December 06, 2006

Digital Music, Piracy, and IT… oh my…

I’m back on the digital music player front again.  I haven’t had the honor of playing with one yet, but I’m hearing that Microsoft has slipped on the installation front with the new Zune.  It’s not easy. Which is too bad, because the beauty of the Apple product is that even your pet can install an iPod, download music and go.  Which leads me to another of my little hobby horses around digital music players.

The entertainment industry is in a tizzy over changing business models.  People are moving to downloads – legal and illegal – and away from the original models of purchasing entire disks on the portable format du jour that had limited copying capability.  

Here’s a big secret – what customers REALLY want – they want easy access to the content at a reasonable price.  It’s that simple.  

Make your software and purchasing of music easy and cheap (the Apple model) and customers will flock to it. Make things complicated, difficult, etc. and customers will get annoyed, which seems to be a specialty of many technology vendors.

When we speak about IT’s customers, we’re usually referring to corporate customers (outside the consumer space), and we spend a lot of time talking about how their business models are changing.  And we discuss how good customer experiences are critical to their business’ overall success.  Many businesses want to use technology to improve the customer experience on the notion that happy customers are loyal, repeat customers who will spend more with the company they like.

Compare that to the entertainment industry, where instead of looking for new models, we see an antagonistic approach toward customers, with companies claiming they need to defend their old way of doing things.  And surprise surprise, sales are dropping, and consumers are constantly coming up with workarounds for whatever the industry comes up with to protect intellectual property.

Please note here, because I get this question asked of me all the time – I DO NOT CONDONE PIRACY OF INTELLECTUAL PROPERTY.  Analysts also have intellectual property and we appreciate NOT having it stolen, so I do appreciate why companies try to protect it.  My complaint is that the argument is frequently positioned as “we must maintain our old business model because all customers are  pirates/condone piracy”.  How twisted is that?

It seems sometimes that IT vendors are aiding and abetting bad business models rather than using innovation to create newer smarter models.  Industry people I’ve spoken to have actually challenged me, arguing that most people will steal as it’s easy to do and most people will not do the right thing.  I disagree with this, but the fundamental nature of man has been argued by philosophers for generations and this blog is not going to pick up that line now, but it is an assumption that needs to be discussed.  
I believe that the problem a lot of people have is that they know perfectly well that they are paying for content they like but most of it is not going to the artists.  In fact, they’d rather remove the middleman and give more money directly to artists.  The middlemen have frequently supplied marketing and distribution.  The Internet is making it easier for artists to do their own marketing and distribution without relying on the middlemen.  That’s not to say that record companies have no value, but it is changing, shifting, and instead of exploring it, they’re basically digging in their heels and refusing to budge but hiding behind the notion of protecting artists’ intellectual property.

I’ve got a couple of Sony CDs that I purchased in Germany of a German artist I like.  However, I now play all my music electronically, and those CDs have copy protection software which – according to the label – will damage my computer/CD drive if I insert it in the computer.  I don’t listen to those CDs anymore, which means I don’t listen to that artist anymore.  Those CDs have no more value for me. I am being punished, and I did nothing wrong other than to want to play those CDs on something other than a traditional CD player.

In the end – the IT vendors can decide to defend an aging business model and declare that all customers are really pirates and that the record companies are virtuous, or they can decide that customers come in all types, some honest, some dishonest, that it is bad business to assume a dishonest customer and they can work with the customers and the companies to find new models that better benefit artists, middle men and consumers.