Digital Media Digest

I can’t prove it, but my guess is that “Direct to Consumer” was the earliest form of retail.  An artisan crafted his product and then sold it directly to those in the community who were willing to pay for it.  His brand was his reputation and his reputation was only as good as his product and his relationship with his customers.  Marketing his product was exactly the same as marketing himself.  Things have changed since then.  Mass manufacturing and distribution have opened the doors for specialists, but specialists, by default, need partners, and partners, by default, come between the maker and the buyer, effectively destroying the essence of Direct to Consumer.

So there is a disconnect.  One that marketers have tried to cover up for decades by telling stories and connecting the dots between products and consumers.  It’s just that those messages are falling more frequently upon deaf ears, or at best competing against a hundred other messages at once.

There are also technological issues at play.  Marketing is story-telling; stories require channels, and most channels are dictated by technology.  So “gadgets” become the gatekeepers of the story.  This was not a problem when the gadget was ubiquitous, but buyers are dispersing at an exponential rate into niche electronic ecosystems where standards are sparse and quality is demanded.  The mobile industry is a perfect example of this.  Even though almost everyone you know owns a mobile phone, each carrier is proprietary, each handset model is unique, and each user utilizes the phone’s features differently.

Abundant resources are still being spent on some tried and true methods of marketing (TV, Radio, Advertising, Email, Retail Placement, etc) but it’s becoming a crap-shoot at best.  If you’re selling records, radio stations have to hit millions of people weekly to see any retail conversion at all, and the costs of advertising has becoming more difficult to justify with every click-thru campaign.  We all know that email open rates are unacceptable and retail shelf space is shrinking.  So this brings us back to the basics.  Back to an entrepreneurial level.  To make matters worse, while the industry straps up its boots, history laughs as we complain about going through this inevitable valley that some argue we created for ourselves.  Especially in this economy, the Music Industry’s corporate structure is a great way to be cost effective, but the corporate mentality is a liability.  So what is the most important asset moving forward?  Relationships

What are 2 key elements of a successful relationship?

• Communication
• Trust

And what does a relationship get you?

• A Valid Email Address
• An Attentive Ear
• An Impulse Buy
• An Early Adopter
• An Open Wallet
• A Repeat Customer
• Word of Mouth (The loudest most effective Voice)

To the music industry’s credit, over the years they specialized in “music” while forging thousands of crucial and lucrative partnerships with 3rd parties (iTunes, Wal-Mart, Amazon, Best Buy, etc) to accelerate their product into the marketplace and amplify the message.  For these partners, product was supplied, so their efforts were focused on building a strong relationship with their consumer.  While there is nothing wrong with these partnerships, the labels failed to create their own direct relationship with their artists’ fans, ultimately bringing us to where we are now; completely reliant upon our partners to generate revenue for our products and communicate with our customers.  Sure.  We did a lot of good things to help promote the roster, but we didn’t do anything to take the relationship to the next level.  We didn’t complete the cycle.  We didn’t monetize it.  Monetization requires a higher level of trust.  A clearer method of communication.  A level of trust and communication that turns a fan into a consumer.  It’s a different challenge altogether.  A challenge that is dependent upon deep relationships.

Maybe it wasn’t possible to facilitate this relationship then, or maybe it wasn’t cost effective.  Regardless, our partners are not only taking our margin, they are taking our customer data and severing our communication lines in the process.  Every credit card swiped at Wal-Mart or account setup at iTunes is another brick in the wall between the labels and music buyers.  Sure, the product is moving and that’s great, but the spoils of the sale go to the partners, and the longer we wait, the more difficult it becomes to get that back.

So we begin with relationships.  Deep relationships.