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Brands shouldn’t ask customers what they want.

One of the worst things I can do is ask my wife what she wants – whether it’s an innocuous question about what we should have for dinner or a request for a hint as to what she might consider a good Christmas present. I have been, repeatedly, told that if I had paid better attention to her I’d know exactly what she wants.

Customers think like my wife. Few are willing to answer street questionnaires, take calls at home; fill online questionnaires or participate in focus groups – unless they are paid.

And yet, companies keep insisting. They rather ask than listen. If companies really cared about the customers they should know what they want!

Everyday, all day long, customers are expressing what they want and what they’d like to have improved. All it takes is listening and observation: see how happy the customer is by the time they get to the front of the queue to pay; how much time they spend with the product; how wide they smile then consuming it.

Social media (social networks, blogs, et al.) provides ample opportunities for companies to listen to what customers are saying about their products and services; uninhibited and unaffected by facilitators and stimulus material.

A friend of mine at a leading consumer goods company told me that a sweeping review of blogs, forums and notice boards led to the surprising knowledge that one of their soap bars was used for onanistic practices. My friend dismissed it as an indication of the folly of a few. To make a point I pushed back and suggested they should have launched a bar specially designed for these people’s interests. I argued that, of all the product extensions the consumer goods company had launched over the years, this was one which, at least, had a proven market.

On a similar note, Coke famously chose not to listen to customers, over the summer, as a wave of videos showing Diet Coke bottles spouting geysers when mixed with Mentos began to appear on YouTube (today there are over 6,040 videos with the top 25 having registered over 15.5 million views) and other video sharing sites. At the peak of the craze, Coke’s response was to say “we want people to drink our soda, not play with it.” Mentos on the other hand, embraced it. Belatedly, in October, Coke commissioned the EepyBird Guys, the producers of the most spectacular Coke/Mentos videos, and announced a competition. Alas, they have only attracted 5 entries so far. Read B.L. Ochman’s blog for an analyses of this fiasco.

Listen, participate.

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Should the EU raise a “music tax” to be paid by broadband and mobile phone users to compensate music labels (akin to the TV license paid in many European countries)?

Earlier in the month, The Register published an article titled “Big labels are f*cked, and DRM is dead — Peter Jenner” .

Peter Jenner is a music industry old-timer (who was Pink Floyd’s first manager and has also looked after T.Rex and The Clash among others), and is Secretary General of the International Music Managers Forum. His voice is as authoritative as it’s brash.

Jenner says the major music labels “raped their whole business model” to cover profit shortfalls and haven’t got the “got the time or energy” to think about the future of their business.

His analysis of the current situation is accurate:
– “digital music pricing has been a scam where the consumer pays for manufacturing, distribution, and does all the work”;
– “DRM, pay-per-download, and per-device restrictions force users to pay multiple times for a single song”.
(which, taken together, in my view, provide individuals an incentive to seek pirated music)

I also suggest that the RIAA (US), MCPS-PRS (UK) and other national rights bodies are shooting themselves in the foot. By punishing new bona-fide Internet-based business models that promote music with over-bearing the regulations and fees common to traditional media (TV, radio, etc.) they are preventing the emergence of legal alternatives and, in the process, helping the illegal outfits flourish.

Jenner’s recommendation is for EU countries to introduce a blanket broadband license of about €4/month to compensate music companies in exchange of them abandoning DRM and them accepting greater pricing regulation.

There hasn’t been enough debate as this recommendation warrants. The clearest thinking has come from Micheal Arrington of TechCrunch who was highly critical.

I think the idea of a broadband fee is quite sensible.

Competition is unlikely to create an environment without DRM and excessive pricing.
– iTunes controls more than 70% of the music download market and is unlikely to soon loose it’s strangle-hold on the market (over 70% of new US cars have iPod docks and six airlines are now talking about supporting it too).
– Microsoft’s has just introduced a new DRM, instead of the one it already had, for it’s new Zune MP3 player.
– Mobile operators are closed networks where there is no competition for like services.

This tax wouldn’t elimate innovation. Music labels would still compete for a larger share of the broadband license. And, anyway, it is already a tried and tested concept. Many countries (eg, Canada, Holland, Germany) charge a “rights tax” on reproduction media such as blank cassettes and blank CDs. This tax would be no different.

Germany and Sweden have already introduced similar taxes to pay for their public broadcasters.

The danger is that other rights holders would demand a similar tax. Movie studios? Book publishers? Phtographers? In the process they might over-tax individuals to the point of slowing down broadband penetration.

CBS Corporation’s President and CEO, Leslie Moonves, highlighted his company’s commitment to develop digital revenues during the Q3 earnings call.

“I want to talk about our efforts in the digital space. New media is a huge opportunity that cuts across all of our businesses and affects everything we do as a premier content company. You guys are always asking us when we’re going to start making money here. While it is still too soon to quantify the impact, I can tell you we expect to generate hundreds of millions in digital revenues in ’07. We made a number of very significant moves over the quarter to extend the reach of our television programming online.

In October we partnered with YouTube to begin offering short form video streams that include content from the CBS Television Network, Showtime, and CSTV. Meanwhile as I mentioned earlier, we continue to find new platforms to stream our hit content. We’re already offering many of our shows on Google Video, Apple iTunes, Amazon.com, and AOL. Plus we began offering free next-day streaming of 12 primetime series on Innertube, our own entertainment website. We have streamed more than 2 million episodes of our show so far this season and over 3 million related videos. These numbers continue to grow week over week.

[…]Meanwhile, DVR and Internet streaming are only adding viewers. New technologies and platforms make it easy for people to enjoy both programs that air during these highly competitive time periods. We are already getting paid for this incremental viewing on the Internet, and we expect to get paid for DVR viewing next year. “

tags: TV CBS

eMarketeer released a report showing that global ad spending on social networks is expected to reach $445 million in 2006 and nearly triple to $1,125 billion in 2007. They predict that the US will account for about 80% of the ad spend.

Socnet adspend 06-11-01

In a related article, Google announced that Its 2006 UK revenues are expected to surpass Channel Four’s (*) predicted £800m ($1.5bn) returns.

Since much of the advertising on social networks are contextual text ads like Google’s AdSense (Google owns the ad space on MySpace which eMarketeer estimates to account for 60% of social network ad spend) this all seems to indicate that

1. Social networks are real businesses – some are here to stay;

2. Broadcasters really need to start developing their response to user/viewer migration online.

(*) Channel Four is the UK’s second largest network, with about 9% share of viewers, that airs advertising in the UK (the BBC is paid by though a TV tax).

tags: social networks TV