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Posted by Mark Mulligan on August 11, 2009
For the last couple of months Forrester’s global media team has, in collaboration with a number of other Forrester analysts, been working on a series of research looking at the impact of the Media Meltdown and the implications for the future of media businesses. A number of key reports have already been published (see Nick Thomas and David Card’s reports) but there is also plenty ‘in the pipes’. One of these works in progress is a report laying out the product innovation that Forrester believes that music companies need to pursue to survive the Media Meltdown. What is becoming apparent is that many of the fundamental challenges and solutions apply far beyond the music business.
In fact it’s beginning to look like there is the makings of a product innovation blue print for all media companies in the digital age. We’re really excited with where some of these ideas are going and I want to share with you a few of these key concepts here. In return I’d really value your comments and feedback to help us continue to hone our thinking.
One of the core challenges facing any business that tries to sell content to consumers (in digital or physical form) is that content scarcity is gone. In the boom years of the distribution era content scarcity encouraged consumers to think distributors and retailers had a monopoly on the supply of content. In the digital age of ubiquitous availability and pervasive free, scarcity of content simply does not exist. Consequently consumers' willingness to pay for content fades by the minute.
So perceptions of value must be rebuilt along new lines using a new form of scarcity as the lynchpin. Though free content may be just a click of a mouse away, it is increasingly inconvenient to find it and deliver it to your devices of choice. In short convenience is becoming a scarce commodity in the digital age. So we’re proposing that convenience becomes one of the key ways to communicate value in the post-content-scarcity world. In fact we’re suggesting that it forms one of the ‘Three C’s of Digital Content’
Content, convenience and cost. These are the three principles of digital content which we think should form the basis of differentiating a clear hierarchy of value to consumers. We think that a careful mapping of content availability and degree of user control of content with pricing tiers will be key. Of course this implies a much more strategic level of coordination between rights holders and digital content services than currently exists.
To succeed this strategy requires a fundamental shift of emphasis from business model innovation to product innovation. It’s all well and good building content licenses that dovetail with the business structure of channel partners, but if the user experience is subjugated then it is doomed to failure, however robust the business model.
As I mentioned at the top of this post, these ideas are still a work in progress. We’re currently discussing some of these themes directly with some industry executives, but we’re also really keen to enter into dialogue right here. So let us know what you think by commenting below. And of course if you’re a Forrester client we’ll be more than happy to set up an inquiry call with you to discuss things one-on-one.