Competitive Mentality

I'm a couple of days behind on Seth Godin's blog, but just read this one and it really moved me.

In search of competition

If your pipes break at 3 am, Roto Rooter is happy.

They're organized for emergencies like this, for moments when you have no choice but to do business with them. Since you're out of options, their high-priced service is your best shot.

They do far less well in the light of day, when you can take your time and compare plumbers and perhaps bargain a little.

Some businesses prefer to catch you when you have no choice. They use market conditions or even patents to ensure that they can be the bully. I'm not sure that there's anything wrong with this, but I'm certain that it is a deliberate choice.

Other businesses, like Amazon, do better when they have lots of competition. Amazon has made it easy for other vendors to use their technology platform and even to sell items on their site. Why? Because they understand that more competition brings more attention, more business, more commerce. And since they are organized for volume and are eager to compete, more competition helps them.

The only way to enjoy competition is to have something different, or better, or something that scales. You need to offer a community that increases in value as it scales, or a unique perspective or technology.

Compare Amazon to the folks that make the Invisible Fence® dog containment system. They hate competition. In my experience, they have really high prices, nasty policies and a take-it-or-leave-it attitude. That's okay, as long as you really don't have a choice--you need a system like this, and they have it. If there were a transparent market for this product, they'd fail in a heartbeat.

Of course, nothing lasts forever, and competition does show up. Then what?

If you run your restaurant knowing that there are dozens of other restaurants on your block, things will be easier when in fact there are other restaurants down the block.

Which situation benefits your church or your political candidate or your store? Do you do better when you're the only choice, with all the power that this brings, or when there are many choices, with all the audience and excitement that this brings?

You can pretend that you are unique, that you have no competition and never will. Inevitably, this will create an attitude that, while fun for a while, will probably harm you later. The alternative is to acknowledge that the competition exists and in fact, to encourage it. I have never met an author who believes that her book is the only one in the world you can buy... and this realization changes the way books are written and marketed.

The Internet turns just about every category of goods or service into a bookstore-like bazaar of competition. You can either fight that or encourage it. No one will be exactly like you, not if you work hard, but it's inevitable that there will be replacements just a click away.

Predictions for Social Media in 2009

My business partner Terry Dry and I did an interview with Edward Barrera at Adotas about two weeks ago and they just ran it..

YouTube and Twitter, Marketing Takeovers
ADOTAS — Larry Weintraub and Terry Dry from Fanscape sent out some of their predictions:

- Less really is more: marketers can achieve more by targeting few.
- “You think you know, but you don’t.”
- Social Media definitions now will not be the definitions of the future-brands. Companies will need to understand that different tactics and tools of social media are not clearly defined, as the industry progresses these terms will change.
- Brands/companies will begin to define in RFP’s exactly what their looking for vs. using buzz terms to appear knowledgeable about the space.
- Consumer behavior will continue to change in the social media landscape — as consumers become more comfortable with one-to-one interaction, more will begin participating in conversations rather than just observing.
- Online buzz and awareness will grow in effectiveness to directly influence sales, viewership etc — driving customers more and more to act
- Professional media will try and regain their presence on the Web by infiltrating user-generated communities – i.e. Television/Film Networks/Studios taking over YouTube, marketers infiltrating Twitter, brands influencing the “influencers”, etc.
- For any of these sites to stay in existence – they need advertising, and advertisers will not support only user-based content.
As a result, major entertainment brands will take over these spaces, in order for them to stay alive, forging a real partnership with the sites formerly dedicated to “you.”
-The online audience will become more sophisticated in their needs and requirements for entertainment, news, videos, etc. They will seek more credible resources for distributing information and will shy away from the content currently being distributed by their peers. Though user-generated content, blogs, communities, etc. will still thrive, users will want to see more from their favorite brands, news outlets, actors, television shows – those deemed “the professionals” – and ultimately they will get their wishes based on the above prediction about the UGC take over.
- As influencers and internet celebrities become more and more prominent in the space – they are going to inevitably open themselves up to become extensions of brands - whether they like it or not. Brands will continue to reach out to budding online talent/popular web-users to endorse their brand. Most will not succeed. Those that do succeed (the brands and the internet celebrities) will be those that find the way to organically marry the two seamlessly.

Brand Sponsored Music

If you've heard me speak over the past few years, I've often given an example of where I believe the distribution of recorded music is headed.

Brand sponsored music.

This doesn't work for all bands, but it definitely works for the big ones. Let me set up a hypothetical scenario for you:

U2 has a new album due out in 2009. I know the economics of the record business and my estimate is that U2 may make $10 Million on the release of their next album. And that is generous. Figuring they have one of the old-school deals where they get a bunch of money every time they deliver an album, it is worth on the high end $10 Million.

