The Forrester Blog

News reports today suggest that Warner Music may be planning for buying some or all of EMI in a post-bankruptcy fire sale.  As a Brit I’d be particularly sad to see EMI meet such a disappointing end, but there is an unnerving sense of inevitability with current events.  I’m not a financial analyst and I’m not going to attempt to comment on the likelihood of Terra Firma meeting its debt obligations.  But what I do think is interesting and relevant from a strategic perspective are the questions EMI’s predicament raises about the role of record labels in the digital age.
 

In fact there are three key questions record labels need to ask themselves:

1. Are they relevant and necessary anymore?
2. Are they innovating enough?
3. What role should they play?

Here's my take on what the answers should look like...

Virtually every firm has been burned in the past by failed mobile initiatives that launched before the market, consumers, or technology were ready. This time is different. Why?  There's now the critical mix of great devices; widely available fast mobile networks; often unlimited data tariffs; a shift in mobile carrier attitudes; and a focus from US-based firms placing mobile as a core part of their strategy, this raises the amount of mobile services and content available and in so doing boosts the value of mobile to every consumer.

The spectre of Apple's innovation has driven every mobile handset maker, every mobile operator, and every media or entertainment firm to raise their game.  It's taken a while for those new smartphones and service plans to come to market. Now they are, and it is changing everything.

We're in the process of ramping up our research around mobile product strategy to help all types of companies -- in essence every firm that has an Internet presence -- to determine when and how to embrace mobile. We've published numerous recent reports, some are referenced here.

And, to pull together in a little more depth why mobile and why now, and set out how we can help different types of firms with their mobile strategy, we've put together a short document. Anyone can read this, whether or not you are a Forrester client:- Forrester's CPS Mobile Consulting capabilities

For the cynics out there, especially those too lazy to follow that link, here's my take on why mobile's time really has come:

Pink Floyd yesterday won a court battle with EMI over the label’s ability to sell individual songs from the band’s albums in digital format.  There’s a fair amount of debate about what sort of precedent this may set and its implications for the broader digital music market.  In my view though the ruling is an unfortunate and retrograde step that reinforces many of the 20^th century shackles that continue to prevent the 21^st century music business from truly breaking free of its analogue past.

As I proposed in my Music Product Manifesto, the future of a successful music business - if there is to be such a thing - depends squarely upon radical product innovation that follows consumer demand rather than try to dictate it.  The world has changed markedly since the days when the needle was cutting grooves into the master lacquer of ‘The Dark Side of the Moon’.  In those days the record labels had a near-absolute monopoly of control of distribution.  If you wanted to have a copy of ‘The Dark Side of the Moon’ you had to buy a copy in your local high street music store.  But in the digital age the audience has complete control.  If a modern day fan only wants to download ‘Money’ they have the freedom to skip the other 9 tracks on the album.  And it doesn’t matter if Pink Floyd have succeeded in stopping EMI from selling it that way, because if iTunes doesn’t let you download ‘Money’ on its own then BitTorrent certainly will.

The media meltdown has been a major theme for the Consumer Product Strategy team at Forrester. We have of course covered its impact on traditional media companies (see my last blog post about the BBC’s latest strategy review, which elicited a response from a senior BBC exec). But just as importantly, the media meltdown — where digitization leads to the collapse of traditional business models based on controlling the distribution of inherently scarce content — is creating challenges and opportunities for non-media companies, too.

As I wrote in a report last year, We Are All Media Companies Now. Every company, every brand, every organization now creates and controls content on its own Web site, for example , to address its own audience directly. But not all get it right. Engaging an audience with content requires skill sets which many non-media companies do not yet possess. The reality is that we are all content strategists now, too.

For non-media companies using content directly to engage consumers, the barriers to entry have never been lower, but with so many Web sites competing for eyeballs, the competition has never been fiercer. While "paid" media remains vital to marketers and strategists, "owned" media — content created to engage directly with their consumers — is an increasingly important tool and part of a wider content strategy.