Who Was Really Napping?

What if I told you that major international companies were suing their customer base? Sounds a little ridiculous, doesn’t it? Now here’s the really ridiculous part: It’s true.

Yes, everyone loves to bash the record labels. And, to some extent, they deserve it. What were they doing when the world went digital? Happily selling CDs, of course, convinced their fortunes were set for eternity. They forgot 3 things: 1) the customer, 2) innovation and 3) the customer. Did I say the customer? When you get right down to it, this is about listening to the customer. It's about the very real impact of a very real Fear of Marketing.

It's like this:
The major labels were happy enough with the innovation of the CD. It was small and portable with amazing sound. And, even better, it meant that everyone had to replace their LPs and their (yuk!) cassette tapes. (Personally, I never warmed up to cassettes ⎯ the sound quality was waaay too bad!) So for over a decade, the heat was on with reissues galore as baby boomers, their younger cousins and siblings replaced LPs with CDs. And of course there were the ongoing releases of new music and artists.

Then Napster reared it’s head (whether that was ugly or beautiful depends on your point of view). People were trading music instead of buying it. So what did the record labels do?

1. They carefully studied the phenomenon, using the technology to better understand their customer and learn to create an environment that will make trading MP3s for free an undesirable option.
2. They invested in secure watermarking technology that would make it impossible to trade songs without paying for them and converted all their assets to MP3s. (In fact, Napster founder Shawn Fanning undertook just that solution with a company called Sno Cap using watermarking technology developed by Phillips Laboratories. No major labels have used it though, and the company has been acquired by one of its former partners.)
3. They threw up their hands until profits started to drop then blamed their customers for making a poor choice.

What was missing from the recording industry’s analysis? The customer (After all, wasn't it the customer who was doing all the damage?). In all fairness, the Internet sprang to life in the 1990s and changed business by creating online giants that gave some real competition to the “brick and mortar” retailers. What changed with Napster in 1999 was that media itself, not the medium of distribution, became commoditized.

This was a shock to the media industry and sent ripples that have become waves. Now I’m not proposing that trading music illegally is right. But what is the customer telling them?
I remember an interview I once read with music legend and entrepreneur, Les Paul. Not only did he help create the solid-body electric guitar, he was a key driver in multi-tracking recording. The musician’s union, as I recall, told him he would put musician’s out of work. In fact, there are more working musicians now than there were then. Why? Because recorded music reaches in to the hearts and souls of the consumer. The new technology made it easier to do that.

So here’s the conundrum: Is it better to put your finger in the dike (translate: sue your customer base), build a new damn (translate: find a different solution that doesn’t put you at odds with your customer) or head for higher ground (translate: reinvent your business to map to the current landscape)? My father used to say, “Don’t bite the hand that feeds you.”
The finger-in-the-dike is a short term solution, but come on guys, it’s been nearly a decade. That doesn’t really qualify as a “flash flood.” Building a new damn seems to be where things are headed, but how long can it stand against a rising tide? This is the age of the wiki and people are wiki-ing music. Whether by design or default, the international community has begun to rewrite the copyright laws. The question is whether the business community, the big labels, can get out in front of the tsunami.

In my opinion, the record labels get the "Asleep-At-The-Switch" award: They should have been paying attention. I'm not feeling sorry for anyone, but here's something to think about: Radical changes call for radical solutions. Try talking with your customers, not at them. Maybe it’s time, in the words of Monty Python, “for something completely different.”

Maybe it's time to start listening. Try it, in between some of those lawsuits.

You Are Not Alone

My first realization of the magnitude of the problem in high-tech marketing started in Ohio. I worked at a Midwestern software developer. Yes -- there is software development in Ohio; no joke though I admit it is a bit of an oxymoron. In the 9 years I spent at Macola, crawling my way up the ladder from Marketing Communications to run marketing and its team of nearly 30, I saw the constant churn of marketing leaders. I endured the sales and marketing meetings in which I was informed that the leads we generated were no good. I was shocked how our smart, but techie, CEO was squirreled away in his office, coding instead of spending time out with the customers and resellers. I was outraged when I couldn't get the CEO or the head of engineering to see where the market was going in software applications and that we either needed to rewrite our code or niche ourselves and increase price. I was in a no win situation. So when I got the call to move out to Silicon Valley to work for Oracle, I jumped at the chance. I wanted to work for people that "got it." And I watched the company I had left miss the move to GUI and software-as-a-service, and sell itself to Exact in 2000 for its customer and support base revenue.

It was the winter of El Nino when I arrived from Ohio to the massive glass doors of "the Emerald City," Oracle Corporation. Looking back 10 years, I realize I should have seen El Nino's torrential winds and rain, that pelted me daily for 3 months as an omen. I did not. Within that first 9 months, I had 4 bosses, survived a power struggle for the small team I had inherited after my first 2 executives left , and saw marketing organizations blown-up and retooled. I dug my heels in because I new I had the chance to learn from one of the best marketers ever: Larry Ellison.

When I began at Oracle in my role as Director of Product Marketing, I was part of a development organization. (That changed later. Whew!!) It was unsettling for me to be part of development. It must be the same kind of feeling a young man experiences the first time he enters a lingerie shop to buy a girlfriend an intimate gift. But I had just moved 2,300+ miles and figured, hey, it was Oracle. Larry had to know what he was doing.

I am a business marketer: Not a techie. I had arm wrestles with product management who used my lack of "really deep" technical expertise as a reason I couldn't do the right positioning. I was sandwiched in between the sales guy with Rolex and the pipeline and "developer" with the braniac stare, and more developed logic in arguments and spreadsheets. And I was managing a killer team to launch our first integrated suite of CRM (Customer Relationship Management applications). As we readied the entry of our product marketing messages I was handed an advertisement that Larry had written for my team to execute upon. The ad was full page slick targeted at CRM magazines, Oracle Magazine. The headline: Don't Be Held Hostage By Your CRM System. And the graphic? Well, of course it featured a pair of handcuffs and one of the tools Larry loves to use to force differentiation -- a competitive chart on the features, targeted against Siebel Systems. I knew the market would backlash and hate us.

This was a clear disconnect between what potential customers needed to hear and what we wanted to say. I knew if the ad hit the market it would hurt us rather than help us: We lacked credibility in this space. In the end, the handcuffs were dropped and the feature chart publicized. The market response was less negative than it would have been.

Bottom line: It isn't just me. There is a problem in high-tech marketing. As marketers, we share in both the issues and the solutions.

Later -- Lisa