

by Richard Florida

Universal Music Group, the world’s largest recorded music company, is once again trying to adapt to the new world of digital music. It’s created a new venture named Vevo in partnership with Google, according to the Wall Street Journal. Vevo aims to generate increased advertising revenue from streaming music videos.

But the enormity of the creative destruction sweeping the industry goes far beyond the iPod killing off the CD. The Gang of Four’s Dave Allen argues that we are seeing the “end of the album” - a construct initially created by the limitation of vinyl technology in 1930 - as the organizing principle of musical production. He sees this as potentially liberating for musicians - or those musicians that can adapt. Industry veteran Bob Lefsetz predicts a return to the pre-LP era, when artists constantly pumped out singles and toured. He even draws a comparison to the way that Toyota has succeeded by building a reputation for reliability gradually through word of mouth.

Technology is also changing the way we experience music. Strange as it may seem to vinyl purists out there, many of the net generation increasingly prefer the “sizzle” of compressed MP3s to the sound of higher-quality files. Some musicians now check their final mixdowns on cell phones.

But not all the results are positive. Mark Fisher counters that the ubiquity of digital recording is again changing the way we experience music. As more and more people produce their own music, and with more music to consume online and elsewhere, we have less time to actually experience music. We now take our music in small bits, seldom listen to anything “whole,” and have precious little time left over for live events. Like a digital-age Walter Benjamin, Fisher argues that such instantaneous exposure deprives cultures of the time and space they need to germinate and grow.

Technology and music have long interacted as economist Peter Tschmuck has shown. On the one hand, new technologies like the long play (LP) record, the synthesizer, and now the iPod have changed the music industry and led to the rise of whole new music genres. But, on the other hand, music has also powerfully affected the rise and dissemination of new technology. Without music and some ingenious entrepreneurs in the music industry, the phonograph would still be used as Edison intended: to dictate letters and store phone calls. Radio was seen as a “wireless telegraph” until one of Thomas Edison’s researchers broadcast himself playing O Holy Night on the violin on Christmas Eve 1906. And we’re all familiar with the way the MP3 popularized peer-to-peer file-sharing and broadband internet connections. But, It’s about more than just technology, actually.

The way I see it, that music is a “fruit-fly industry” - one that can tell us a lot about the nature of technology, new business models, and the economy in general. Music is a highly competitive business - a hyper-competitive market in miniature, where competition for sonic, technological, and talent advantage spurs rapid evolution and change. New recording and network technology means that barriers to entry are lower than ever. Music is often the first sector to experience the full force of disruptive technology. It was the first industry to face the file-sharing crisis, and other industries like film and publishing are now learning from its experience. Musicians are quintessential examples of free-agent workers, mixing income and seeking out affordable, creative places to do their work. And the concentration of musical talent and firms into clusters and scenes - in an industry which requires little in the way of capital infrastructure and fixed costs - can help us better understand geographic clustering across a wide variety of fields.

We’ve always thought digital and traditional media work best in sync with each other.  Traditional media will never really go pouf and disappear, it will always have a role. What’s happening now is that digital seems to be surging to the head of the line.

In 2005  Joseph Jaffe proclaimed how the 30 sec TV spot was on its way out.  How Pepsi had just announced the relaunch of Pepsi One without TV ads.  See Jaffe’s book here.

 ”People who think the 30-second spot is still alive might want to reconsider their statement in view of the announcement to relaunch Pepsi One without TV ads,” Jaffe said.

Fast forward to the 2009 Super Bowl and Hulu, an online video outfit supported by NBC Universal, FOX and ABC Disney.  By placing two TV spots in the Super Bowl Hulu increased visits to its website by 49%, and the growth has been sustained.  See the 3 minute Ad Age interview with Hulu CEO here.

No doubt, media habits are evolving with the internet. Yet this is a good example of old and new working in sync, the TV spot may not die after all.  Better chance that it will  be reincarnated as…….not making any proclamations on that.

So imagination may be the way out after all.  The Financial Times has a piece on…

“What A Feeling: How emotions may yet save the economy.”

A key paragraph details how Obama has changed the public perception towards the positive, one of the toughest things to do.

According to a recent ABC/Washington Post poll, Americans’ belief that their country is heading in the right direction has soared from 19 per cent, just before Mr Obama’s inauguration, to 50 per cent, the highest in six years. In what could be a textbook example of behavioural economics, the stock market has followed the same curve, recovering from what rightwing commentators were calling “the Obama bear market” at the beginning of the year to a healthy rally.

Still, on the way down to the great depression the stock market experienced 8 large declines and 8 large rallies. See chart here.

Oh what a feeling…

No one seems to know what’s going to happen next on things economic.   Predictions, assumptions and guesstimates have all fallen flat.  And the nation’s financial infrastructure is still a mess.  The only sure thing is that we don’t know what’s going to happen next.   This made me think of Einstein’s quote on imagination and knowledge —

“Imagination is more important than knowledge.”

Indeed, at this point there may be no other option but discard what used to be and imagine a new way out of this mess.  This means innovating  our way out of it, instead of waiting for the economy to sort itself out…someday.  In the meantime some links to help weather the economic perfect storm here and here.

And a debate on Squidoo inspired by this Einstein quote here.

Imagine…

I keep hearing how “green”, “eco-friendly” or “organic” products won’t make it in this recession.  That right now consumers have concerns which dwarf buying “green” toilet paper to do their bit to save the planet.  Yet an article in AdAge today notes how green brands like Seventh Generation continue notching double digit sales increases in the midst of the worst economic crisis in 80 years.  With so many consumers in dire straits, or about to be, why is Green thriving?

