Social Networking – Fab Four Case Study

When the internet first appeared as a serious business tool about 10 years ago, talk was about industries being transformed.

Here's how the music industry is now being transformed, and the internet-based tools being used. What lessons can be learned by businesses of all types?

The first internet purchase I made, back in the 90s, was flowers for my mother for Mother’s Day (Smothering Sunday). I was working outside a town and buying online was so much easier at lunchtime. But it did mean that the local Interflora shop lost out their commission for taking the order. Indeed “dis-intermediation” has been a major issue in many industries. Middlemen need to be adding value to survive.

Impact of the Internet on the Music Industry

One industry that has perhaps taken longer than I expected to fully transform is the music industry. Now the iPod, mobile phones and other mobile devices can handle masses of files with a sound quality indistinguishable from CDs. The AppleStore, other digital stores and the likes of ReverbNation are the new middlemen, replacing record shops and record labels by letting bands publish their music online directly.

The Impact on Music Retailing

HMV Group are doing a sterling job of keeping HMV stores and Waterstones bookstores open, when virtually every other record, video, game and book store is closing due to digitisation. By coincidence HMV published their full-year results a couple of days ago. They are desperately trying to move into the digital space on the one hand, and into live music through the recent acquisition of Mama Group on the other (HMV Hammersmith Apollo etc). With like-for-like sales down but profits up, the share price rose slightly but has since dropped back, to around a half of the price a year ago. (Please note that link to Stock Exchange website may be playing up - if so try finding HMV once you get there). Capitalisation, the group's value, has dropped in the last year from £488m to around £236m - a drop of some £250million (or quarter of a billion pounds!)

Rich Musicians, Poor Musicians

For professional musicians of all genres, they have always been relatively poor unless they’ve been right at the top. The last few decades have been relatively good for them, but the internet is making it ever more difficult to make money from selling music, due to file sharing and free downloads. Tracks and albums sold via the digital stores are in pence or a few pounds, so huge quantities need to be sold to make any serious money. More and more musicians are complaining of problems making a living.

Musicians are having to focus again on live gigs, and selling merchandise there and online. Fans of Lily Allen will be disappointed to hear that even she is winding down her involvement in the music industry to concentrate on fashion clothing, with just two gigs in July remaining on her schedule, at the Wireless Festival, London on Sunday 4th and Benicassim Festival, Spain on Sunday 18th.

Marketing - Using Social Networking

Marketing for musicians is more important then ever. Using social networking is key, especially amongst the younger generation. How is this being done? What lessons can be learned for other types of business?

The new Fab Four

In honour of my teenage nephew being the youngest member of the youngest band ever to appear at Glastonbury, at founder Michael Eavis’s personal request, I’m going to take a look at how they are trying to break into the music industry using social networking.

“The Theory of Six Degrees” has adopted a multi-pronged approach, in roughly descending order of importance :

1. A web site for the band with a nice short URL www.t6d.co.uk for publicity. The site provides links to all the social networking sites listed below. Merchandise such as event tickets, mp3s, CDs, badges and other super items can be purchased.
2. MySpace This is often the site linked from other websites, such as festival sites, and effectively acts as their principle site because of MySpace’s capabilities. This contains a gig list (including Guilfest where they kick off the Rocksound Rock Cave 1240-1310 on Saturday 17th July), videos, Twitter feeds from band members and the band itself, shortened demo tracks to download free of charge and buy in full, and links to their main merchandise store. They are also carrying banner ads to earn a few bucks (but this is a distraction from their own messages).
3. Facebook This is the principle way to keep in touch with their 2800 fans, many of whom are the traditional teenage girls. Isn’t it magic that they can get feedback about their gigs directly?! For example “saw you at Glastonbury and you were quality and honestly one of the best acts i saw all festival” and “Glastonbury …. one word for the gig... AWESOME!” There are dozens of pictures, and videos, including from their set at Glastonbury last weekend. Announcements can be made on Facebook about gigs, radio and TV interviews and track releases, and there’s links again to their merchandise webshop
4. YouTube Dozens of videos of live gigs and staged demos, plus the BBC News broadcast just before Glastonbury. Yet another way of getting feedback from fans (“Anyway you guys are absolutely amazing. Even my mum thinks you're cute!!!” and the inevitable “Does Scott have a girlfriend?” from a female admirer)
5. ReverbNation a specialist music site where T6D are rated 32nd of the hundreds of London-based bands. Over 6000 fans, and you can hear a selection of their music for free (yes, that’s the problem!, though some are shortened demos) by clicking “Play All”. Enjoy!
6. Twitter A late addition to their set, as it’s perceived as being for older peeps. But why not, to broaden appeal to the parents’ generation? The tweets feeds into their MySpace site.
7. Bebo This is barely used, which reflects Bebo’s problems under AOL’s ownership

This all took time to set up, and now to keep updated. But as most of the facilities are absolutely free, they provide a powerful, low-cost marketing platform for the band’s development.

Lessons for Other Types of Businesses

So what can we learn and adopt in other types of businesses?:

1. A simple but well-designed website can be used to act as the hub of the social networking activities, and include a webshop to sell a variety of electronic and physical products
2. MySpace is aimed principally at musicians, comedians and filmmakers who need gig lists etc. No relevance to other types of business
3. Facebook is really useful to involve fans/customers two-way, at least in the B2C space
4. YouTube is a great way to publish videos, whatever your business
5. Twitter can be used to send out messages, optionally with links to pictures and videos. It’s an easy way of embedding real-time news into your website, by anyone given access rights to the Twitter account(s)
6. ReverbNation: Again mainly relevant to musicians, plus venues
7. Bebo: Can anyone tell me why bother to use it?

