Lessons From Jay-Z, MySpace, And iTunes

A number of recent announcements in the music industry caught my attention:

My take: That’s quite a bit of news for one week. The music industry is clearly going through some significant changes. Here’s what I think we can learn from these moves:

  • Convenience matters. Why is iTunes so popular? It’s terribly convenient. Most people don’t have a desire to unwrap shrink-wrap, open a plastic case, and caress a metal CD. They want to hear music. iTunes provides the easiest way to fulfill that desire. Universal, Sony, and Warner are teaming up with MySpace because they recognize they they need to create an equally convenient option in order to dampen the growing power of Apple’s music retailing empire.
  • Money matters. MySpace may be a “Web 2.0″ company that grew up fostering connectivity across its members, but it still lives in a “Finance 1.0″ world where revenues and profits are really important. Especially when you are a part of a big conglomerate like News Corporation. And Jay-Z had no problem walking away from Def Jam (where he had been president) for some more, a LOT MORE, money.
  • Experience matters. Why on earth did Live Nation give Jay Z a $150 million deal when his record sales are declining? (His album from last year, “American Gangster,” sold one million copies in the US compared with “The Black Album” from 2003 that sold more than three million.) Because the concert industry is booming. While people may buy fewer CD’s, the concert industry grew 8% last year to nearly $4 billion. Digital distribution hasn’t dampen people’s desires to have a memorable concert experience. And this opens up even more revenue streams.
The bottom line: Music might become a loss leader in the music industry.

About Bruce Temkin
I am a customer experience transformist, helping large organizations improve business results by changing how they deal with customers. As part of this focus, I examine strategy, marketing, interaction design, customer service, and leadership practices. I am also a fanatical student of business, so this blog provides an outlet for sharing insights from my ongoing educational journey. Simply put, I am passionate about spotting emerging best practices and helping companies master them. And, as many people know, I love to speak about these topics in almost any forum. My “title” is Managing Partner of the Temkin Group, a customer experience research and consulting firm that helps organizations become more customer-centric. Our goal is simple: accelerate the path to delighting customers. I am also the co-founder and chair of the Customer Experience Professionals Association (CXPA.org), a non-profit organization dedicated to the success of CX professionals.

One Response to Lessons From Jay-Z, MySpace, And iTunes

  1. Multiple devices and competing standards have ensured frustration for the music lover. This is a huge issue in the digital distribution experience that is still to be surmounted.

    As regards music being a loss leader, could there be opportunity in making available the entire repertoire of music ever created ?

    Music search could do with a better experience that could create opportunities.

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