New Business Models?

In a long and interesting article on the car manufacturing and dealership sector in America, Nicholas Moryl makes some telling points about the “old” industrial model car brands and the new software model of Tesla (see source link below).

He says: “The existing problems with the car manufacturer business model and end product are a reflection of the fragmented interests of the manufacturer, its parts suppliers, and its dealership network.”

He continues that this approach means that, currently, “manufacturers need to satisfy dealers first and consumers second”.

He also implies that the various parts suppliers, like the car manufacturers and assemblers themselves, are not necessarily building for quality or longevity, but rather for speedy and cost-efficient manufacture, looking just at the short-term.

The result for most car manufacturers, he says, is, “largely mediocre products that leave consumers uninspired.”

Tesla-Model-S-P90D-interior-600pxHe sees Tesla as a harbinger of new and necessary — and can we say, exciting — ways of doing business. He says Tesla is a technology company rather than an industrial company, and lauds their ability to incorporate internet update functions right into the control unit software on their vehicles.

In other words, Tesla not only sells direct to consumers but it doesn’t need a dealership/services sub-sector to perform repairs and updates.

The customer deals directly with Tesla for its high-tech products, gets support directly from Tesla, and can receive automatic software updates from Tesla.

Now that sounds a LOT like the Apple business model!

apple-store-new-graphics-600px

Source: https://medium.com/swlh/the-model-3-and-the-future-of-cars

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Live Social-Media Reality Mash-Up Challenge – Whew!

We’re not sure if this is a trend yet, but it could certainly be a trending topic! Take 21 Top 20 stars and create a prize-draw competition for the public, topped with a Reality Show Challenge for the performers. Add in a jetset location like Valletta on Malta and “swag bags” worth $15,000 and this sounds like great fun – and great entertainment.

The excitement comes from imagining your favourite music artists in a live mash-up performance – which then becomes real. As well as the live shows, Festival At Large intend to provide both streaming and download options for the events. Their tag line of “Festival At Large is wherever you are” is definitely making full use of our modern, connected world.

Just one example from their growing collection of videos proves the point. What do you get when you mash-up Miley Cyrus with Chicago in a cleverly synced video? You get this:

Now that you understand the plan, it could be time to get mashing yourself into tip top YouTube form. Rumour is American Idol will be using video submissions soon to help in the heats!

The failure of VEVO gets worse

Despite the ongoing hype by the music industry suits about VEVO being so great, users stay away in droves. Some recent and very contrary views explain some of the issues.

As we noted in an earlier post, VEVO has really low visitor numbers – click here. The news has been getting worse. Even when people visit the site they run away again, fast. Here is the chart to prove it:

bounce rate of vevo compared with youtube and myspace

The higher the Bounce Rate, the less time visitors stay. Google Analytics specialist Avinash Kaushik has stated: “My own personal observation is that it is really hard to get a bounce rate under 20% while anything over 35% is cause for concern. Above 50% is worrying.”

The chart shows YouTube is fabulous, very close to the 20% optimum. Even MySpace, despite its troubles, has still managed to stay below 40%. But VEVO is still climbing, now well into the extreme danger zone.

So it is silliness in the extreme to see Mary McKnight, aka @REBlogGirl at a Major Record Label, make extravagant and incorrect claims about VEVO. She said: “VEVO has really taken off … and is driving in more people than Hulu! The premium content model is leveraging fan base against both artist brand and artist product to deliver exactly what the fan wants – the ON DEMAND ALL ACCESS PASS to their favorite artist. It’s a simple model and it is working on Vevo.”

Except it is clearly not! Why do major music labels continue with this selective blindness to what is really important to fans.

The GAP between consumers and marketing – laid bare

Marketing Gap Tracker 2010There are a few ads and marketing campaigns that capture the attention of huge audiences – did anyone mention meerkats? But the vast majority of campaigns fall into the ‘also ran’ category. New research helps us see why.

A 2010 survey of consumers and marketers reveals what marketers believe is important. There is a wide gap in some important areas when we also look at what consumers are influenced by.

It’s no surprise that the highest ranking for consumers is given to brands they trust. Marketers are a little behind on this, but the next three metrics show consumers and marketers are fairly close.

The final three metrics, however, throw large spanners into the hopes and aspirations of marketers and designers. The consumers don’t really care! So it’s thumbs up for:

  • brand/company that’s known/trusted
  • relevant product or service
  • personal, targeted communication

But, and it’s a big BUT, there are very wide gaps in the final three metrics. When marketers rate something as twice as important and, ye goddess, 3-times or even 5-times as important, someone needs to get back to basics. Sorry, marketers and designers, but consumers are mostly looking for quality and relevance. In short, it’s thumbs down for:

  • interesting packaging
  • fun themes
  • design and appearance

Consumers are now a bit too savvy. They can see a great product or great deal, but they can also be turned off by smoke and mirrors. The final message might be:

If you’ve got a great product or service, be straight about it in your marketing.