Interestingly all these branded web services are based in the US, so there’s all the usual cloud SaaS issues around Data Protection and the like. But let’s not worry about that here.

In any case hope to see you for celebrations on 17th! Discounted Guilfest tickets here. Rock on!!

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Escaping Excel Hell – Processes Desperately Seeking Automation

A chat over a pint last night reminded me that many businesses still have lots of Excel-based processes, including reporting, that are inefficient and prone to error.

In many cases highly qualified and expensive “Excel jockeys” are spending most of their time manipulating data. Automation would let them be their job title – “business analysts” - who add proper value to the business.

Sometimes it’s just a matter of replacing Excel with a database or OLAP system, depending on the volumes of data, or writing some macros or VBA. Automation also provides the key benefit of slashing the risks of error that so often plague manual Excel manipulation.

What Excel-based processes are desperately seeking automation in your business?

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Performance Management - Just fight crime, Theresa May tells police

With huge pressure expected on police budgets, Theresa May the Home Secretary has announced that the last of the previous targets will be dropped to let the police get on with the job.

That’s great, but how can this be reconciled with “If you don’t measure it you can’t manage it”? That’s an important question. Should every business and organization in the land follow suit and drop their KPIs (Key Performance Indicators)?

It would make a mockery of the concept of KPIs. So are KPIs good or evil?

Well it depends how they are implemented:

1. There are two types of KPIs – KRMs and KPDs (results and drivers respectively). It’s important to understand which, and have a balanced set
2. Key means key. Just a few KPIs that make a difference to the business at each level of management, and in each area.
3. Use them appropriately. For example “public” league tables tend to polarize participants into getting better and getting worse, which is rarely what’s required. Just publicly announcing this week’s “winner” would be a better motivator, and discuss other performances privately.
4. Watch out for fractions where reducing the denominator at the bottom has a bigger influence than actually doing a better job (e.g. artificially reduce reported crimes to improve % of reported crimes solved)
5. Make sure data collection is practical. The key problem with the police is too much time has been spent doing paperwork. In any organisation there has to be a better way to be able to collect data needed for KPIs.

When KPIs are well implemented they can transform a business or organization to concentrate on what’s important, and produce the results that matter. Cultural issues and change management are as important as designing the KPIs.

There’s also the matter of how KPIs are communicated. Gauges in dashboards are becoming increasingly popular, and here’s an example of putting speedometer dials into Excel to compare actual against target performance.

What’s your view?

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Cloud Computing - Hot Air or Business Reality?

Cloud computing is BIG BENEFITS, BIG RISKS.

See recent article Hot Air or Business Reality?

Weekly Review - XP Support / Cloud Computing & 20% VAT Rate Change

(1) WINDOWS XP SUPPORT & CLOUD COMPUTING

Having lost at least 3 days' work last week continually re-booting my XP laptop (for reasons below), it was interesting to see today that Microsoft have made an announcement about "extended support" for XP. From 13 July support will continue, but only for XP on the latest Service Pack3. This means Microsoft will continue to issue security updates, fixes, patches and driver updates for XP SP3.

Any XP PCs that cannot for some reason be upgraded to SP3 will need to be replaced (an upgrade to Vista or Windows 7 would also not be practical - in any case upgrading a PC is generally inadvisable, as older ones are not designed for the newer operating system)

I've kept XP principally to run Word 2003 (which I prefer over 2007, and it provides better compatibility with both 2003 and 2007 used by others). Those around me are using Windows 7. Other than perhaps a bit of speed advantage, there is no magnet affect to suggest it is worth the effort of changing.

In fact the loss of use of the laptop highlighted that I would have been far better off if all my applications were cloud based. I could have then used any other internet-enabled device to continue working. Having been "positive but cautious" about the cloud for some years, my aim now is to migrate to the cloud and leave Windows behind altogether. But there are lots of compatibility hurdles and cloud risks (see separate articles) before I can make the switch.

Why leave Windows behind? The fault has proved elusive, but appears to relate to wireless networking. I've switched to my 3G dongle and all is well (for now), though I can no longer use network services such as network printers. I suspect there has been a "Windows Update" that has screwed a setting. It certainly highlights:

1. The risk of taking upgrades like these "blind" (as is often the case with both PC and cloud computing)
2. The need to have secondary methods for all critical aspects, such as internet access

Hopefully the cloud and telecoms industries will progress quickly to bring the risks down to acceptable levels. Roll on the revolution!


(2) 20% VAT RATE CHANGE

Another "exciting" but important announcement this last week was the new standard VAT rate for the UK of 20%, to apply from 4th January 2011 (the Tuesday after the Bank Holiday). For many B2B (Business-to-Business) companies this will mean the first day of a new accounting period, but for retailers, etailers and some B2B it will be part way through a period.

It is tempting to think that this is otherwise just a repeat of the rate change this last January. It isn't:

• On the commercial side, the last increase was a reversal of a previous decrease. This time it is a real increase, and new approaches will be needed for pricing etc
• On the systems side, software vendors will have chance to put better solutions in place than when a few days' notice was given in 2008. This may mean software upgrades and/or changes to their advice. Many vendors didn't have specific functionality for aspects such as credit notes and un-despatched orders last time. Furthermore any business that has changed their systems in any way during 2010 will need to look afresh at the rate change issues.

I published an article last week that looks at these issues in more depth.

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