Steve Ballmer from Microsoft comes knocking on U2's door. "Hey U2, we have a proposition for you. We want to give you $20 Million dollars and everyone who buys Windows '09 will get a free copy of your album. What do you say?"

Bono says something like, "Hey Steve, thanks so much for the offer. We're going to turn you down because we don't want to make all of our fans have to buy your product to get ours."

But then The Edge chimes in and says, "Wait Bono. The reality is that most people don't buy music any more. And most of our fans are going to need to upgrade to Windows '09 anyway. Microsoft is going to do more advertising than Interscope Records will ever do, remember how much Apple did for our last album? Within a few days of Microsoft releasing our record and their product, all of our fans will have our album because they'll have copied it from their friends. We'll be perceived as the biggest band in the world because we've just done this groundbreaking event. Our music will be everywhere, we'll have made more money than we would have if the album was available on iTunes, Walmart, Target, and Best Buy, and everyone will want to see our live show."

Larry Mullen, Jr. and Adam Clayton will each stare at each other and in unison say, "Yea Bono, it is a no-brainer.

And there you have it. The new model is created.

If you grew up in the 70's and 80's this idea sounds repulsive. But if you were born after 1990, this won't even phase you. And 10 years from now when the next Jonas Brothers or Miley Cyrus release their album with a hair care product, this will be common place.

Look, the CD is dying a quick death and digital sales are a temporary solution. The artist needs to get paid for their music, right? Brands need to expose their product to an audience and utilizing a core touch point makes sense.

This is coming. I promise.

Right now the only way you can buy the AC/DC album is to go to Walmart. The only way to get Guns N Roses new album is at Best Buy. This is the start of my prediction. First there is the exclusive retailer. Next comes the exclusive product tie-in.

So what prompted this diatribe today? Mr. Bob Lefsetz. He sent out a note echoing a similar thought and it got me thinking. Finally, someone else sees what I see. I'm "reprinting" it here...

Exclusives

Only seem to work at Wal-Mart.

You can rail on and on about the economy, but if that were a factor, how come the AC/DC album sold 90,000 to Guns N' Roses 257,000? Even though "Black Ice" has already been in the marketplace for six weeks? As for Christina Aguilera, last week, her second, she sold fewer than half her first week total, for an anemic cume of 104,000.

In other words, Best Buy and Target are not Wal-Mart. And Wal-Mart is shrinking its floorspace and its two biggest winners, the Eagles and AC/DC, were beneficiaries of incredible positioning, and in the case of the Eagles, incredible pricing.

I hope Irving got big checks from Best Buy and Target. Because he ended up with anemic sales.

I think we're about done with this exclusive retailer gambit. I think we're going straight to sponsored music. Or should be. Sure, the newspapers are in terrible shape, but there's got to be a major corporation that's willing to give away free CDs/music for the foot traffic/eyeballs.

"Chinese Democracy" should have been given away at GM dealerships. Or even Toyota, that company's sales were off by a third in November.

Corporations have the money, musicians have the goods. There would be a stampede to the outlet if the music was free. And, with the new music in so many hands, touring revenue would shoot up. Assuming the album were good.

With all the Britney hype, why didn't she make a deal with a mental health company? Everybody comes in for a free screening! Or a consortium of plastic surgeons. You come in for a Britney CD and get a free consultation.

It's come to this. The big boxes, that put the indie retailers out of business, other than Wal-Mart, can't move the product anymore. The iTunes Store sells a fraction of the physical product, because consumers are allowed to pick and choose exactly what they want and only buy singles. You've got to sell everybody a bucket of tracks for a low price to meet your numbers. Oops, that was the Napster model, from almost a DECADE AGO!

Congratulations major labels... You've marginalized yourselves! Wanting everybody to pay for music, suddenly few are. And all the money is on the road. And why should an act give you a share of its road money, you're not agents, you don't know how to do it, you only want to skim the cream from the top. Or try to get the act on terrestrial radio and television, neither of which move tonnage like the old days.

So, do you want the money or the career?

Turns out taking the money isn't so great for your career. Axl Rose is gonna have the stink of the failure of "Chinese Democracy" on his back forevermore. His only option will be to reunite with the old gang and play the twenty year old material.

Hell, no one's really interested in the new music of old acts. So, either sell your records and get out...on the road, like Neil Diamond... Or figure out a way not to move the product so much as get it exposed, get people to actually hear it. So they listen intently and applaud when you play these newly-minted numbers live, as opposed to going to the bathroom.