iKnowledge

One of the big business stories of recent years has undoubtedly been that of Apple iPod and their online iTunes music store. But it is not just the level of sales or the share of the market Apple has captured that marks out the iPod/iTunes as a success story. What is remarkable about the iPod is the way it took technological innovation and understood how it could help chart new consumer trends. What is also revolutionary about the iPod story is that it is changing what we understand by manufacturing and distribution and how companies relate to their customers by putting more power in their hands to customise the product for themselves. The following article, which first appeared in the bottomline magazine, takes a look at the implications of the iPod for CRM. It also looks at the ongoing role and knowledge of ‘gatekeepers’ in defining consumer trends.

Apple was reported to have sold two million iPods and to have captured eighty two per cent of the US market for portable digital music players in their first year. Important as they are, it is not the level of sales or the share of the market Apple has captured that marks out the iPod/iTunes as a success story. Neither is the iPod a success simply because it is a stylish product that looks good and is easy to use.

What is revolutionary about the iPod story is that it is changing what we understand by manufacturing and distribution and how companies relate to their customers. Rather than record labels putting their albums out to manufacturers to burn CDs for distribution via record stores, the manufacturers and retailers are being cut out of the loop. The product is now being delivered straight to the consumer, who is able to customise and compile their own collection for use on their music system.

And if customers want to make music that is convenient for the rest of the household to listen to or for use in the car, then it is simply a case of ‘manufacturing’ a CD via their computer. In effect, the consumer, in concert with the record labels and Apple becomes a co-producer of goods customised for their use. The holy grail of one-to-one marketing has been achieved! So, good news for the consumer? Yes, to a point. But we shouldn’t forget that music retailers also act as a channel for information about new musical trends and as a place where consumers are able to meet up, browse, seek advice and share information about their musical tastes. In short, music stores perform an important mediation process in helping consumers navigate the range of music products available.

It is ironic that with the advent of the world wide web, the need for mediation to help manage and navigate a bewildering range of choice is even greater. But what will these new forms of mediation look like and how will they integrate with the new forms of ‘manufacture’ and distribution.

Well, it would seem the answer is already out there – what the marketing industry calls cultural tastemakers or gatekeepers. These tastemakers – TV and film reviewers, car reviewers, fashion buyers, graphic and interior designers, disc jockeys, magazine editors – help filter, channel, validate, fashion and focus this information, articulating new knowledge and insights into the tastes of emerging segments of an ever shifting marketplace.

Perhaps a measure of the importance of this activity was given by the DJ, Andy Kershaw when paying tribute to the late John Peel. He claimed that Peel’s contribution to the pop industry in identifying and promoting new musical trends and bands eclipsed that of even the Beatles. Arguably, this mediation process, this identification and articulation of new consumer trends are part of what we might understand by a knowledge economy.

But as the iPod demonstrates, consumers are becoming more closely involved in determining ‘product’ across a whole range of business activities. Through the web, individual consumers are able to articulate new demands and influence production more directly.

And there is a further irony in the prediction that the web would bring about the death knell of the printed magazine, TV and radio. In fact, the reverse appears to be the case. As with the iPod, these media are ‘integrating’ with the web to improve the dialogue with consumers. Consequently, rarely a week goes by without the launch of a new publication, TV or radio programme serving a newly identified consumer trend. And this in itself represents further business opportunities for astute intermediaries.

As was the case with John Peel, cultural intermediaries are vital in maintaining the cycle of giving birth to new desires, products and experiences.
Glyn Fry

(This article first appeared in Issue 2 of bottomline, 2004)