Culture

by Mike Masnick


Filed Under:
reasons to buy, scarcities



Ten Good Reasons To Buy

from the scarcity-plus-value dept

So I already put up my post about all the Connect with Fans + Reason to Buy (CwF+RtB) stories from last year, which kicked off with my presentation at Midem 2009 all about Trent Reznor and his business model experiments. This year, we wanted to do something a bit different at Midem and get a lot more interactive. So, we set up a brainstorming workshop to see if we could build these sorts of business models for some artists. I did a (very) short presentation to kick off the session (no video, sorry) and then we broke up the audience into groups where we could pick specific artists and (quickly) run through the process of setting up a business model. I wanted to share a basic writeup of what I presented, and sometime later I will try to do a writeup on some of what the groups discussed.

I was going under the assumption that, by now, most people understand the basics of how to "connect with fans" (though, we keep hearing stories suggesting that many still struggle with this a lot) and wanted to focus in the presentation on understanding the "reasons to buy." One of the problems is that many people assume that "value" alone is enough to get people to buy -- but as we've discussed multiple times there's a difference between value and price -- and assuming that value alone is enough to get people to buy isn't going to cut it -- especially if the product is abundantly available.

So the key is to find scarcities -- as we've said many times. But, not just any scarcities. Those scarcities must also be valuable. Value plus scarcity is the real reason to buy. And, the intersection may be different for each kind of content creator. In fact, it should be different for each content creator, because it is essential to recognize how to express the key value that a particular creator brings to the table. To help explain that, we discussed 10 key scarcities that are helpful to think through in creating reasons to buy. The list is not complete, but is a good starting point.
  1. Access: Access to the actual content creators is a real scarcity and one that can often be used to make money in ways that make fans quite happy. In fact, a study released at Midem claimed that, in a recent survey, 19% of respondents claimed they would pay anything to meet their favorite star. Now, obviously, that's a bit of hyperbole, but it does suggest a high degree of demand for access from top fans.
  2. Attention: One of the most important scarcities in the digital age. Attention is incredibly scarce, and if you've got it, you can do a lot with it.
  3. Authenticity: This one also includes "trust." The ability to be authentic carries tremendous weight and is quite scarce at times. But if you can provide something that is authentic and valuable, it's often a very strong reason to buy.
  4. Exclusivity: Many people value having something that very few (or perhaps no) others have.
  5. (New) Creation: The ability to create something new is a scarcity. This often confuses people, because a digital good once created is no longer scarce -- but the ability to create it is still very much a scarcity.
  6. Tangibility: The granddad of scarcities: physical products. Sometimes when we discuss scarcities people seem to think that we're only talking about tangible products. Nothing is further from the truth, as we often think that other non-tangible scarcities represent much larger opportunities, but that doesn't mean you should ignore the value of tangible products.
  7. Time (saving or making): People will pay if you can save them time (or give them extra time in some manner).
  8. Convenience: If you make things more convenient, many people will buy, even if free options are available. That's one reason why iTunes has done so well. Apple has made the whole process super convenient. It's also one of the top reasons why people say they buy bottled water -- even if they know the water quality is no different than tap water. They just find it more convenient.
  9. Belonging: Never underestimate just how important a sense of belonging to a group or a tribe is -- and being able to provide that in an authentic manner can be a true scarcity.
  10. Patronage: Definitely depends on the situation, but there are some people who just want to support an artist, no matter what. And that presents a scarcity.
So, we've got the list, but then what do you do with it. In my presentation, I looked quickly at a few artists (most of whom we've discussed before, so don't be surprised that you know their stories) and listed out what scarcities they appeared to use -- and made sure to include artists of all types: small to big. Among those we discussed were Josh Freese's hilarious tiers, as well as Jill Sobule's tiered offerings, noting that they involved a combination of access (hanging out with the artist, private concerts, phone calls, etc.), authenticity (in both cases, the lists were very much reflective of the individuals' personalities), exclusivity (many were limited), new creation (both involved the ability for the artists to write songs for the buyer), tangibility (offering tangible goods like CDs, t-shirts, and Josh's Volvo), belonging and patronage (big fans of both wanted a chance to support the artists they love).

