New product post #3: Digipacks vs. Jewel Case - majority decision reached

I’m all for improvements in CD packaging – have been for a long time. I’ve talked about it both on this blog and during my time at the IFPI.

Indeed, in a memo to Guy Hands last year (did anyone in this industry not write a Memo For Guy?) my first recommendation was for him to take the initiative in transforming CD packaging across the piece - no more jewel cases.

Labels and music retailers should show the customer that the industry cares about its product and release all CDs in the superior digipack format (preferably using recycled materials).

After all, until we discover the value in digital music, surely the best route to monetization in the current music business, is through a better physical product?

Of course this call to action is naive, because it would cost the industry money to do this, and it isn't necessarily a cost that can be passed on to consumers. The CD is a volume product. Not only that, it is rapidly being commoditized. UK single artist CD prices have fallen by one-fifth over the past five years, from an average of £10.21 in 2003 to just £8.10 in 2008.

To reverse this trend is probably impossible. However, it's conceivable that music buyers’ perceived value of a CD album is, in this day & age, much lower than its current price. A notable shift in the quality of packaging (coupled with content extras) might be enough to hold CD prices where they are, or at least allow retailers to stem the relentless tide of discounting.

There is of course, a long list of logistical manufacturing issues to contend with. The digipack is more labour-intensive (someone has to stick the booklet on the inside card cover) and has longer lead times than jewel boxes. Demand planning is trickier, since jewel boxes are interchangeable with any CD booklet insert, whereas a digipack cover is printed specifically for that title. You need to plan carefully for how many you can sell - and who on earth can judge that accurately in this most unpredictable of businesses? In summary, it's difficult, costly and risky for any one company to move unilaterally on this issue.

Until now that is. At long last, there is a real catalyst to change CD packaging for the better. That catalyst is the environment, which music industry organization Julia’s Bicycle has articulated superbly so far.

At a recent event Hosted by Sony Music, Julie’s Bicycle took the opportunity to begin the process of aligning some key packaging goals across the whole music business. The facts are pretty compelling, as recently published in the Julie’s Bicycle report ‘Impacts & Opportunities, Reducing the Carbon Emissions of CD packaging’:

• The recording industry could reduce its packaging emissions by up to 95% by switching from the plastic jewel case to card packaging
• Consumers would prefer card packaging, particularly heavy CD buyers. More than half of those surveyed (55%) preferred the card wallet version of Coldplay’s Viva la Vida to the jewel box version
• 75% of CD buyers agreed it would be a positive step to shift to environmentally friendly packaging
• Some manufacturers are developing even more environmentally friendly versions of the digipack (the current digipack format already reduces emissions by two-thirds compared with the jewel case)

So the call to action is right there. As Tony Wadsworth put it at the event “I don’t see that there has to be a dichotomy between commercial goals and environmental goals, especially if we take a long term view”. Quite right too, especially when consumers would support packaging changes. Julie’s Bicycle has set out a roadmap for change with the ultimate goal of discontinuing the jewel case. In 2009 the major labels and Beggars Group have set a target to reduce emissions by 10%.

As for artists, ask any A&R or marketing exec, manager or indeed artist, which packaging they prefer. It’s a no brainer – artists would kiss goodbye to the jewel case in a second (probably preferring some ridiculously expensive alternative such as embroidered velvet, but hey, they care!). Beggars Group claims that nine out of ten artists request alternative packaging for their releases.

It’s about time we retired an old, much-hated, faulty product. I say product, because for some consumer goods, the product is the packaging! Packaging plays a key role in music – with CD buyers firmly attached to liner notes, artwork and tangibility. Putting music into beautiful but responsible boxes sets a great agenda in extending the lifecycle of the industry’s core product. After all, just letting the CD wither on the vine until we wait for digital revenues to materialize is a do nothing option that won't be enough in the longer term.

Music's changing product

[This post appeared in last week's Record of the Day as the Insight piece, just here in case you didn't catch it...]

A few years back I came up with an idea for a label, to present its pipeline as an online feature, called the 'Creative Curve'. The idea was to show a curve or spectrum with all the key creative points along it as a music project was being created - writing, recording, mixing, releasing, promoting and touring. For each point along the curve there would be a featured artist project at that stage of development.

The idea was meant to build anticipation, provide fans with an insight into the creative process (for example to see how artists work differently and handle those points along the curve with whatever degree of joy or dread) and potentially to offer products or at least promotional clips such as demos, song stems, interviews etc. which could also be widely syndicated to other digital platforms.

The idea didn't fly, since everything the label did needed to be artist-specific, not label specific. Also, there was a concern that opening up the creative process in this way would spoil the mystery and annoy the artists. In the end the will to mix up the product in this way wasn't there at the time, but things have moved on at a pace since then.

