Could music labels make more money online by charging less?
Major recording companies are in shock over declining revenues, which fell by more than 25 percent from 2006 to 2008--and executives privately blame Apple’s iTunes pricing strategy for much of this decline. But according to consumer pricing expert Raghuram Iyengar on the Knowledge@Wharton site, music executives should be asking Apple to revise its pricing strategy downward in order to reverse the industry’s financial trendline. At a retail price of 60 cents per music track, versus Apple’s standard price of 99 cents, Iyengar’s pricing model predicts that labels could see as much as a 50 percent increase in revenues, as consumers respond to lower prices by buying significantly more tracks.
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media file is a repository of links to articles and research reports for business and non-profit executives, media professionals, marketers, and others interested in the emergence of social innovation as a driving force reshaping the process of creating value in global markets. You can search the media file database from this blog or directly on Delicious.
more media file links for 25 January 2010:
Amazon shakes up book industry with 70 percent Kindle royalty plan
Silicon Alley Insider reports on Amazon’s new Kindle royalty and pricing option for participating book publishers--a remit rate of 70 percent of sales price under the plan, versus 35 percent under its standard agreement. The catch? There are several, including a price cap of $9.99 per book; and at least a 20 discount on the digital book versus the print version. While book publishers worry that low e-book prices will destroy their profit margins, SAI argues: “Hogwash.” Lower prices will unleash demand, and publishers will end up sitting pretty as higher sales volumes drive revenues up. Says SAI: “This is where the book industry is headed, whether traditional publishers want it to or not. Amazon’s new plan should help shorten the time it takes to get there.”
Loyalty programs migrate into media space
The magazine pro site Folio reports on media giant Hachette Filipacchi’s plan to launch “reader clubs” to build audience engagement and revenues for its US magazine brands, including Elle, Woman’s Day, and Car and Driver. Like affinity programs in the travel and financial services industries, Hachette’s clubs will provide retail discounts and priority access to entertainment events related to the magazines’ brand and key advertisers. Hachette has a customer database of over 22 million names and email addresses in the US.
For an uncertain future, imagination trumps measurement
Most managers would readily agree that “if you can’t measure it, you can’t manage it.” But according to “design thinking” advocate Roger Martin on the Harvard Business site, an uncritical faith in this approach has led to some of the most spectacular business failures of our time, from Motorola to GM. In an unpredictable business environment, metrics often provide little insight into the future of markets. Instead, imagination--which infers new possibilities from the present--can assist leaders to make creative leaps into new markets and new product categories. While Motorola was busy measuring the market potential for “feature phones,” Research in Motion leaders imagined an entirely new kind of handheld device, the demand for which could not be quantified--because the product category did not exist. It is from this kind of imaginative leap, Martin says, that the future is born. Managers who stick with a seemingly more predictable, measurement-based leadership style risk being left in the dust.
Successful innovations can be predicted
On the Advertising Age site, innovation strategist Phil Roos pokes a hole in one of the most persistent myths about breakthrough innovations: that they are the result of lucky accidents or brilliant flashes of insight. On the contrary, Roos says: Innovations follow a predictable pattern, in which first the potential breakthrough and its benefits are introduced into the market by insurgent startups, which lack the resources to take it to scale; then competing firms take up the innovation and experiment with variations on its basic theme; and finally the idea reaches a tipping point where product readiness and market awareness meet. Successful innovators recognize this pattern as it emerges and are therefore able to predict and capitalize on breakthroughs as they evolve into mainstream market successes.
What is “operations strategy”?
Is it the new black? Or is it a basic contradiction in terms? On the strategy+business site, operations strategist Tim Laseter squares the circle by pointing out that battles between strategy advocates on one side, and operations/performance excellence advocates on the other side, have largely missed the point: Both are needed together, in a way that amplifies the strengths of each perspective. Strategic choices must advance operational excellence; quality/performance initiatives must advance strategic goals. This integrated perspective is essential for success in such core activities as product innovation, customer service, value chain management, and long-range planning.
Three steps to social media mastery
Social media is about mastering the consideration phase of stakeholders’ decision-making process. There are three steps you can take to influence and shape this crucial phase: Understand stakeholders’ experience; create a presence that they find attractive; and collaborate with them to improve their experience. Dave Evans comments on ClickZ.
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