CD Sales Declining - Why a Drop of 20% in 2007 Should Not Be Surprising

I've been meaning to write this post for a few weeks now, but work has gotten in the way! :-) In late March, it was reported that CD sales were down 20% from a year ago. Hold the phones! CD sales are dropping? What! Why would that be. Ok, you can probably tell I'm being sarcastic... I know this has to be reported, but did anyone think it was groundbreaking news?? This is part of a 7 year slide, that by the way, will not slow down...at all.

Music Sales and Systematic Automation
So, why is this happening? To me, it's a form of systematic automation. Technology advances and products and/or services that were once used now become obsolete. Consumers can now buy the 3 songs on an album that they like and let the other 12 hang in bad-song limbo (like they should). Let's face it, the concept of a "cd" or "album" is dead. I, along with many others, knew this was going to be the case in the late nineties when Napster hit the scene and people started downloading full albums at a time, not songs, but albums. Yes, it was illegal, but that didn't stop anyone at the time. The recording industry should have embraced the technology instead of fighting it, but that was a long time ago...

Some Music Sales Perspective
Based on my post so far, you might think that everyone is downloading music, but let's not jump to conclusions. Over 85% of music sales are still CD's. This is probably the 40+ age group that still doesn't fully understand what digital music is all about. My father in law (59) thought that the quality of an MP3 file would be much less than a CD. So I quickly took out my ipod and saw his eyes light up when he heard the first song. This age group will learn, just like they learned to use a computer and access the web. My father (69) now browses the top travel and real estate sites on his Dell laptop. Enough said. The 85% of sales from CD's will decrease drastically over the next several years. Why in the world would you buy a CD when you can just purchase the songs you like?? I don't. It's just an education issue. Consumers aren't stupid and once they learn that they can spend $3 versus $15, they will...

1 Billion...
Now let me introduce a staggering statistic. There are still an estimated 1 Billion songs traded illegally each month on the web. That's 1 Billion songs. (Note, I am now pointing my pinky at my mouth like Doctor Evil from Austin Powers). Let's translate that number into potential revenue. If even 5% of those songs were downloaded from a paid service like iTunes, that would be ~$50,000,000 in revenue per month. Yes, that's 7 zeroes and a lot of money.

Stop Complaining and Embrace the Technology
Instead of sitting and complaining like the recording industry has done over the past 7+ years, they should get creative and think of other ways to generate revenue. The genie is out of the bottle... Actually, the genie is out of the bottle, took a flight to Key West, and has been hanging out at Sloppy Joe's drinking tequila shots by now! The recording industry needs to embrace technology and change with it versus fighting it. And by the way, movies are next...

In Closing
So, as I download 6 songs this morning from across 4 albums on iTunes, my 12 year old neighbor is probably downloading 50 illegally, his mother is probably jotting down the 2 CD's she wants to buy today, and the 72 year old woman that just walked by my office window muttered, "So, what's an MP3?". The recording industry needs to see all 4 of these situations as business opportunities and they will be in a much better place than they are now.

Long live digital everything!

GG

Can Podcast Marketing Impact Your Business? -- A Simple Internet Marketing Case Study

I was talking with a business owner the other day about web marketing strategy and he explained an interesting story to me that recently impacted his business. It ends up his company received several leads from a place he had never thought of as a source of leads before…a podcast. His products are B2B-driven and the price point is relatively high. He pointed me to the podcast where his products and company were mentioned so I could help him evaluate the potential of the podcast marketing channel. To be specific, he wanted to know if this was an anomaly, or if could he benefit long-term from this type of marketing. He is not technically savvy and was honest that blogs, podcasts, and vodcasts were new to him.

Some initial questions I had:

1. Would he consider paid advertising (ad spend) in the future for podcasts or does he want to launch an organic WOM campaign targeting podcasts?
This changes the entire dynamic, doesn’t it? Based on my experience with both organic word of mouth and amplified word of mouth, you cannot underestimate the power and return on investment of organic WOM. Little or no ad spend with the possibility of yielding confidence in thousands of prospects from hearing about your company or product from trusted sources is a powerful mechanism. He did not pay for the mention in this particular podcast, and explained that he would like to keep it that way, so it's clear that we are now talking about organic WOM. I told him that this was a good thing and that I agreed with him. :-)

2. Who recorded the podcast and why was his product part of it?
The podcast was recorded by a group of industry experts that focus on trends in the industry and emerging products or solutions. Wonderful! They have a solid base of listeners who trust their opinions. Keep in mind that this can also be dangerous if the experts didn’t have a positive view of his product…but thankfully they did. Then I asked how they heard about the product in question. It ended up that WOM was the driver. So, this mention in the podcast is actually a second generation Word of Mouth element. Even better! This shows how WOM can weave its own path organically through people in an industry. The experts actually heard about the product from one of their listeners!

3. Did the podcast yield quality prospects?
Overwhelmingly yes! They were qualified leads, period. These podcasts are intended for people immersed in a fast moving industry. It targets people that are always looking for a way to get a leg up on their competition. In addition, questions from the prospects were extremely targeted and they had budgets to play with.

4. Did the podcast explain his product the way he would want it explained?
Not exactly, the mention of the pricing was a little off and process for getting up and running was the old process (they implemented a newer solution since the original customer had used it.) That said, the podcast segment that explained the product was extremely positive. They even mentioned the name of the sales rep to call (based on the customer’s positive experience with him). Are you starting to see how something like a podcast or a blog post can build confidence in a prospect? This is why I tell my clients that organic WOM is ultra-powerful.

5. Did the podcast generate revenue for him?
Yes, the business landed sales from the podcast leads. The sales cycle was also much quicker (which also saves the company money…) The conversion rate of the podcast leads was 30% higher than someone coming from natural search, and 40% higher than someone coming from paid search.

The Bottom Line:
My opinion is that he should create an organic WOM strategy targeting podcasters (and bloggers) in his industry. I also recommended that he should start his own podcast. Based on my experience, the more his company podcast gets noticed, the more other podcasters will be intrigued, which might lead to more coverage. With a relatively small budget, why not try and replicate what happened with this recent podcast that yielded qualified leads? It makes sense, doesn't it?

Some Podcasting Marketing Tips to Keep in Mind:
(If you have some control over the content…)

* Ensure the website is mentioned (clearly). Since podcasts are audio-driven, you can even spell out the website, if needed. For example, “visit gsqinteractive.com to learn more, that’s G, S as in Sam, Q, interactive.com. All as one word.” Something like this will help listeners find you.

* Have a contact at your company mentioned. For example, Glenn Gabe helped me set up my paid search listings. He was helpful and extremely knowledgeable! OK, I won’t get out of control here talking about myself! :)

* Mention a phone number. Even though a podcast is associated with online marketing, some people still like the immediacy of calling a company! Especially if you mention a contact, like I recommended above.

* Make sure your core information is included in the podcast’s feed. Every podcast utilizes an RSS feed (just like blogs do) to keep subscribers up to date on current podcasts. This feed can be indexed by the search engines, so don’t overlook it! The power of RSS for organic search is for another blog post, but I wanted to mention it here anyway!

In Closing:
If you were ever wondering if a podcast or vodcast could impact your business, I hope this simple case study shed some light on the subject. The concept is actually quite simple and is grounded in traditional marketing:

As a marketer, you want to get your message in front of a targeted, qualified audience. Having trusted sources recommend your product, based on their positive experiences with it, make that message even more powerful.

Podcasts and vodcasts, although web marketing focused, can help you achieve this. It’s not for every business, but you won’t know unless you try it!

Happy Podcasting!

GG