In Music, the Customer is Always Wrong

It never surprises me that the music industry is in the mess that it's in.

Consumers want one thing and the record labels want another. In any other industry, this type of thinking would put companies out of business. But in the music industry, it's standard operating procedure.

Examine the evidence.

1. Starbucks sells CDs when customers obviously want coffee. According to a recent New York Times article the average company-owned Starbucks sells only two CDs a day. Starbucks disputes the figure, but refuses to supply Times reporter Jeff Leeds with a better one. Starbucks has lost its way in the coffee end of the business, too and recently coaxed its former CEO back to rescue the company. One of the first things he did was close the stores for a few hours to offer in-service training to teach employees how to make it right for the customer or give them their money back. Same should apply to music. Customers don't want CDs. They want downloads. Starbucks had a plan to install machines at their stores that would allow customers to fill up on coffee and also fill their MP3 players up with music. Where are they?

2. Record labels want to make up for the loss of CD sales revenue with monthly subscription fees that offer consumers more music than they could ever imagine. The problem is that most young people don't want more music than they can imagine. They want what they want and they want to own it (or steal it). The customer and the labels are at odds. And the labels don't get it. They flick off the failure of AOL Music. They discount the less than impressive example of Rhapsody's subscription model. No, damn it -- the customer is going to get their music by paying the labels a monthly fee! But customers are vowing, no, damn it -- I'll get what I want for free. Smart strategy on the part of the labels, eh?

3. Fans love live music. In fact, live music is one of the few bright spots for the music industry. Young people and students overwhelmed with evil professors who force them to work too hard during a semester will find the time and money to pay outrageous ticket prices to attend live concerts. And it's not like when they get to the venue that things get cheaper. Everything costs a fortune. So, let's see if we have this right -- music loving young people will beg, borrow and steal to go to a concert and the concert companies will rob them blind. Sounds like a match to me. Even Steve Jobs knew when he overpriced the first generation iPhone and swiftly cut the price. Only in music can you expect the entertainment providers to spit in the face of an adoring and willing public.

4. The next generation lives on the Internet. They work, play and enjoy entertainment on their laptops. Music lovers consume music like no generation before them thanks to Internet streaming and digital downloading through peer-to-peer groups. So, how does a music industry down on its luck respond? They discourage Internet streamers who will give their music wide exposure by seeking unreasonable royalty rates against them. This is ludicrous because Internet streaming is in its infancy and imposing burdensome rates on a burgeoning industry is an insult to the the consumer and tantamount to the labels stunting the growth of a new age business that can help them sell music.

5. Rabid music consumers want to mash up their own albums. They no longer want 12 tunes from the same artist. Consumers sent that message to the labels five years ago when they started to buy individual songs from iTunes instead of purchasing entire albums. Yet the labels give lip service to the current mash-up trend. They reiterate that they want to sell albums. After all, albums are the holy grail. I don't know about you, but I have only a small number of albums that are best enjoyed when they are played from front to back. Could it be that the labels' desire to promote what they want -- selling albums -- and killing off the sale of singles was their real strategic mistake? Never underestimate the desire of the next generation to get actively involved in their music.

For the record labels, it seems the customer is always wrong.

But for Apple, the customer is always right.

This is not to say that we all haven't had a issue or two with them but on the whole, Apple gets it.

No pressure selling at the Apple store. (I'm on my new MacBook Pro for the first time today and they helped me agonize between Apple Air and MacBook Pro and then said order it online if I want). They even take back laptops with glossy screens when consumers realize they made a mistake and would prefer the matte finish. It has to be done within a few days, but they do it. The Apple customer can't lose.

My daughter lost all her iTunes songs on her iPod -- you can imagine the crisis. We explained, Apple reactivated them. Done. Now, I have heard of others not being as fortunate, but I have also heard many more customer-centric stories like mine.

Apple, as imperfect as it is, tries.

They try to satisfy customers by giving them products and services that they like.

And guess what?

We pay for it -- dearly.

Could there be a connection between the customer being right and the ability of a company to earn record revenues?

This is not brain surgery to you or me, but to the music industry it is one of the great mysteries of life.

The future looks like this:

Downloads not CDs.

Own not rent music.

An insatiable appetite for live music.

The Internet as the music industry's new "radio".

The new album is whatever the consumer mashes up and says it is.

The record industry is on the wrong side of all these significant and current issues.

Is it any wonder that the company that defies you to use their product is the one that is always wrong.

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