Sony’s release of its Apple (iOS) compatible Music Unlimited streaming service, intended to challenge Spotify’s iPhone app, is a natural and welcome step in line with changing customer music needs and behaviours (http://www.thevalueengineers.com/2012/01/26/spotify-the-low-key-music-revolutionary/). Streaming is the future for all forms of digital entertainment, and music is leading the charge.

But I think Sony is missing a trick here. They offer two subscription packages: $3.99/month for listening to pre-determined channels (radio-style?) and $9.99 for access to Sony’s music library consisting of 15 million songs. Spotify’s catalogue has long surpassed 15 million, but more importantly, there is no clear incentive for any one customer group to switch to Music Unlimited.

As I have argued before, Spotify’s finest trick was to get people hooked in the first place by offering free music access. Here at The Value Engineers, we see time and again that consumers do not appreciate the value of technological innovation until they’ve tried it themselves. There are high barriers to adoption in place, and only a truly motivating and appealing incentive will push people to give new technology a go – and therefore fully experience the benefits that innovation offers.

Sony is not offering any such incentive. There is no free service to get customers to buy in, so Music Unlimited will struggle to convert iTunes/CD people to streaming. And for those of us who are with Spotify – well, there are no clear benefits to switching. And switching is a pain in itself.

One thing’s for sure: the Battle of Streaming has only just begun.

Sony's Music Unlimited

I love Gaymers. It transcends my two great passions in life – cider and festivals. For me it has become synonymous with brilliant music, muddy wellies and frolicking in the sunshine. In the competitive cider market where virtually identical brands vie for the attention of young urban professionals their strategy of branding around music and bringing it to life through festivals is a stroke of genius.

Their packaging re-launch is yet one more step in that direction. It is a clear move away from the visual cues associated with ‘standard’ ciders such as Magners and Bulmers (see below) such as the bottle shape, gold label, focus on provenance and ‘originality.’

Gaymers’ new look is clearly influenced by visual styles and emerging cultural codes associated with festivals. The bright block colours and playful retro typography come up time and again in the likes of Bestival and Lovebox and thus help position Gaymers as an affiliate of the liberal outdoor music culture. By comparison, the ‘standard’ cider look begins to feel formal and stuffy with their carefully crafted ‘signed’ labels.

When everyone talks about originality, it stops being original. The introduction of Stella’s Cidre brought a welcome shake-up to the category and drove many estbalished cider brands (inclusing Magners) towards premiumisation. Gaymers have recently been hit by this trend as they were stuck in the middle, but the current move is a clever competitive response which should hopefully grow not just their sales but the cider category in general. I, for one, am really excited.

Nintendo blaming price promotions (http://www.marketingweek.co.uk/news/nintendo-blames-price-promotions-for-profit-slump/4001363.article) for a profit slump is nonsensical; discounting is only ever a symptom of an underlying business problem rather than a cause. Strong brands and product manufacturers do not need to reduce their prices to shift volumes. Judging by Thursday’s announcement Nintendo’s recent focus has been to desperately cling onto market share, even at the cost of profitability.

The underlying reason for such ailing fortunes is the expansion of their competitive set. The digital revolution that is underway in gaming (as well as most other industries) is fundamentally altering consumer behaviour in a way that is squeezing Nintendo’s devices out of the market – who wants to buy a hand-held console if they can download the games onto their iPhone for a lower price? Portability and convenience used to be Nintendo DS’ great selling point, but carrying one device is infinitely more convenient than carrying two.

This is part of a wider trend in technology that is leading the consolidation of devices into a fewer number of formats, each of which acts as a multi-purpose platform. The result is that Nintendo’s strategic focus going forward should be on software rather than hardware, both from the point of view of the market trends and the core strengths of their brand in the eyes of the consumer.

Once upon a time, luxury brands were premium and budget brands were mass-market.  Yet as consumers become more demanding, brands are becoming ever more creative in meeting multiple, seemingly irreconcilable customer needs.

The launch of Bloc Hotels is in Birmingham is the latest in a series of such feats.  A ‘Boutique Budget’ hotel brand, Bloc has developed a new model based on an in-depth understanding of customers’ behaviour and needs when travelling on a budget (rooms start at £30).

As most short-stay travellers do not unpack and prefer not to eat in their hotels, Bloc has chosen not to offer storage or dining facilities.  The resulting savings mean that its hotels can focus on those elements that cue a premium accommodation experience for guests: for example luxury linen, powerful drench showers, state-of-the-art WiFi and HD TVs, and a superb location.

By focusing on the brand touch points that make a real difference to its customers, Bloc is able to provide a luxurious experience in spite of its failure to tick all of the customary ‘luxury hotel’ boxes (with associated price tags).  This innovative challenger model has potential to shake up not only the travel industry, but also potentially any luxury product category.

Even if you can’t build your customer experience from the ground up, do you have a full understanding of what’s important to your customers and what isn’t?  Focus on the elements that have a real impact on consumers’ perceptions, rather than wasting resources on those that don’t, and you can create a superior experience without an associated increase in cost.

If you’re interested in identifying and innovating around the touch points that are most significant and differentiating for your customers, drop us an email today to find out more about how The Value Engineers can help you chart and make the most of your customer journey.

It’s hardly news that the music industry is changing fast and being forced to adapt by the likes of iTunes and YouTube.  What is not, however, being shouted about enough is Spotify – and its dramatic takeover of the hearts and minds of youngsters who will define the music industry landscape of tomorrow.

I’m a Spotify Premium customer, meaning I pay £9.99/month for unlimited access to virtually all music that is out there – including streaming onto my iPhone. I do not own any music, don’t use the iPod function or even have iTunes. Spotify meets my music needs better than any other brand.

In the pre-Spotify era I would not have dreamed of spending £120/year on CDs or downloads, but now feel it’s providing me with such good value I don’t think twice about it. It is their ability to innovatively monetize the market that seemed like it was fast heading into the abyss of promotions (HMV) and giveaways (YouTube) that I admire most.

It’s true that Spotify’s profitability and financial future is a very controversial issue.  Yet no matter how healthy their finances are, it is critical to appreciate the revolutionary nature of their new revenue model. At a time when piracy threatens the music industry an approach that gets customers to pay more for accessing music whilst feeling they are getting better value is not to be sniffed at. The consumer interface of this model is a brilliant innovation, and even if Spotify are unsuccessful at making its financial ends meet other music providers should take note.

The other major breakthrough was the introduction of Spotify Social. Having access to your friends’ personal playlists and seeing which music they listen to in real time puts social media onto the next level in in terms of creating meaningful bonding experiences in the digital space. Compare this with Facebook – the Social Media King – whose Timeline has done more to confuse consumers than add any emotional value to their online relationships.

Spotify have not yet got it right. But they’re onto something, and the music industry better take notice of this completely new way of engaging with their audiences. After all – iTunes caught the big players unaware, and many (HMV included) have still not developed a strong enough platform to compete with Apple. History might be about to repeat itself.