We then looked at Moldover and Motoboy who each have offered really cool physical goods (Moldover's CD case that doubles as a virtual theremin and Moto Boy's wonderful music box). I showed off each of these products, highlighting how they clearly played up the tangibility scarcity as a reason to buy (as well as things like authenticity, exclusivity, belonging and patronage) to make this work.

As a final less well known artist, we looked at Matthew Ebel, whose experiments with giving fans a subscription service that provides new music and additional opportunities for access are working quite well. In that case, he's obviously using access, authenticity and exclusivity along with belonging and patronage.

Of course, this isn't just a model for small or up-and-coming artists. It can work quite well for big name artist, as well -- and on that front we discussed both Pearl Jam and Mariah Carey. As you may recall, Carey and her team put together a whole issue of Elle magazine, all about Carey, where Carey's team was allowed to sell the ads and keep the money. Some of the ads were for Carey-branded products, such as perfume. In this case, with a star this big, that particular aspect of the model is not about access (which is regularly used by smaller artists), but about belonging and tangibility (the magazine is tangible, as is the makeup that Carey was selling). But perhaps an even bigger point is that Carey was really selling her biggest fans' attention in selling advertising directed at them. As for Pearl Jam, they have their "Ten Club," which gives fans earlier access to the best tickets at shows (convenience, time saving, belonging, exclusivity) along with special physical goods, such as a special vinyl single, a magazine and other members' only contests and giveaways (tangibility, exclusivity).

Of course, there's a lot more that goes into building good "reasons to buy," but using these ten scarcities as a starting point is an excellent way to start a brainstorming process - as we did ourselves at the conference.

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  1. icon
    Suzanne Lainson (profile), 29 Jan 2010 @ 11:01am

    Re: Re: Hard to find music-related scarcities

    You seem confused over the economic term 'scarce'. While recordings of music are not inherently scarce because the cost of copying is near zero, the music itself is most definitely scarce or there would be no market for it.

    I'm not sure we really do know what the market is right now. Many consumers have become conditioned to get digital copies for free and to get streaming for free. Of course, people are still paying, but the more free stuff that is out there, the lower the price goes.

    As for live shows, yes people are still going, but in some cases ticket prices are dropping. I've seen it for both local and national shows. Some festivals are folding. Live Nation says they have to merge with Ticketmaster because both of them aren't doing that well separately. Whether or not that is actually true, Live Nation has been providing a number of sales over the last year to move tickets.

    Generally what I have been writing about is what I anticipate seeing 5-10 years down the road. Everyone has pointed out that the labels were slow to grasp the changes in the music landscape. Now I am suggesting that the DIY market place will change too as fans are given more technological tools to become their own shows. I see the music market continuing to splinter so that we have ever more people making music, and smaller and smaller core audiences for most of them. We have gone from the ability to sell millions of copies, to a time where 10,000 is considered good, to a time when I think we'll have even more people putting out music, but it will be to tiny audiences.

    There seems to be a belief that music making will continue to be mostly one-sided, from artist to fan. However, cultural trends being what they are, I think the entertainment/cultural world will be far more interactive and the concept of "artist" will change as more people think of themselves as creative. Given the choice between creating your own art and buying someone else's, I think many people would choose the former.

    What I am trying to do is push the music industry discussion forward so that people counting on the current system won't be as blindsided by potential changes as the labels were in the past.

    The irony about talking about this in Techdirt is that overall this forum advocates doing away with trademarks, copyright, and patents. So when I suggest that doing so may allow and encourage everyone to make their own music and undercut the DIY artists who hope to sell their art, then I am challenged by Mike.

    I'm looking at the research being done at universities to create more musical tools that take music to the masses. For example, we are seeing some very cool iPhone applications that allow people will no musical training to make music.

    Personally I would like to have everyone get paid a fair amount for their music. However, fans have gotten used to free and I think we have to accept that.

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