Do online music sources negatively or positively affect a "recording artist"?

     The idea of music piracy has, as of lately, been on the hot seat as more and more free software downloads (i.e. Limewire, Napster, Bearshare, etc.) have begun to be closed down by the United States government. One of the larger problems with the issue is whether or not the industry is as profitable as it was before the age of the "free download". One should attempt to decide, if possible, whether the artists and all parties involved are being negatively or positively affected by this music piracy as this substitution effect continues to occur. I crown the term "substitution effect" based on the fact that as a music downloading network is shut down, another arises almost simultaneously (e.g. Limewire/Frostwire, respectively).

     While many view the affect of music piracy as negative on a "recording artist" based on sales numbers alone, it is important to point out several criteria that may sway the pendulum of these beliefs. For a new artist, or one who is fairly new to specific markets, any form of P2P networking is a way to get the artist's name out there. For more famous artists, it could be a way to get yourself out there even more and establish some sort of brand familiarity with consumers in the marketplace.              
                                              

     I believe there are several negative aspects that affect not only the "recording artist", but also all parties involved in the supply chain of the music industry. It has been said that "recording artists" no longer "record" like they once did in the time of the Beatles. The Beatles were said to have given up concerts because they couldn't hear themselves over screaming fans and solely recorded in the studio (i.e. the "recording artist"). Now, with the internet boom, artists are able to work from home and have instruments played for them on a computer to construct their beats. On specific albums, an artist who has another featured artist on a song may never even meet to do the song together (or even the video for that matter). The main artist will send the first verse and chorus to the featured artist via email, who will then make their verse and send it back for final completion of the track. This has eliminated costs to the artists to rent out a studio, but also eliminated the idea of the "recording artist" all together.

     So, if we claim the artist as the manufacturer (the one who makes the music), we can say that they have been dramatically impacted over time. Also, there is not as much need for the wholesaler or the retailer in the supply chain as people are purchasing CD's less and less. Even if a CD was purchased in support of an artist, it would be more than likely bought on itunes. We have seen a job reduction and margin reduction from this wave of music piracy over time and more may be headed this way. Many artists have resorted to the opposite approach of the Beatles for sake of necessity. Instead, they go on tour and give more concerts in order to cover lost profit from music piracy. Kanye West attempted to gain any profit possible by selling his latest album on Amazon, priced at $3.99. This is when the artists themselves use a distribution channel to attempt to outdo competitors.

     Let's hope that this trend won't lead to a decline in music because artists feel as though they "just can't make it any more".


-Cfree

Groupons: The buyer's alternative to quantity discounts

The idea of Groupon is one that is fairly new and has left CEO and founder Andrew Mason at crossroads.  Should he have taken the roughly $6 billion purchase attempt by Google to do what it has long been doing, acquiring small start-up internet businesses in order to further expand its capabilities, or should he attempt to try further growth in attempts for a sweeter deal in the future? Well it seems as though Mason has chosen the latter. Over this last year we have seen internet juggernauts such as Yahoo and Google throw money at the two-year-old "quantity discount" organization. Yahoo had their roughly $3.5 billion dollar offer counteracted by Google with the offer I previously mentioned. However, two days ago, Google was shot down by Groupon which shows that Mason believes in further expansion and an increase in the selling price.

  So how does it work? I view Groupon similar to a supply chain management approach with regards to quantity discounts. In the supply chain, every member such as the manufacturer, distributor, retail store, etc. works together to supply one another what is needed at the best price possible for the purchaser. The idea of quantity discounts allows the buyer to receive each item at a lower price the more items they order. To associate quantity discounts with buyer-seller relationships encourages lower prices for the customer, while increasing inventory sales and brand familiarity for the seller. Groupon teams up with businesses in local areas and comes to an agreed upon price break. This price decrease is offered to the customers of that area where they (hopefully) will spread the word to their friends on the "great deal they got". With every person that the initial customer can lead to Groupon, they receive $10 worth in Groupon spending for future businesses.






Some opposed to the idea of Groupon argue that the class who chase this style of purchasing are those with little to no disposable income who are solely looking for cheap deals. This graph shows just the opposite, which proves larger markets to target in the future.






