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Avoiding the Plight of the Music Industry

Avoiding the Plight of the Music Industry Isaac Scarborough

As philosopher David Hume might say, consumers often harm themselves -- and the market as a whole -- by narrowly pursuing their interests. And on a much more pedestrian level, my grandmother used to say “why buy the cow when you can get the milk for free?”

As we all know, an ever-increasing number of consumers are finding ways to avoid advertising -- either overtly by using ad-blocking technologies such as pop-up blockers and TiVo, or more subtly by just not paying attention to the ads.

In an even less obvious way, this points in the direction of a test case that might not be at the top of everyone’s mind: the recent Supreme Court case, MGM v Grokster.

Stay with me for a minute, I’m going somewhere with this

The Supremes

The future of P2P will likely depend less on the way the Court ultimately rules, and more on the actions of individual users. For many, (and probably for just about anyone who isn’t stinking rich), there is a very strong personal incentive to file share. Certainly, this is partially monetary, but the benefits of P2P have a lot to do with convenience. At any rate, if given the choice, lots of people would prefer not to pay for books, or operating systems, or in this case, music and movies. 

The beauty of Grokster -- and other P2P programs -- is that it removes the, err, “difficulty” normally associated with copyright infringement. And in doing so, it makes file sharing so very tempting. Even if a consumer recognizes that he or she is breaking copyright law, the desire to sample new music, or watch an old episode of "Battlestar Galactica" may just be more compelling. P2P is simple, convenient and, of course, it’s free. And it allows a consumer to avoid paying Virgin 18 bucks for an album that may or may not justify a second listening, or tensely waiting for SciFi to actually play reruns of something other than "The X-Files."

Many consumers (as well as many in our industry) have scoffed at the plight of the record companies and movie studios, as if to say: they should’ve seen it coming. Some have stated that the entertainment business is working with an outdated business model, or that they haven’t come up with plausible alternatives that serve consumer interests. 

This is an appealing position. As Dr. Don Lloyd Cook, assistant professor of marketing at the University of New Mexico puts it, “The tech industry tends to favor innovation, while the music industry has often viewed innovation as a threat.” That is, new technology is valuable, and if it changes the market, so be it. “The industry players that win are usually those who learn to make money from the new business model.” 

Those of us in online marketing like to talk in terms of putting the consumer in control. We also like to think that we’re listening to user concerns and adapting to the constantly changing environment of the internet. Many of us, myself included, have a love of technology that borders on the maniacal. From this perspective, it may seem like there is little reason to empathize with the troubles of the music industry. After all, they’ve been aware of the changing landscape for several years, and surely could have been more receptive to their customers. But before I deliver another “listen to your customers” sermon, let's tie this thread back to the online media world.

Bringing it home

We’ve all read the  are perfectly willing to tune out any advertising they feel is irrelevant. One has to wonder whether a day will come when the only available eyeballs will belong to the few people who haven’t figured out how to avoid the advertising.

Okay, I realize that’s a bit harsh. But as Jack Klues, CEO of the Starcom MediaVest Group, told this year’s attendees of the American Association of Advertising Agencies’ management conference, the industry needs to realize that consumers are “ignoring messages with increasing frequency.” No one can deny that ad saturation and ad blocking are increasingly becoming problems for our industry, and in Klues’ words, a “failure to move now, and aggressively, will lead us to be held back, perhaps forever.”

It may not be clear how to best respond to a changing advertising market in which consumers are becoming less and less receptive. But it’s useful to recognize that consumers who block out ads are behaving similarly to those who engage in free file sharing. In both cases, consumers are getting content without paying for it.

Moreover, both trends demonstrate a general consumer disregard for the value of content, copyrighted or otherwise. Those who file share don’t seem bothered by the fact that they are acquiring otherwise valuable material for free. The same goes for those who block advertising. Notably, many of these people see cookies as pernicious, and either don’t think about how ads pay for the free content they so enjoy, or just don’t care that they are “getting the milk for free.”

So if the Supreme Court rules against Grokster, it is either supporting an outdated business model, or outlawing bad behavior, depending on your perspective.

No matter how the Court rules, though, the actual impact is likely to be minimal. Why? Because P2P isn’t going away. Bandwidth demand for P2P file sharing has remained constant over the past couple of years within the United States, notwithstanding the continued lawsuits by the RIAA and MPAA. Demand is actually increasing overseas, particularly in Asian countries. Even if Grokster itself is shut down, there’s little doubt that the software will keep on running. And just how effective will the government prove in stopping college kids from file sharing, given their historical track record at limiting other illicit and illegal activities from campus life?

Back to Hume

According to Hume, anyway, the only effective way of overcoming these negative desires would be through the promotion of an equally powerful positive desire. That’s the important point: Over the long haul, I do have an interest in not file sharing and in not blocking cookies. I may want to download movies for free, and avoid watching some inane ad about foot fungus. But maybe my desire for free content outweighs my distaste for ads. If I, as a consumer, realize that the content I enjoy is paid for by the ads I’m trying to avoid, or the cost of a movie rental, I might be less inclined to block it all out. As we all know, content has got to be paid for somehow.

We in online marketing have a couple of choices. As Dr. Cook correctly points out, “The market is changing. So you can change with it, or enforce your interests on the market.” In other words, we can change the business model or we can try to convince a consumer base -- most of whom tend not to focus on any of these things -- to act out of their own self interest and in the interest of the so called "greater good."

Is this challenge too heady? Perhaps. But we have a great deal of brainpower at our disposal, and I would never discount the power of a well-crafted ad campaign (I do, after all, own a Schick Quattro for completely unintelligible reasons). 

It’s possible that at rock bottom, consumers just don’t care, and that any such marketing would fall on deaf ears. But maybe -- just maybe -- they haven’t thought about, or don’t understand, the exchange between them and content providers, and how ads make up an integral part of this exchange. It’s worth explaining to consumers why cookies aren’t evil. You never know -- they just might listen.

Isaac Scarborough is manager of market intelligence at Chapell & Associates. Read full bio.

Isaac Scarborough covers market trends for Chapell Associates, a consulting firm that helps companies understand privacy and incorporate consumer perception into product development. Chapell & Associates has been instrumental in the development...

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