The local youth theatre troupe recently put on a performance of Grease. It was a high-spirited outing, with terrific performances and it was a great way for them to spend a month or two over the summer. I was amazed to discover, though, that the budget for the rights to the play were $3,000. That's pretty steep for a high school production of an old, not particularly wonderful musical script that was only going to be seen by the local community. Should it really cost $7 for every person who watches the play?
The reason fees for licensing plays are so high is that almost all plays and musicals are licensed by just a few firms and the purchasers have no power whatsoever. The sellers have signalled each other and created an artificially high pricing floor. "Take it or leave it" is their motto.
Here's the opportunity that the net provides (in this case and so many others): someone should organize the customers and negotiate on their behalf.
Imagine contacting 3,000 high schools and finding 500 willing to join together and agree to act as a buying cartel. Now, the organizer can poll the directors at these schools and find thirty plays they'd be willing to put on next year. Go to the rights holders of these plays and say, "We're going to pick six of these plays. Each of the six will get a huge number of customers as a result, perhaps twenty times as many as you usually get. But to be among the six, you need to lower your price by a factor of ten."
Now, if you're the rights holder, you have a dilemma (but not a huge one). You can agree to lower your price and thus double your annual revenue on this dusty old play, or you can stay where you are and make zero.
Hmmmm.
Over time, the cartel will only grow more powerful. Word of mouth will spread, because news that joining this cartel cuts the cost of renting a play or musical by 90% is noteworthy. More will join. The benefits to the rights holders who agree to play along will go up because they'll have the play reach more audiences. The only losers will be those that are stuck on the old model of taking advantage of independent communities with no purchasing power.
While this has been tried in markets where it's very difficult to make it work (like consumer electronics where the margins are small) I think it can thrive in business to business, service and intellectual property markets where market share can easily make up for lowered profits. Universities can join up to push down the price of textbooks by agreeing to adopt the one of the six acceptable ones that's the cheapest–and all the others get zero. The key is frequent communication and solidarity as you go through the dip that will happen when providers resist your initial offers. That's why the net (and free online coordination and messaging) are so critical.
Think of all the tiny vertical markets where this can really pay off.
And of course, the organizer deserves (and gets) a piece of the savings.
September 3, 2009
Enormity doesn't mean really enormous. It means incredibly horrible.
The problem with enormity in marketing is that it doesn't work. Enormity should pull at our heartstrings, but it usually shuts us down.
Show us too many sick kids, unfair imprisonments or burned bodies and you won't get a bigger donation, you'll just get averted eyes.
If you've got a small, fixable problem, people will rush to help, because people like to be on the winning side, take credit and do something that worked. If you've got a generational problem, something that is going to take herculean effort and even then probably won't pan out, we're going to move on in search of something smaller.
Not fair, but true.
September 2, 2009
New media isn't the perfect marketing medium, and it won't be until we find the magic beans.
TV had magic beans for forty years. For forty years, anyone, even a complete moron, could make a lot of money using TV ads. Buy enough ads, don't screw up, you're rich.
The hard part was buying enough ads, but once you did that, victory could be declared.
On the web, there are countless marketers just standing around waiting for someone to hand them the magic beans. And that's the problem.
Marketing online takes too much measurement, patience, creativity, technical knowledge, flexibility, speed and authenticity. It requires too much thinking and not enough going out for dinner with clients.
Perhaps there will never be magic beans again. Perhaps marketing is about to transition to a new kind of profession, one that requires insight, dedication and smarts.
Or maybe someone will find some magic beans.
September 1, 2009
When George Washington was a teenager, did he really, really, really want a car?
Unlikely.
In order to want something, you probably need to know it exists. But my guess is that it surely helps if you've been marketed to.
One definition of happiness is wanting the things you're likely to get (or, conversely, not wanting the unattainable). One definition of marketing is persuading the world it wants what you have, regardless of whether they can afford it or not.
We don't hesitate to motivate employees by marketing them the benefits of being promoted, even if they all can't possibly get this. We don't hesitate to tease kids by marketing every conceivable unattainable Christmas gift at them, relentlessly.
