Market Share
He not busy being born is busy dying
"It’s Alright Ma, (I’m Only Bleeding)"
Bob Dylan
I’m reading the new "BusinessWeek". Or as it now says on the front page, "Bloomberg BusinessWeek". And that makes all the difference.
I noticed it last week. The usual tech suspect was gone. The guy who was a mealy-mouthed me-too reviewer is history, replaced with a nerd who doesn’t appear to ever see sunlight, who’s willing to go a bit deeper and show an edge.
Somehow, the fat has been cut from the magazine. And the features in the latest issue hit a bit harder, they’re more incisive, more authoritative. Rather than worrying about pleasing advertisers, there’s a bit of independence.
Well, I’m not sure that description fits Charlie Rose’s interview with Howard Stringer. A well-liked man with a terrible track record, Sir Howard has yet to turn Sony around. And Charlie, who first and foremost yearns to be your friend, tees it up for Sir Howard in classic Larry King fashion, he lets Sir Howard shine.
Until the end of the magazine. Forty five pages later, Mariko Yasu analyzes Sony’s stock. Its shares trade for less than the assets’ value. Sony’s stock surged 39% from last year’s battered price. But Samsung’s rose 77%.
Samsung.
Ten pages earlier, the strategy of the two rivals is delineated. Sony’s gone to outsourcing, Samsung’s still making all elements of its LCD tvs, selling Sony glass in the process. End result? In 2006, Sony had 17.1% of the LCD market and Samsung 15.3%. Last year, Sony’s share declined to 15.3%, but Samsung now maintains 22.7% of the LCD market. And Samsung makes high-priced sets.
Meanwhile, Samsung sold $17.5 billion worth of electronics in China while Sony only moved $18 billion in all territories outside Europe, Japan and the U.S combined.
In other words, Samsung is the new Sony. Happened just about that fast. While you were focused on the travails of reality TV stars. While the iPod became long in the tooth and was superseded by the iPhone and iPod Touch.
Wow.
Just as interesting is the resurgence of Atlantic Records. Columbia ended up winning the market share race, with the combined once in a lifetime sales of Susan Boyle and Michael Jackson, but up until this last SuBo surge, Atlantic was number one.
And Interscope was..?
Jimmy Iovine is off revolutionizing sound at Best Buy, selling Beats headphones. But if I were Vivendi, I’d be worried. Is this strategy contributing to Universal’s bottom line? What is Jimmy Iovine doing to prepare Interscope for the future? What is Universal doing to prepare for the future?
There’s Vevo.
But didn’t Warner prove that you’re better off not operating outside of your core competency? With both Bulldog and LaLa? Vertical integration is a failed eighties concept. Once upon a time, CBS owned record stores, that didn’t help them sell more product and they ultimately got rid of Discount Records.
Howard Stringer talks about 3-D, he’s banking on music… Seems to me, he should be focused on electronics, that’s Sony’s core competency. But Sony is losing there. Dramatically.
Atlantic is leading the way in 360 deals. And Warner derives much more of its revenue from digital than any other major.
My point is not that the major label paradigm is the future, it’s just that if you are a major label, what is your strategy for the future?
More than ever, it’s a tough row to hoe. Because there’s always someone around the corner poised to eat your lunch. Motorola rode the RAZR to the brink of irrelevancy, the mobile phone company might never recover. NOKIA peaked. Apple demonstrated that people would pay a lot for functionality they were previously unaware of. No one can compete with Apple’s App Store. Not even Google. All Android phones reserve only 190 MB for apps, whereas on an iPhone, you can fill up the entire memory, 8, 16 or 32 GIGS!
But better than that, the iPod Touch has all the same functionalities, except for making phone calls. Making the market for apps that much stronger.
In other words, Apple’s got market share. For now.
Microsoft is Universal. The shrinking behemoth. So busy protecting what they’ve got, overburdened with overhead, neither can make a move, it’s just too risky.
Let someone else sell the music. Whether it be Apple, Spotify, MOG or… Focus on creating that which is desirable.
And one thing we’ve learned, most of what the major labels create is not fully desirable. It’s made to run up the radio chart, not to do live business. But live business is where the revenue is, and if you’ve got a 360 deal, you want big grosses. Meaning that to prepare for the future, you should be selling what appeals to ticket buyers, not radio stations.
Whatever innovation Live Nation has delivered has not been viewable by the public. And Ticketmaster has an image that eclipses that of the RIAA…as in negative. Ticketmaster doesn’t even seem to be making an effort to change its image. It’s just banking on its exclusive relationships.
But what we find in the modern era is the public catches on to quality very quickly. It’s hard to sell crap for long. Just ask Detroit.
So to continue to come out on top, you must constantly be reinventing yourself. And this takes risk. And stunningly, too many entertainment companies are afraid of risk, even though the riskiest projects create the most revenue down the line.
We don’t want to see the 1910 Fruitgum Company, we want to see Paul McCartney. Even Jethro Tull. There’s some substance underneath. Vanilla Ice may have turned his image around, he may now be somewhat likable, but there’s still very little there at the core. He’s got fame, but no revenue. Whereas Phish has got a modicum of the fame Rob Van Winkle possesses, but tons more revenue.
But Phish has not figured out how to tap the younger market. Their audience is aging. And this is problematic. There’s no enticement to today’s college students.
And there you have the modern music business. Let’s just continue to do what we’ve always done.
But that hasn’t worked for Sony…
