Posts Tagged ‘disruptive technology’

More from me on e-commerce and retailers

December 29, 2011

My piece on the Conversation has generated a bit of interest from business reporters.  Here’s a piece from the Brisbane Times that resulted from a phone interview. I got to bandy around terms like “disruptive technology” and delve deeper into the scope for bricks and clicks to coexist (for some).

Will books be the next records?

December 21, 2009

My post of last week about the exaggerated death of vinyl records (and their resurrection) has got me thinking about the challenge to the physical book from the Kindle and other similar electronic devices.

Will Kindles, and any eventual and probably much sexier Apple i-Tablet thingie, kill books?

The contrast with recorded music is a curious one. Music has had a shifting portability dimension in modern times mainly built around the “player”.

Phonographs and record players had limited mobility, while radios became more portable (but lacked storage/choice elements). As storage media changed (to 8-track cartridges and cassettes) car stereos became possible, and eventually mobile personal stereos (both boombox and Walkman styles) the norm.

With CDs we got sound-quality and durability that created an expectation that our music should be available everywhere. Digital music was thus just the next step. Of course, there was that disruptive technology stage where digital was a poor substitute and the players were clumsy, but Apple sorted that all out for us.

The pace of change in the book industry has been much slower. The basic product is not much different to that of 100 years ago. Yes, the printing technology has been transformed, but the reading experience is pretty much the same. Portability has never varied as the content and the medium have remained one and the same.

The big question then becomes whether the embodiment of the book is more overwhelming for consumers than in the music market. I can see that carrying multiple titles around in a Kindle is more practical when travelling, or as a students, but beyond that I personally am pretty wedded to carrying a single book on public transport, to a cafe etc. I like the diversity of covers, typefaces, textures, weights, sizes etc and associate them strongly with my reading experience.

If others share such emotive connections, are Kindles a real threat to publishers, printers and bookstores? Or are they just the cassette player of the noughties?

Another entry barrier gone?

February 23, 2009

My post about the music business argued that technological change has reduced barriers to entry considerably. In that instance, it was a raft of new technologies that made making and distributing music so much easier. These changes rendered the previously important music labels somewhat redundant.

One further aspect of this was the scope for musicians to market themselves, as they could build their image and communicate their message through extremely low cost means (such as Myspace and Youtube).

Such gains can be seen beyond the music world. Firms can now also bypass the dominant mass-media (and its associated businesses such as ad agencies and media buyers), and attempt to communicate their message directly to consumers via the same sort of sites as the musos.

Here’s an example from web-rental business Rentoid (yes, the one run by my cousin):

It’s low budget but has a chance to go viral and build greater brand awareness than a boring print ad or a billboard (both of which would be much more expensive).

What do you think? Does it communicate an effective message?

And is this a viable strategy for many firms?

Disruptive technology amplified

February 18, 2009

I’ve posted on here before about the changing dynamics of the music industry. This interview with marketing guru and bigtime blogger Seth Godin highlights a raft of substantial and probably irreversible shifts that continue to bewilder the big record labels (See also his rearticulation of these ideas on his blog).

Godin has a neat take on the changes too:

This is the greatest moment in the history of music if your dream is to distribute as much music as possible to as many people as possible, or if your goal is to make it as easy as possible to become heard as a musician. There’s never been a time like this before. So if your focus is on music, it’s great. If your focus is on the industry part and the limos, the advances, the lawyers, polycarbonate and vinyl, it’s horrible.

Music disruptive technology iPod beats CDLet’s put this into the language of strategic management ..

Disruptive technologies (internet, low-cost recording and dissemination of audio and increasingly video, filesharing) have diminished considerably (if not almost absolutely) the power of previously dominant players in the field. This includes not only the record labels but also radio, MTV and their cohort channels, bricks and mortar retailers, and producers of CD players and CDs.

Massive shifts in distribution channels away from many of the aforementioned mechanisms. Indeed we have seen almost a polarisation whereby there a few huge-scale outlets for buying digital recordings (i.e. iTunes, Amazon) and small ranges available in large scale retailers (WalMart, Target etc), and then an enormously lengthy tail for buying digital, CD or even vinyl, often directly from the artists, from indie labels or well-conceived aggregators (like CD Baby). And, of course, a huge proportion of the product is exchanged for free through filesharing.

These two phenomena have indeed changed the world of music as we know it. This is a fascinating case of disruptive technology, as it remains very unclear which businesses have gained from this huge shift in the nature of the value chain. You could argue that Apple has through its i-empire, but I’d hazard a guess that their revenue gain does not outweigh the losses of income to the record labels etc. Similarly, it does not look like the innovators (i.e. those responsible for MP3s, file-sharing protocols etc) have reaped much in return.

moroccan-musos-djamaa-el-fnaAs Godin indicates, it would seem it is the musicians who hold much of the power now. The major barrier to entry of olden days – a major label recording deal – has fallen.

The marketing requirements have shifted considerably, with much less uniformity in the approach taken. Mainstream music has faded from our culture as smaller and smaller niches open up as viable and vibrant communities of interest.

It is unclear that major record labels have any competitive advantage at all in such domains. Indeed their credibility is highly questionable, and, with integrity and uniqueness so highly valued, their patronage may well be a burden for new acts. Indeed it appears possible to build a substantial following without a label or indeed much pay-to-listen product (as exemplified by the case of Aussie outfit Short Stack or US singer Corey Smith).

Musicians face considerable diversity of possible revenue streams, many of which are not subject to extreme bargaining power (merchandise, live performances, personal CD sales (i.e. at performances/appearances)), or offer considerable returns for limited effort (licensing of songs to video games, movies, advertisements). Increasingly there is little need to utilise the record label to tap these streams. I’ll finish with another quote from Godin which should remind artists where the gold may lie:

The idea that you could have a micro-market of 250, 500, 1,000 copies of a CD every night is a totally different way of thinking about what you do for a living, rather than making one album a year marketed with payola and promotion that reaches a certain group of people and ignores everybody else.