Social Media Is Ubiquitous, But Overhyped
Social media is a tough nut to crack. Its benefit is hard to measure but it's become a focal point in sales and marketing efforts. Market research says it plays a minor role relative to traditional media and word of mouth, but an entire industry has been built around the need to use it efficiently and effectively.
Wednesday's Leadership Music Digital Summit in Nashville, focused solely on social media, helped explain these apparent contradictions. Indeed, social media is both difficult to quantify and impossible to ignore. The running theme of the panels was that social media is simply one of many aspects to a successful career, project or campaign. The panel I moderated on monetizing social media often reminded the audience that email lists and iTunes are still two of the most impactful pieces of any digital strategy.
If anybody had inflated expectations of social media, NPD's Russ Crupnick brought them back to earth. Crupnick gave a short and sobering presentation that showed social media's modest - if that - role in music discovery and purchase decisions.
The social media enthusiasts in the room may believe the rise of social media and direct-to-fan marketing are behind the current stabilization in the record business. After all, the rise of Facebook and Twitter has coincided with new digital business models that ease the pain of brick-and-mortar woes. But Crupnick pointed to a host of more likely factors: the staying power of the CD, the ongoing digital conversion, improvements in digital album offerings, the success of Adele and strong discovery vehicles.
To exhibit how social media is "a little bit hyped," Crupnick showed a slide that shows that traditional AM/FM radio accounts for most music discovery of 40% of the most-engaged music fans. Word of mouth, TV shows, awards shows and video sites all came in around 10%. At the bottom of the list was social media at around 1%.
Social media ranks lowest in factors that would encourage people to buy more digital downloads. Another of Crupnick's slides showed that Twitter recommendation ranked low on a list of reason a product or service was purchased. The top reasons for purchase were the influence of advertisements, concert sponsorships, free download and video product placement. You have to keep all vehicles in perspective because consumers are keeping them in perspective, he warned.
NPD's data also shows consumers are following artists on social media sparingly: the average person follows between 4 and 5 artists on each various social media channel. Crupnick wondered why that number isn't as high as 10 or 15. That's a good question given the visibility artists attain through networks of friends. Whatever the explanation, the difference between today's low engagement and higher engagement in the future represents an opportunity for the industry.
Feel free to be a little unnerved by NPD's data. After all, entire conferences - including this one - are dedicated to social media. Nobody wants to think they're going to conferences to learn about a topic that matters little. But perhaps NPD and others are asking the wrong questions. None of Crupnick's examples gauge social media's impact on artist affinity, for example. If social media is having such a small impact on discovery and sales, it stands to reason an artist would not be much worse off by ditching Facebook and Twitter. But social media has become a mandatory tool for nearly all artists, management companies and labels to engage with fans.
The problem with social media is its fuzziness. CEOs and CFO's like concrete numbers, not fuzzy guesses. Nobody knows the exact value of a tweet or Facebook post unless ecommerce is built into the message. Most of the power of social media comes in indirect ways, just like good customer service indirectly benefits a restaurant or retail store in ways that aren't easily measured. Even though you can't easily measure social media's impact, you probably don't want to live without it.
A Changing Music Industry Requires More Entrepreneurial Workers
A new music industry needs a new type of worker in order to harness and interpret data, said one entrepreneur at Wednesday's Leadership Digital Music Summit in Nashville. People constantly call for legacy music companies to change, but what does that mean? From an organizational point of view, it means hiring people better suited to today's dynamic industry.
In a panel about the future of social media, Sean O'Connell of Music Allies and Creative Allies explained that thriving companies don't look like they did even two or three years ago. O'Connell believes today's company needs to hire more entrepreneurial people with better critical thinking skills. People doing today's jobs need to think like an entrepreneur and be able to work in a dynamic environment. Over the years, these more entrepreneurial workers have replaced workers who are more comfortable with the routine of a static workplace. The people who are left in these companies are able to work in a changing, challenging workplace and have adapted to the fast-moving industry. "Maybe that means we're going to move even faster," he posited.
Apple May Soon Lose Steam Under CEO Tim Cook
The CEO and chairman of Forrester Research believes Apple has only a year or two of momentum left under current CEO Tim Cook. Without the appointment of a new, charismatic leader, writes George Colony in a blog post, Apple "will move from being a great company to being a good company."
Colony's comments run counter to Wall Street's assessment of the company. Apple reported a monster quarter after the close of trading Tuesday and its stock rose 9% on Wednesday. But Colony is looking beyond the success of projects Jobs put in the pipeline before his death. "Apple has chosen a proven and competent executive to succeed Jobs," he wrote. "But his legal/bureaucratic approach will prove to be a mismatch for an organization that feeds off the gift of grace."
Colony makes a good point. It stands to reason Apple is a less valuable company regardless of who takes Cook's job. Apple is Apple because of Jobs, and Jobs was a once-in-a-generation business leader. Unless Apple just happens to have another once-in-a-generation leader already in its ranks, none of Apple's succeeding CEOs will be able to duplicate Jobs' impact and maintain his momentum. Apple can certainly get one of the best CEOs in the world, but that's still a step down from a once-in-a-generation CEO.
Apple's investors may have paid just a little attention to Colony's argument, or maybe they were still digesting the company's stellar earnings release. The company's stock slipped 0.4% while the Nasdaq rose 0.7%. ( George Colony's blog, via CNET)