Indeed, there has been a constant, breathless innovation to the way music is being released to consumers. In recent weeks we’ve had the first pixel-interactive video, with Empire Of The Sun's new single, a new band More Than Thieves recording and releasing four exclusive sessions for each major streaming service, and another couple of high value box set packages from the likes of Metric and The Smashing Pumpkins. Meanwhile, some long-established artists have really been ripping up the rule book on what the ‘music product’ is, although I almost hesitate to mention the usual suspects since they get referenced everywhere (which is perhaps partly the intention – to capture our collective attention). No, I will not mention Trent Reznor in a piece about digital product. Doh!

To some extent these initiatives could all be categorised as promotion – an expanding array of gimmicks designed to shout the loudest to simply do what the industry has always done – “work the album”. But there's more to it than that. Music, it seems, is constantly in search of a new way to present and package itself now that the album has been de-coupled and the physical product is being slowly but surely eroded.

The business 101 book says that when a core product is being devalued and commoditised the only way forward is to build new products, services and experiences around what was the old cash cow (in our case, albums) and meanwhile milk that cow dry. Other sectors have made successes in doing just this - indeed it’s been the raison d'être of Richard Branson’s Virgin brand for some time – it’s how flying got a makeover for example.

Entertainment industries have had makeovers too. HBO did it for TV and Marvel did it for its catalogue of super-heroes - they transformed their respective industry’s products and allowed them to flourish whatever new distribution channels emerged. The movie business is currently working through product transformation via digital projection and 3D film.

With music, it's been harder to tell how to respond to the impact of technology and the resulting changes in consumer behaviours. Piracy, other entertainment products, digital distribution and now apps, have all shaken up consumption to the point where consumers seem to spend more time searching, writing about or playing with music than actually listening to it. The term the 'Kodak moment' just doesn't do music justice. What Kodak went through was child's play compared with the current challenge of music producers.

Arguably, those producers have placed too much attention on distribution, with little genuine sustainable value created from this. It has taken too long to switch focus to the obvious – music the product.

But with new product innovations now arriving that seems to be changing. We have high-end physical album packages that come with a range of valued extras including even gig tickets, like Metric & Smashing Pumpkins mentioned above. Some debut artists like Laura Marling did it with her ‘Song Box’ release of Alas I Cannot Swim. Radiohead really got that ball rolling. The much talked about release of In Rainbows skewered the two polarising trends in music consumption: digital - get it now, get it cheap, no frills - serving one end of the scale and the £40 box set serving the other. Clinical, simple, genius marketing.

Audio-visually music has come on leaps & bounds despite the reduction in the volume of expensively made promos. Again, the music video market has widened to cover lo-if or user generated low cost clips for YouTube to high brow art films for theatrical distribution, such as The Arctic Monkeys Live at the Apollo and Wilco’s two great movie projects. Artists at all ends of the spectrum are creating interesting film product, from U2's recent arty collaboration with Anton Corbin to Conor Oberst’s superb recent touring film.

Despite being in the eye of the hurricane, the pop song itself hasn't changed, although the singles format has actually benefited. Meanwhile albums seem to have remained intact, my own theory (statistically unproven) being that albums have both shortened and improved as a ‘natural response’ to current market pressures. With ever more music products growing around the core song & album formats, two things need to happen to affect a notable shift in the commercial fortunes of music:

1. High-end physical product will need to become more standard rather than ‘special edition’. This will extend the physical life-cycle for music across all demographic groups that value physical product, be it CD, vinyl or USB. This would take investment on the industry’s behalf but will pay-off over the long-term. Besides, standard CDs are just not good enough for modern day consumers.

2. More & more peripheral content – film, video, apps etc. should be packaged & offered commercially as product, not purely in the name of promotion – after all, what exactly is being promoted these days except an ever-reducing sales yield for the standard CD?

There has been an ongoing debate in the convergence era as to what is King, content or distribution. To my mind it is clear, content wins, distribution is just access to content. People will always want music content and will pay for the privilege, but music the product has to change and improve with the times. Consumers appreciate that more than anything.

[See also http://www.creativereview.co.uk/crblog/what-no-jewel-case/]

Will all CDs go The Way of the Shed?

It’s just been the May bank holiday weekend in the UK and I undertook to do some typical bank holiday weekend stuff, including clearing out my garden sheds (that’s right, I have two! Yes I’m aware this is a seriously privileged over-allocation of sheds).

This involved the usual detritus... a decrepit lawnmower, baby & toddler instruments with bits missing, hundreds of dead spiders and much worse, a few live ones as well.

Inevitably it also involved CDs. Lots and lots of CDs, hundreds in fact, boxed up randomly – all but abandoned - a travesty of wasted plastic. Most of the CD cases are cracked of course and they generally don’t look attractive – what a faulty product when you really think about it.