Facebook is now LOSING users and traffic

As we have predicted for the past 6 months, Facebook is in serious decline. But now, on top of concerns over private information being sold to advertisers, plus the cover-ups of complaints about pedos, it is LOSING market share among users aged 18-25 and 35-44.

The lack of enthusiasm towards Facebook from other countries – reported in yesterday’s post (see below) – is another reason growth has slowed. Research in the past has claimed Facebook can gain up to 6 or 7 million users per month. In June 2010 it gained a very small 320,000 according to market research from Insider Network.

facebook advertiser statisticsFurther problems for Facebook revolve around the games and apps – the money is not there! For example:

  • Zynga is the top app developer with about 50% market share
  • Number 2, Electric Arts, has only about 15%
  • Zynga made only $250m in 2009 (from about 250m users)

In other words, the most successful app developer for Facebook could gather only $1 (ONE DOLLAR) on average per user per year!

By any business model, that is rubbish.

The money is not there in advertising either. Facebook allegedly “served” 176 BILLION ads in the first quarter 2010 yet made less than $80 million profit in 2009. The hype about Facebook and its value is just that – hype. It will make a few million for a handfull of companies. It is NOT the future of the web and NOT the future of social media.

Disastrous start for VEVO – only 35 million visits

The new premium music video and entertainment service created in partnership by Universal Music Group, Sony Music Entertainment and Abu Dhabi Media Company is already in trouble. VEVO managed just 35 million visits in December, a remarkably low number given the hype and marketing muscle of the corporates behind it.

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This is – or should be – a huge reality check for the music industry. The closing of Tower Records reflected the end of the old-school analog days, and the demise of imeem underlined the folly of trying to use old-style business practices online. Even with VEVO being run on the YouTube platform and picking up a large potential audience, the figures are dismal.

VEVO logoThe “Most Popular” music videos on VEVO also showed the problems of the service:  Beyonce, Justin Bieber, Drake, Lady Gaga, Jay Sean, Shakira, Britney Spears and Taylor Swift. Those artists will be popular anywhere BUT the problem is the inclusion on VEVO will just steal listeners/viewers away from other platforms.

Claiming “Music Evolution Revolution!” is just not backed up by the figures. The real Evolution and Revolution in music is happening elsewhere. For example, podcasts by trance DJs Above & Beyond already have 21 million listeners/viewers each week. In other words the immediate future of digital music is still iTunes and iPod, much to the concern of the majors.

Will VEVO bring us anything new? No. It is just a continuation of the old-school music cartels trying to channel our music appreciation – and it won’t work any more. Therefore we won’t spend new money via their platform. The real evolution of music marketing online will continue elsewhere – platforms like Pandora, Last.FM, MySpace and WordPress.

Podcasts Define Web 2.0 Music – billions of downloads each year

The figures are in and the results are inspiring. Old media, large (Murdoch) and small (regional newspapers), are moaning that the web is ruining their business. Radio stations, meanwhile, blow large trumpets about 1% gains in audience share.

Wizard Media podcast digital downloadsThe reality is that the public have been given real choices by Web 2.0 and are moving on from old media. Two quick examples:

  • Wizard Media announce digital downloads increase in one quarter from 241m to 350m
  • Trance Around The World podcast has 21 million listeners per week

Wizard were very happy with a 45% increase in downloads but also announced a very solid 41% increase in audience (5.3 million). Meanwhile, advertising impressions served by Wizard grew from 3.9 million in the second quarter of 2008 to 13.7 million in the second quarter of 2009, an increase of 251%.

Trance Around The World is the podcast from Above & Beyond, a weekly mix available through iTunes or from their own website. Their podcast sits alongside others by Armin van Buuren, Tiesto, Paul van Dyk, Paul Okenfold and hundreds other national and international trance stars.

Therefore TATW is successful in a very competitive market, while 21 million listeners would be an extraordinary achievement for most radio stations. TATW is enabled by the most significant brand of the decade – Apple. Lest you object, look at a few examples of the activity around Steve Jobs:

  • Apple iPod podcast digital downloadsApple is 45 times more profitable than Dell
  • iTunes sells more music than Walmart
  • iPhone and iPod features and quality have revolutionised mobile technology
  • Pixar is the most succesful and profitable studio of the past decade
  • Apple is 6 times more popular as a social brand than Microsoft

While Web 2.0 provided a wonderful potential, it is companies like Apple and YouTube who have defined and raised the standards so much higher than anyone else. And the biggest winners are the public – the music listeners and video viewers – who can choose exactly what they wish to download or stream. Further, the public can now enjoy what they want without the interference of the taste bias or old-media commercial ‘necessities’ of a production or advertising team.