  The idea of quantity discounts has long been used in the supply chain area and has proven to reap major benefits on both sides of the inventory transaction line. The major issue is whether or not Groupon will continue to flourish or will cease to acquire the necessary profits to stay afloat. It has recently been projected in an article by PCWorld that Groupon can expect to gain revenues of $2 billion. This does not take in to account all of these local businesses it has agreements with to pay back for the offering of the price reduction. The current and future growth of Groupon relies heavily on customer expansion in order to cover the price reduction costs. Hence, the supply chain quantity discount approach. The more items sold (groupons- customers attracted), the more likely the organization can move boxes off of the shelves and cover its costs (or costs spent on offering the discount in the first place).

  With this comparison, I firmly believe that the idea of Groupon has taken the business-to-business approach from the supply chain side and just applied it to a business-to-customer approach out in the open market. The concept of word-of-mouth has been used through out time for any and all products. When a person looks to acquire a specific product, they rely on friends on family in order to find the "best deal" available. Groupon gives the best deal and encourages its customers to spread the word instead of waiting for a necessity. By offering a "deal of the day", Groupon facilitates buying that may not even be necessary at the time in order for customers to feel the need to purchase an item because of the "can't be beaten" deal. These internet juggernauts have realized the exceptional benefits that can be earned and I compliment CEO Andrew Mason heavily for holding on to his organization. I foresee even more growth in to the future and a larger selling price, if sought. I also see expansion of an online e-marketing service that may even exceed capacity to the likes of facebook and twitter which will allow Mason to increase profitability in to the future.

Online Social Media: The Free Method to Market Your Product

                                                          
             The concept of marketing to your customers and making your products more attractive to them has long been important to business overall, especially marketing. While business strategies have changed greatly over the last several years (mostly due to the expansion of technological advances), marketing is just as important today as it has ever been. With that said, finding ways to form a connection between your product and potential customers may be even cheaper today than in the past. The emergence of online social media and its expansion have shown that many small businesses can grow exceptionally because of this popularity. To name a few, current online media methods such as Facebook, Twitter, and LinkedIn play a huge role in connecting people all over the world and can be argued that small businesses should get involved in these markets to grab a larger piece of the market share pie.

             Dell released an article on the issue of crowdsourcing and its connection with the importance of online social media. Crowdsourcing is the concept of allowing your customers (or potential customers) to play an active role in creating a new product or service. In an age and country where customer service dominates strategies of firms everywhere, this idea of crowdsourcing gets right to the heart of customer satisfaction. Dell managed to use an online social media implementation of their own, Ideastorm, in order to target their customer's needs. Ideastorm was a place where customers could go online to view potential  product modifications or new product development and vote. What would they vote on? Customers would be able to directly give input on which products under consideration they liked, didn't like, and were able to see the impact it had on which products Dell put out on the market. Dell also did not limit its online social media to just its customers. In order to create employee satisfaction, they created Employeestorm for employee feedback on specific issues, strategies, and overall business functionality.

            As a previous manager in the restaurant industry, I was able to witness a small business gain popularity and increased customer satisfaction through the implementation of an online social media site such as Facebook.  The owners, along with management, wanted a cheap alternative to marketing to be able to grasp an increase in its customer base. What cheaper way than to create a Facebook account for free that could reach millions of people at a single given moment? By telling customers to “add them” on Facebook, the restaurant was able to spread its name and increase brand loyalty with previous customers through the offering of coupons, specials, etc. For other small businesses, HR departments can incorporate the use of LinkedIn to check on the value offered by employees and use this information to check further on the potential candidate. Also, companies today will check on the lifestyle of potential candidates by “facebooking them” on the online social media website. According to a business statistics website, the Smith School of Business at Maryland University found that the adoption of these specific online social medias have doubled from 12% to 24% in the past year with relativity to small businesses. The study also noted the specific features that these small companies were performing when they used these specific media sites. 

          While it can be seen the amount of time put in to media outlets such as Facebook and LinkedIn, it should be noted that not much emphasis is put on Twitter. So how much does each specific format work? How do you get customers to visit your advertisements on Facebook for example? Should you advertise for your Facebook advertisements? I would argue that for an industry such as that of the restaurant and others that are similar, marketing your Facebook account is essential to customer growth. Give your customers that eat in your restaurant a link on their receipt where they can add you on Facebook and receive special offers. A further step would be to add features where people can fill out reviews of a previous experience at your restaurant to receive the discount/coupon. This would allow for growth in customer service and an increase in business by customer returns.

