PepsiCo’s got a problem.\u00c2\u00a0 Its signature soft drink and the products of its Frito-Lay division make you fat.\u00c2\u00a0 And obesity has become a worldwide epidemic.\u00c2\u00a0 How to survive in the future?\u00c2\u00a0 Convince people that being fat is good, keep selling them what you always have, or reengineer your products for the future?<\/p>\n
That’s the subject of an article in last week’s "New Yorker" about innovation.\u00c2\u00a0 The new CEO of PepsiCo is all about the future, looking ten years hence.\u00c2\u00a0 The company is consumed with making potato chips with less salt (did you know you can only taste a small percentage of it, even though you ingest it all, and PepsiCo has invented a new salt shape to get you to eat less but still be satisfied?), and snacks out of vegetables.\u00c2\u00a0 PepsiCo is trying to stay one step ahead of the public and the government, it wants to ensure not only its survival, but its continued triumph.<\/p>\n
I woke up today to read that Hewlett Packard sold 20% fewer personal computers.\u00c2\u00a0 HP is the number one manufacturer, in case you didn’t know.\u00c2\u00a0 The company’s in trouble because the former CEO did not prepare it for the future, he was focused on short term results.\u00c2\u00a0 There was not enough development on services and the company’s lunch was eaten by Apple, a company that delivered a product so far ahead of its time Steve Jobs touted its magic more than any specific use.<\/p>\n
Yes, the iPad is a triumph.\u00c2\u00a0 And will continue to be because its a marriage of great hardware and software, it just works, and Apple has cornered the market on so many components that the iPad is cheaper than competitors.\u00c2\u00a0 Could the iPad be the new iPod?\u00c2\u00a0 Owning almost all of the market?\u00c2\u00a0 Many analysts believe it could be.<\/p>\n
Then we’ve got the music business.\u00c2\u00a0 Where record companies continue to sell CDs and the concert experience is overpriced and lousy.\u00c2\u00a0 Do you really think people will be buying CDs ten years in the future?\u00c2\u00a0 Do you really think people will continue to be abused by Ticketmaster and be happy buying overpriced lousy seats in the back when brokers get the good stuff up front?<\/p>\n
Check Apple’s numbers.\u00c2\u00a0 Then check the music industry’s.<\/p>\n
Looks like music is lacking the vision thing.\u00c2\u00a0 Not only in business, but music.\u00c2\u00a0 Where is the new music that’s cutting edge, that people didn’t even know they wanted, but love so much?<\/p>\n
Give Ticketmaster credit for seat maps and dynamic pricing.\u00c2\u00a0 Even give Live Nation credit for its Groupon deal.<\/p>\n
But what is Michael Rapino doing about bringing down costs?\u00c2\u00a0 We need a complete rearchitecting of deals.\u00c2\u00a0 Rapino says he’s got to overpay because everybody else does.\u00c2\u00a0 But as the biggest buyer, he’s got to institute discipline, he’s got to say no. Otherwise, not only is Live Nation hurt, so is the entire business.<\/p>\n
And the acts scalping their own tickets and refusing to bake in Ticketmaster fees…\u00c2\u00a0 Is this the last tour you’re ever going to do?<\/p>\n
As for the record companies…\u00c2\u00a0 Their only innovation is the 360 deal.\u00c2\u00a0 Give me more for less.\u00c2\u00a0 If you think that’s innovation, you’re probably happy when the airline charges you for bags.<\/p>\n
And don’t listen to the public.\u00c2\u00a0 That’s screwed up music forever.\u00c2\u00a0 Not only callout research at radio, but formats and albums. The public doesn’t know the future, you forecast and deliver it and people come along.\u00c2\u00a0 Isn’t this how Netflix became a streaming company almost overnight?<\/p>\n
At one point in time, forty years ago, music was so far ahead of the public, people couldn’t catch up.<\/p>\n
Now music is behind.\u00c2\u00a0 Tell me why I should buy the music of this new act which is an imitation of the old?<\/p>\n
Yes, our problems have finally come home to roost.<\/p>\n
Apple killed the floppy.\u00c2\u00a0 Moved to USB.\u00c2\u00a0 The labels would be best to kill the CD and move to tomorrow’s dominant delivery method.\u00c2\u00a0 But they won’t even authorize Spotify.\u00c2\u00a0 Worried about losing revenue today, they’re hurting their prospects tomorrow. You’ve got to get the public to buy subscriptions, buying by track is an economic disaster.<\/p>\n
There was a huge upgrade in movie theatres.\u00c2\u00a0 With stadium seating and better food and you go to the gig and you’re treated terribly and overpaying for food a ten year old doesn’t even want to eat.<\/p>\n
Reasonably priced, innovative acts which are easily accessible and deliver a steady stream of product.\u00c2\u00a0 Albums are already passe.\u00c2\u00a0 Have you checked Katy Perry’s album vs. single sales?\u00c2\u00a0 As for those acts with albums that do sell, it’s not evidence of the sustainability of the format, it’s evidence that they’ve got fans, from whom revenue can be maximized, with a steady stream of new material as opposed to a spoon-fed album every two or three years.<\/p>\n
If anyone could license music at a fair price we’d see amazing innovation.\u00c2\u00a0 That’s the power of tech, that’s the power of the younger generation, adept at computers.\u00c2\u00a0 But the old guard is holding them back, the old guard doesn’t want the future.<\/p>\n
It’s like we’ve got a constant going out of business sale.\u00c2\u00a0 It’s like we’re still selling CRTs when the flat screen is now available and the wisdom of building streaming capability into the set, in other words making it Netflix-compatible, cannot be seen.<\/p>\n
Doug Morris running Sony? Isn’t that like hiring your grandpa to replace Steve Jobs?<\/p>\n
There’s no need to further delineate the failings of the old.<\/p>\n
But it’s clear, there’s no focus on the future.<\/p>\n
Maybe because with today’s entities it was never the employees’ money.<\/p>\n
Steve Jobs started Apple.\u00c2\u00a0 He isn’t just an employee.\u00c2\u00a0 Would Irving Azoff overpay himself at Live Nation if it was HIS money and he was invested in the company’s long term future?<\/p>\n
They pay with stock options in Silicon Valley.<\/p>\n
In Hollywood, everybody wants cash up front.\u00c2\u00a0 Because they don’t believe in tomorrow.<\/p>\n
The future ain’t gonna look like the past.\u00c2\u00a0 I guarantee it.<\/p>\n
If you’re not prepared for what’s coming, you’re gonna be left behind.<\/p>\n
P.S. Talk about being clueless regarding the future, the RIAA is lobbying for legislation to combat physical piracy.\u00c2\u00a0 Isn’t this like the CCIA (the computer association) lobbying to combat fake ribbons for dot matrix printers?<\/p>\n
\nState lawmakers weigh anti-piracy bill to allow warrantless searches of CD and DVD makers<\/a><\/div>\n<\/blockquote>\nP.P.S. Goodyear is shifting from blimps to zeppelins.\u00c2\u00a0 Be clear, it’s the music business that’s afraid of change, not innovative companies.<\/p>\n
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