A key tenet of Code Halos thinking revolves around the power of music to understand the real “you” – your likes and dislikes around the tracks of music you listen to really can be powerful demographic indicators of everything from SAT scores to political preference. So two items out of Silicon Valley in the past week shed some light on how powerfully the music industry has been transformed, and continues to transform other industries and players in the value chain…
First, Pandora announced that it is testing its “Promoted Stations” – a tie-in that lets brands like Taco Bell, Kleenex, Toyota, and StubHub actively curate stations that customers might find listed under their “Stations you might Like” playlist. So, if you’re feeling particularly sad, blue, or disconsolate – time to crank up the “Song Sung Blue” by Neil Diamond… and buy Kleenex tissues while you’re at it. (Full disclosure – Neil Diamond is not on my Code Halo. Neil Young, on the other hand…). Pandora is riffing off a few bars from the playbook of Facebook (i.e., Suggested Posts), effectively attempting to weave the brand into the day-in-day out, highly personal interactions that customers drive, watch, respond, like/dislike, and otherwise respond to and interact with. We’ll see what happens in terms of the advertising revenue Pandora will be able to derive from it relative to paid-for subscriptions, but it is yet another signpost of the power of Social Media (and the SMAC Stack in general) to use Code Halos to augment the signal of the brand in new (and powerful) ways.
As if that weren’t enough, a second development out of the music nexus: Apple may acquire Beats, the headphone company co-founded by Dr. Dre and producer Jimmy Iovine. Should the deal go through, it will make both men billionaires (at which point my nine-year-old asked: “I already thought Dr. Dre was a billionaire from the rapping and selling all the headphones?”). The Apple connection seems natural enough – as music downloads from iTunes have fallen off recently (iTunes revenue is growing, but it’s based on the app downloads, not music), the peripherals sales of Beats could uplift revenues and augment the all-important Apple “experience” with respect to the Wearables trend (Google Glass, anyone?).
But the idea of the Apple-Beats duet has brought about the consternation of Big Box retailers like Target and Best Buy (the latter already, as wags would have us believe, the biggest showroom in the world for Amazon). According to the San Francisco Chronicle, “[these two] big-box chains that have struggled in recent years to inject excitement into the notoriously fickle electronics category, recently struck partnerships with Beats to create special product displays inside stores. It seemed probable that Best Buy might even roll out a Beats store-within-a-store - a similar concept it had already developed with Samsung and Sony.” But again, citing Code Halos 101: it comes back to the “experience”, and not “The Thing”.
Best Buy’s policy is that it will meet the lowest price – including Amazon’s. But unless you know about the policy, perhaps the only way you’d know about it within the store is by “discovering” signage while waiting – captivity – in a checkout line. And you know what those lines look like around the Holidays. “Captive audience” is an understatement. Yet, some of the most packed stores I’ve seen in the mall in years are Apple’s. A key characteristic, of course, being that the Apple Store dispenses entirely with the notion of “a line”. What if Best Buy were to equip their knowledgeable store employees with point-of-sale devices around their necks – as Apple’s stores do – to enable the checkout decision, right-then, and right there? Inventory wouldn’t necessarily be an issue; I’ll bet my Code Halo that impatient, otherwise-stuck-in-a-long-line holiday shoppers would be willing to trade protracted line-time for a 2 or 3 day delivery, a la Amazon. Chalk it up to the power of finesse, over the power of volume. And Pandora and Apple are making bets on music, Beats, and the power of finesse – through Code - to make it so.