I cleared a shelf unit at the back and unloaded the boxes – anything to make extra space. My god, look at this! I never even played half of these all the way through. Here’s a random sample:

Black Rebel Motorcycle Club – their over-rated, over-hyped debut (mind you, their 3rd album Howl is on my ‘classics’ shelf)

Teenage Fanclub – Bandwagonesque – isn’t this said to be a classic? – might have to revisit soon
Diesel Park West – Shakespeare Alabama – as above

Grandaddy – Sumday –I do remember being distinctly underwhelmed by this

John Frusciante – Shadows Collide With People – I think this is his 25th solo record, doesn’t he make an album a month or something?

Aha – Minor Earth Major Sky – This has a great B side on it called Barely Hanging On, but as an album it’s hardly up there alongside the likes of Scoundrel Days (or lost A-ha classic Memorial Beach)

Athlete – Tourist – their overly ambitious and eventually career limiting second – it contains literally one good song. Athlete, if you’re still out there, please go back to being the real you!

P.I.L – Greatest Hits – surely this has some crackers on it

Jerry Cantrell – Boggy Depot – what? How many solo albums do I have by guitarists from old-favourite heavy rock bands? I almost certainly paid well over a tenner for this. What was I thinking?

Gomez – Liquid Skin – One-time-lauded indie golden boys, they have actually just released a new record I see

Terrorvision – Regular Urban Survivors – assume this was a bad mistake attempt at a guilty pleasure – you can’t deny they had a sense of humour though (check out Superchronic and Bad Actress for example)

The National – Boxer – wasn’t this on several blog best of lists a few years back? If so what’s it doing in the shed? Maybe it’s a spare copy. Note-to-self - Mistaken for Strangers and Guest Room must be ripped & re-engaged with asap

Guilty Pleasures Rides Again – got to be something here for the bank holiday barbeque playlist surely

Etc.

What are these fit for now?

Since there’s a set of old Mordant Short stand up speakers in here and an old amp and CD deck, I could set it all up and spend the month of May on a nostalgia trip. I’ve got the urge to just select a disc at random, and play through my favourite track from it. That might be a fun way to squeeze some value out of this motley collection. But I don’t have time for that.

I could just throw them in a box and take them down to the next car boot sale (yard sale US readers). But I don’t even think I’d get a punter for them these days. Ten years ago I did do this and the CDs sold out rapidly (a pound for three). But these days, it’s probably only old mobile handsets and iPods that fetch decent prices.

Wouldn’t it be great if you could claim a refund on CDs you never got value from? I’d be in for a good few hundred pounds cash-back on this set (which I would happily spend on new music of course). Maybe there could be an industry recycle scheme whereby you can trade in the CD and get the download version for free, or maybe exchange an old CD album for one new download track?

At least I should spend an hour with the laptop in here ripping a select bunch of tracks into my iTunes library – the Shed Playlist Spring 2009. That’ll work. I’ve created something out of it after all.

Ways of Listening

As I sorted through the piles, I thought about how varied our listening habits have become as consumers and how it all started not with digital but with the CD. One friend of mine, back in University days, would get his new CD home, shove it in the deck and promptly skip through it one track at a time, previewing each song. “How can you do that?” I would say in disgust, “you’re spoiling it for yourself, have some patience man”. And this was ten years before 30 second clips! He always was a futuristic thinker.

Another friend took it to the furthest extreme the other way. Whenever he acquired the new release disc of one of his favourite artists, he would first insist to take it upon himself to play back the entire catalogue of that artist, in chronological order. “Unrealistically obsessive, mate”, was my considered response to that one.

I fell in between these two extremes, always insisting to myself that I wait for the opportunity to playback in full any new CD purchase, on the hi-fi, not headphones. Of course, this hardly ever happened due to the ever dwindling amount of free time, hence not listening to half these abandoned CDs in my shed.

Just lately, I have actually been buying more downloads, mainly from 7 Digital. You can’t argue with the prices (many new releases on ‘sale’ at £5) and the 356 bit rate MP3’s sound pretty good to me. I miss the tactile quality of CD packaging of course and still go for some stuff on CD (recently Metric, Spoon, some classic back catalogue by Talk Talk). But after an experience like this weekend, it might be more downloads from now on and a little less plastic.

The future of music is: Filtered

[this post is featured as the comment editorial in this week's indespensible UK-based Record of the Day http://www.recordoftheday.com weekly magazine and is part 1 of 2 posts on innovation in music. Next week's focuses on music the product].



If the music industry is changing so much, how come the biggest promotional platforms for bands are still mainstream media - radio, press, TV and The Charts? It might be tempting to think that it’s because music label marketing is so steeped in the tradition of radio, press, TV and The Charts that they know not much else. But this is no longer true, especially in labels where digital specialists beaver away on this or that initiative for new music campaigns via apps platforms, social networks, e-tailers and blogs.