          By sending out messages to your "friends" online and posting specials on your homepage, it can allow small businesses to get their name out there and be visible to people who may not just see them driving by or in a particular article. The boom of the internet has put emphasis on reaching your customers via these particular social media outlets. As seen with Dell, companies do not need to use such a large online media as Facebook, but focus on their own medias that contribute to employee as well as customer satisfaction (e.g. Employeestorm, Ideastorm respectively). Small businesses, as well as large businesses, should change with the times and implement a strategy that focuses on this issue in order to set themselves apart from competitors who may not be using any online social media. Acting in a timely manner and managing online media efficiently may separate the acquisitions of new customers between a business and its competition greatly.

-Cfree

Future Implications of Neuromarketing

When evaluating the new mixture between neuroscience and marketing that is known as neuromarketing, one has to consider several implications this mixing may have on the consumer and the backlash that may arise. The more tests that are established in order to discover consumer moods, preferences, and tendencies, the more companies are able to get inside of the minds of the consumer and manipulate their purchasing preferences.  If a particular consumer feels as though they are being manipulated by a company, even one that had greatly appealed to them for many years, it may lead to rebellious acts that may significantly impact an organization.

A few techniques that have been implemented over the last several years are found in the Functional Magnetic Resonance Imaging (fMRI), Steady State Topography (SST), Electroencephalography (EEG), Eye Tracking, and Galvanic Skin Response.  By looking at the fMRI alone, one can see the impact it has on studying a consumer's stimulation to specific criteria.  With an fMRI, scientists are able to take specific pictures of the brain and discover any metabolic changes that may occur.  This may allow them to have subjects from different demographics preview marketing ads and see if there is stimulation in the brain, which allows for stimulation analysis.  Organizations that sell the services of neuromarketing claim that the newfound technology has the ability to measure a consumer's emotional state that focus on guilt, anger, happiness, and love to name a few. This "power", if you will, can have a heavy impact on the purchasing decisions of customers all over the world within many demographic subgroups.

By looking at several companies using this neuromarketing technology, one can see how this theme is spreading like a wild-fire over such diverse industries.  The following companies described were referenced from the previous link by Mr. Kevin Randall:

Microsoft: By using EEG data, Microsoft can assess feelings of "surprise, satisfaction, and frustration" in consumers in order to better understand computer interaction.

Frito-Lay: By targeting a more "healthy" approach, Frito-Lay has learned that this will lead to a rise in sales from women who will lose that feeling of guilt and/or shame. This could prove beneficial for the company in families where these very same women do the grocery shopping for the entire family.

Daimler: A commercial that is promoting sleek headlights on a particular vehicle was told to use human faces of satisfaction in the campaign in order to stimulate the "reward" feeling inside the brains of customers viewing the ad.

These three examples show the organizations that customer stimulation can greatly increase their profits by the particular ad they implement.  However, a potential backlash would be if the consumer actually knew that this information was being exploited by the studies (e.g. Frito-Lay and the focus group of women that it targets).  While companies, such as Frito-Lay, may attempt to revoke the feeling of guilt in their product to increase sales, these very same women may be health-conscious to begin with.  If these women go to the grocery store, having being driven by the ad from Frito-Lay, they may discover the claimed "healthy" benefits from the commercials were more fraudulent than they anticipated.  As an example, if the commercial depicted slim women snacking on Fritos after a work out (i.e. using neuromarketing studies to instill feelings of "healthiness" in the minds of women), it would contradict the nutritional facts that in only a one-ounce serving size of regular Fritos exists 160 calories and 10 grams of fat.  This may lead women to now exhibit a feeling of anger.  They may choose to go against the ad and ignore future advertising strategies from Frito-Lay, thus giving more business to a more healthy competitor, such as SunChips.  This example shows how a company should not abuse its power of neuromarketing studies by attempting to exploit its clientele.

With all of this said, the growing study of the human mind and the emotional feelings attached to marketing in general should lead companies to consider how they go about implementing their marketing strategies.  Although neuromarketing can have exceptional results if implemented in the correct manner, each company needs to take caution as to not mislead their customers.  As seen in the example with Frito-Lay, the same could be said with McDonald's salads and the "healthy" approach they take towards their product.  However, if the healthiness does not live up to impression that was instilled in their minds from the advertising, these consumers may decide to "rebel" against McDonalds and/or associate the company with feelings of mistrust and dishonesty.  An organization wouldn't want to lose customers because of misleading perceptions.  While a company may be able to convince a customer to purchase their product the first time, it may be more difficult to have the customer return if the feeling depicted in the commercial is not received as well.

Chris Freeman