Teenage girls are taught what to want by magazines and by peers.
Patients are taught what to want by doctors who prescribe new tests. And doctors are taught to do that by lawyers eager to sue if they don't. Imagine going home and saying, "the doctor wanted to give me another test, but I said no…"
This cycle of assigned wants is going to get a lot worse before it gets better. The game theory demands it.
And so, once again it seems to come down to a personal decision. If you decide what you want (instead of letting someone else decide for you) perhaps you could choose the things that would actually bring you and your loved ones the satisfaction you can live with.
August 31, 2009
The following does not appear in the Star Spangled Banner:
"Babe Ruth through the night…"
When you do something by heart, it bypasses some of the common sense processing we use to navigate our day. Of course Babe Ruth wasn't even a sparkle in Mrs. Ruth's eye during the War of 1812, but if you're singing by heart, you don't think about it.
I walked into a cheap noodle joint in Soho last month and decided I wanted tofu with vegetables. They had a little plate on display (a special, I guess) and I asked for tofu, vegetables, no sauce. The cashier pointed to the display model and said, "like this?"
I said, "with no sauce," because the gloppy stuff didn't appeal to me.
So, after asking, clearly, twice, I sat down. Four minutes later, they called my number and handed me an identical copy to the display item, oozing with fluorescent sauce.
"I was hoping that there'd be no sauce…"
She didn't miss a beat. She said, "that's the way it always comes."
She wasn't being evil. She was merely doing it by heart. Just like the intolerant judgmental guy who can quote you chapter and verse from his spiritual book of choice but never thought about the meaning of the words inside or the status quo protecting technician who isn't a scientist because she's afraid of violating something that feels like a law.
The next time you or one of your people starts rattling off the obvious truth by heart, wonder about whether it's obvious because it's true, or true because it's obvious.
August 30, 2009
The wrong way first: interview someone for an hour. If you like them, have them interview three or four other people in your organization for an hour each.
You've invested five hours of your team's time, but really you only were looking for approval, because you'd already decided you liked the person enough to work with them for years.
All the evidence we've seen shows that this is a lousy predictor of future performance. And, let's tell the truth… if the first three people love the guy, are you really going to let the fourth, junior person veto him? Or is it just an annoying courtesy?
There are two approaches you can use as an alternative.
First, you can work with someone for months before you offer them a job. Your pool is smaller (freelancers, joint venture partners, interns) but the exposure to how they work is spectacularly different. You don't get the thrill of finding a pearl in the oyster, the "wow, I found the most incredible hire!" bragging rights. Instead, you get exactly what you expect. Organizing for this sort of hiring isn't particularly difficult, particularly in a down economy. Not surprisingly, I've had 100% success doing this.
Second, and with some controversy, you can admit that an hour interview is actually a five minute sniff test followed by 55 minutes of wasted time, multiplied by four colleagues. Tell the truth and switch to five minute interviews.
If you do five minute initial interviews, you can interview 12 times as many people for each job opening. This initial filtering takes precisely as much time as your wasted one-hour approach, but dramatically increases the chance you'll find someone you actually have good pheromone and body language connection with. After the screening, I can only encourage you to do the projects, reference checks and other serious diligence you're probably too exhausted to do after spending all those hours with one person…
This process takes a lot of work, but it definitely works. If you can interview 60 people in a day or two and then have the three best fits do projects, presentations and freelance work for you, you're way ahead of a company that interviewed only three people and fell in love with one.
August 29, 2009
The problem with customer service is not a new one. It's about balancing between serving a lot of people a little, or dropping everything to serve a few people a lot.
Getting a lot of benefit for a lot of people for not so much money isn't particularly difficult. In the chart on the right, for example, (a) represents the cost of good signage at the airport, or clearly written directions on the prescription bottle or a bit of training for your staff. It pays off. Pay a little bit and you help a lot of people to avoid hassles. The utility per person isn't huge, but you can help a lot of people at once.