The simple fact is that radio (followed by TV) is still where the majority of consumers say they discover new music – at least it is when you look at research tracking by the likes of NPD, Viacom etc. I find that remarkable in this day & age, but the point where this changes is when it gets really interesting for music and for the way music is marketed.

It might even be the point where the business itself finally tips into a new paradigm where radio and TV matters less than digital media, or even doesn’t matter much at all. Some artists have already reached that point, such as Ingrid Michaelson, with 250k album sales and 800k downloads with barely a mainstream murmur. Indie band Metric has had recent similar success.



The reason is that many fans have reached that point too. Forward moving artists will concern themselves less with a radio-led charm offensive and more with a fan-base-building digital campaign along the lines of Michaelson.

It is in many ways surprising that mainstream media is still seen as the golden ticket to success, when we’ve had some ten years of development in digital. But then, since digital only represents just one fifth of industry revenues, perhaps it isn’t surprising at all. The business will still focus supply and marketing activities firmly towards where consumers discover the product and spend the cash.

However, over the next year or so, there are some clear signs of a more full-tilt transition to digital. An obvious one is the increasingly moribund physical retail space – you can’t buy CDs if there’s nowhere left to shop for them. Another is breakthrough digital only applications including of course, Spotify and applications platforms like the iPhone.

But what could make a greater single impact than these factors combined is if music discovery really came on leaps & bounds, digitally. It has been threatening to for a while of course, with numerous recommendation engines (most notably Last.fm) and music social networks emerging as more effective music discovery platforms than radio and retail for a sizeable segment of music fans. Such services have certainly improved upon the basic search capabilities that drove earlier generations of music services, including of course P2P.

But for all their clever functionality, no recommendation engine or social network has become the music discovery standard in the way radio has. This is for a variety of reasons: algorithms are yet to work perfectly as filters for music (if they ever will); recommendation results are still a bit hit & miss; social networks like last.fm are a bit too cluttered for mainstream use. Blog aggregators and blogs are too specialist.

But there are a number of ways in which music discovery will change in the next year or two that will collectively make a huge difference:

1. Music crawlers and mega-charts. Going beyond the boundaries of any one social network or just crawling blogs, combined web crawler services that cover all the major metrics of play-counts, profile views, search-terms, twitters etc. – for both bands and songs – will aggregate everything and provide constantly refreshed mega charts to replace the traditional charts as we know them. The BBC’s Sound Index was pioneering for band buzz, but for a more focused application of the concept take a look at We Are Hunted (wearehunted.com). Fresh out of Australia this web crawler amasses all into the 99 most popular tracks of each day, presented in a simple 9-track-a-page format with a stream & buy button on each & every track.
   
2. Social programming. So-called fourth generation discovery after the first three generations: 1. The EPG; 2. Search and 3. Recommendation. Go Fish and You Tube already pioneered social programming to some extent, allowing individual users to programme & broadcast very simple personal video channels. Now iLike & Facebook have really opened up social programming in audio. I’ve been sceptical about this - who wants to discover content through a multitude of individually programmed channels? I wasn’t sure until I tried Peoples Music Store (peoplesmusicstore.com), which I think is a fun and very social way to discover (and even shop for) new music. Judging by this week’s news, Universal music agrees, licensing some 300,000 songs to the service.
   
3. People, places & lifestyle. Geo-location technologies will allow users to use their mobiles to filter all sorts of content by location, timing and lifestyle preferences. Imagine a playlisting application that can give you a playlist relevant to a business trip you are taking today, or the mood you’re in as you are stuck in your tinderbox on the M1 on a hot sunny day.
   
4. Personalised home pages. This one is for the ISP’s to crack, although iTunes really should have done it ages ago as well. The BBC and Google are masters of it. You really don’t have to bother going anywhere for discovery other than your own personalised homepage of your preferred access provider. The likes of Sky, Virgin & BT are developing it as the holy-grail for their multi-platform customers.
   
5. New content brands. In many ways the antidote to all that goes above, new content brands are old fashioned, trusted editorial brands that thrive digitally due to their expertise in exploiting long-tail content, reduced barriers to entry and targeting of audiences previously underserved by mainstream media platforms. Think Lost Tunes, Mondomix, Pitchfork, eMusic, Daytrotter et al. Established Blogs and even Brands that do it well can create new preferred destination services for digital users.

With all this space for music discovery to develop it keeps me optimistic for generating new opportunities to drive more immediate consumption – transactional as well as streaming. Current discovery platforms like YouTube, Pandora, Last.fm & Spotify aren’t necessarily good purchase drivers for music, but that doesn’t mean new ones won’t in the future.