Looks like green has finally hit the mainstream.  Brands like Scott and retailers like Walmart have integrated green thinking into their brands and stores.  And the demogrpahics are changing, for example, IRI found that sales of green products are growing fastest  in a predominantly Hispanic segment labeled “respectful stewards” and a predominantly white-male segment labeled “proud traditionalists.” Yet sales actually remained flat in the “eco-centric” segment with the highest interest in green issues.

The ad age article is here.

No doubt green has jelled. And as I’ve noted before, this recession is indeed a crisis, just check out these charts.  But it’s surprising how some unexpected segments continue to thrive in the face of it while others wilt into irrelevancy.

At the start of 2009 I wrote about the convergence of three factors relating to the U.S. Hispanic segment. The first factor dealt with the shrinking retail environment and how U.S. Hispanics would become increasingly important to marketers since they tend to be a more dynamic consumer segment, particularly on basic, everyday items.

And even with an unemployment rate almost 4 points above the national average there is evidence that smart marketers continue to reap the benefits of reaching out to Hispanics.  We see it with the continuing success of Bedoyecta and  BusinessWeek recently noted how well General Mills and State Farm are benefiting despite the economic maelstrom.  So well that General Mills has tripled its Hispanic media budget to $35 million.

To many Hispanics seem like the last  consumer segment to talk to, but this really could be called a “segment recession”. Some consumer segments are suffering while others are unexpectedly managing through intact and some even thriving.  Notably U.S. Hispanic consumers are less likely to be hobbled by a mortgage or serious credit-card debt, and tend to have two or more income earners in a household.

The “more” is important here.  In general many U.S. households have two income earners, this is not news, however, with Hispanics there’s a tendency to have more extended family living under the same roof, bringing in additional income while lowering living costs per person.  So, even if their disposable income is lower, and perhaps more stable, two key facts are often overlooked. One,  Hispanic consumers over index on a wide variety of basics by a far greater margin than the rest of the population. And two, Hispanic TV ratings continue to surge while general market TV remains flat.  Hispanics respond well to marketing efforts crafted in sync with their culture and language.

As the economy works through this recession many marketers will start to consider the Hispanic consumer as a segment which can take up the slack on softening demand in the broader general market, and begin to build a thriving Hispanic franchise that yields benefits beyond this temporary “segment recession”.

To see BusinessWeek article click here.

Can you recall the last time you heard anyone mention his unmentionable BVD®’s? What about Nuprin®? How about Xerox®? Has anyone Xeroxed papers lately? A very common function back in the day, remember the good old days when Oldsmobile’s and Plymouths traversed the country’s roads? How about when Nolan Ryan took Nuprin® for his aches? Or when smokers and coffee drinkers knew exactly which toothpaste to use and what premium coffee to drink?

It’s the Demographics: There are many factors that contribute to the demise or irrelevancy of a brand, this is not about listing those factors — ultimately bad brand management kills a brand — rather this is about another huge factor that is at the marketer’s doorstep and in due course will be the death of additional brands; demographic shifts in population.
According to the Pew Research Center, the Hispanic population in the U.S. grew by 10 million from the year 2000 to 2007. To put in perspective, the total U.S. population grew only by 20 million during the same period, which indicates that 50% of all the country’s population growth was contributed by Hispanics. Of that 50% growth, 30% was by native-born Hispanics with immigration accounting for the rest.

It’s ok then; native-born Hispanics will speak English and know my brand, right?

Native-born Hispanics will speak English because they will be educated in the U.S however they will be unfamiliar with your brands. Think about your introduction to brands. It was mom who initially brought the product home; it was dad whose brand preference contributed to yours. But if mom and dad are foreign-born Hispanics, then your brand will not have that “little piece of real-estate” in the consumers’ brain.

Country of origin or cultural brands will have the advantage over yours. Almost everyone knows the Mission Foods brand, but how familiar are you with Picot®, Bimbo®, Lala®, or Bedoyecta®? These are brands with equity from their country of origin, and while you may not think it affects your brands, ask the Alka-Seltzer® folks at Bayer — Picot® outsells them in Walmart.

How do I learn if my brand will be affected by demographic changes?

Learn if your category is developed with the Hispanic consumer segment. Is your brand history seeded in the post WWII baby boom? Is your brand steeped in 1900’s Americana? Are you tapping the emergent consumer markets not familiar with your brand? If you are, is the message relevant or simply a translation?
Think about your personal experience, remember traveling in the old station wagon and spending the night at the Holiday Inn®, the familiar shag carpeting and AstroTurf® by the pool? The fun time you had while staying there. That’s a memory — a brand perception, however one that is not shared by about 15% of the US population.

Copyright 2009, Carlos Arámbula. All rights reserved.

I was in LA traffic catching up my reading listening to Malcom Gladwell read his new book Blink.  There’s a section on Improv Comedy and another one on War Games and how these activities seem so spontaneous.  How its seems fascinatingly simple that a group of people can create a 30 minute play from a lonely word thrown out by the audience.  Gladwell notes how in Improv, War Games and even in Basketball spontaneity is a only the result of specific rules and practice.

This made me think about marketing and The Communications Strategy, a process that might seem to suck the creativity and spontaneity out of marketing.   One of the things we always point out is that, yes, a fantastic creative idea can come out of nowhere. More often this not the case and the marketing is usually stuck in the doldrums as a result.

The Communications Strategy is a disciplined process which looks at all the aspects of a brand — the objectives, target, consumer  insight and most important the brands positioning.  This is a process designed to distill the mass of ideas, notions and perceptions about brand into one consistent and potent message.

During this process ideas become more focused and relevant and even seem to be spontaneous.  But what is actually happening is that spontaneity is being created by a disciplined process which forces people to think more effectively and efficiently.

The focused messaging developed during the Communications Strategy then drives all  marketing efforts, improving the overall effectiveness of a company’s marketing investments.