(b) is the higher cost of a bit of direct intervention. This is the cost of a call center or a toll free number or an information desk. You're paying more, you're helping fewer people, but you're helping them a lot.
(c) is where it gets nuts. (c) is where we are expected to spare no expense, where the CEO has to get involved because it's a journalist who's upset, or where we're busy airlifting a new unit out to a super angry customer. The cost is very high, the systems fall apart and only one person benefits.
Of course, if you're that one person, you think it's not only fair, but appropriate and right.
This "spare no expense" mantra is extremely difficult to avoid, because in any given situation, when the resources are available, your inclination is to say, "make the problem go away, spend the money!"
It's certainly possible to build a brand without going to (c) (witness the way Google almost never gets embroiled in special cases or even answers the phone–I know that they're certainly not eager to fix my imap problems), but once you've trained your customers that (c) is an option, it's awfully hard to scale back.
The reason we get trapped by (c) is that, "I'm doing the best I can" is always much easier than, "we need to be disciplined and help more people, even if that means that some special cases will fall through the cracks. The internet makes this even more difficult because people who fall through the cracks are able to amplify their complaints ever louder.
The way around it, I think, is to set expectations early and often. If you're going to give me your phone number, you better answer it. If you're going to offer a warranty, you better honor it. If you position yourself as a company with real people eager to make every single person happy–you better deliver.
No matter what, you should decide. In advance. How much do you want to spend on ad hoc emergencies, how much do you want to reserve on design and helping the masses improve their experience?
August 28, 2009
Atlanta brags about having the busiest airport in the world. Like most municipal facilities, they don’t brag about having the best, the most pleasant, the most engaging or the most remarkable airport in the world.
That’s a shame, because airports are great opportunities to create value. Lots of curious, alert people with money to spend and connections to make. Yet the lowest-common-denominator is served, relentlessly. If you like fried meat, plenty to choose from. You’d think that rather than cater to the center of the curve 100 times at 100 concessions, they’d pay attention to some of the outliers now and then…
Imagine my delight, then, when I stumbled upon One Flew South, located at Terminal E. Perhaps because it’s at the end of the line, the economic and turnover pressure is less. Regardless, it’s better than we have been taught we should deserve. Jerry the general manager explained why in the simple quote that leads this post off. He’s busy comparing the place to other restaurants, not to other airports. (If you go, say hi to Carolyn at the bar. Tell her I sent you and she’ll take care of you.)
Who (or what) are you comparing yourself to?
August 27, 2009
I was talking with a few executives from one of the biggest technology companies in Europe, and they were explaining how their hands were tied in moving forward on the internet. They were doing the best they could under the circumstances, of course, but there were units in their organization that needed to be protected, prices that needed to be supported, sacred cows that couldn't be touched. After all, they argued, how could they wipe out their current business just to succeed online?
This conversation happens every single day at organizations large and small. You want to do the new thing, but of course you must do it in a measured, rational way.
Which is great, unless your competition doesn't agree.
When you have someone who is willing to accomplish A without worrying about B and C, they will almost always defeat you in accomplishing A. Online, of course, this often leads to doom, since there are many organizations that are willing to get big at the expense of revenue, or writers willing to be noticed at the expense of ethics or reputation. But in the short run, the singleminded have a fantastic advantage. And sometimes, their singleminded focus on accomplishing just that one thing (whatever it is) pushes them through the Dip far ahead of you and then yes, they make a ton of money and you've lost forever.
Newspapers, magazines, TV stations, hardware companies, real estate brokers, travel agents, bookstores, insurance agents, art galleries and five hundred other industries need to think hard about this before it's too late.
August 26, 2009
If you need to get your audacious proposal/clever ad/new project past your boss, go ahead and add some gratuitous brackets here and {there}.
"Hey, what are these weird brackets doing here," she might say.
"Oh, I like them. I think they add drama to the headline."
"Take them out!"
Giving in early makes it easier to keep the important stuff in later.
August 25, 2009
