Your Customer's Customer

The economics of content.

Way back in another lifetime there was a great music
publisher by the name of Lou Levy. Lou had a lot of great sayings, that I
believe he originated. His son, Leeds, used to toss these sayings out from time
to time to make a point.

One of them was, “There are three sides to every story. My
side, your side, and the truth”.

The point is that it doesn’t matter what our memory of
something is, ultimately we are all flawed, and all have a subjective view.

Over the years my subjective view of business has changed
massively. I have always had a high level of optimism for whatever I have taken
on. However as the years have gone by I have come to the belief that the one
thing that it is useful to understand in going into a business discussion is to
understand that if you are going to get someone to help you, it is always
better to figure out what their agenda is first. Agendas are always in motion –
vectors that have direction. So if you can establish what the direction is of
the vector that is the primary influence in a business, it makes a big
difference to the way that you approach the other person.

What it also achieves is to enable you to enter into a
conversation with the other person and hopefully build some rapport along the
way.

That’s what I believe anyway.

When it comes to content businesses there are a whole lot of
misconceptions that people have coming into the business end of things. If you
can recalibrate those misconceptions, it gets to be a lot easier to generate
success.

Take music.

A lot of people have this belief at the moment that the
music industry is in dire straits. I don’t think so. It may be that when Guy
Hands bought EMI several years ago he paid over the odds for it, and is now
negotiating with CitiBank to buy it for the second time – and now for a bit
over a Billion. But that doesn’t mean to say that EMI is in trouble. It just
means that he paid too much in the first place.

Why was that? I suspect that he fell into the trap that many
unwary people fall into around entertainment. He fell in love with the idea.

People around music often fall in love with the idea. The
idea of a song, a band, a singer, a video… And then they wonder why radio
doesn’t share their enthusiasm.

Why doesn’t radio pick up on every great song that is made?
That question is easy to answer. Radio has utterly no emotional tie in
whatsoever with the music it plays. If it does it is by axiom unsuccessful
financially. The successful radio stations have a clinical appreciation and
focus on only one thing: ads. The ads produce the revenue. The bigger the
audience, the higher the selling price for the ads. And since ad time on radio
is a resource that is similar to tickets to a show – if you haven’t sold every
seat in the house on the night of the show, you will never see any revenue
again from those seats that weren’t sold.

In the radio business that clinical appreciation of the
value of an ad is combined with the great good fortune that radio has (unlike
TV) of getting open access to all of the available content that can be
played. 

So it means that in radio the art becomes putting together a
format and a playlist that motivates and keeps entertained the demographic that
will generate the maximum amount of listeners.

The more listeners, the more ad revenue per ad, and the more
demand for ads generally.

So once you realize that radio programmers, as nice as they
might be a people, have jobs that require for them to only pick records to play
that will appeal to a specific demographic, as a record producer, you stop
making records that you like and start making records that the radio station
audience likes.

Once you do that, you are aligned with your customer’s
customer. And at that point you can start being successful.

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