The Economics of Consumer Attention

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by: David Jennings

Here's the beginning of an article I've written for the current issue of Five Eight — for the full article, please subscribe to Five Eight monthly.

A recent survey by The Guardian asked the question "Where do you go to find out what music to listen to?" Of the sixteen options they listed as possible answers, over a third are web-based and did not exist a decade ago. What's more, these online channels are themselves fragmented, each jockeying for listeners' attention.

So where should the industry invest its money and effort to reach its target audience? The economics of consumer attention suggest strategies that target 'trusted intermediaries' to build profile and reputation. Only when an act already has an established reputation capable of guaranteeing attention is going direct to the audience a reliable tactic. [excerpt ends]

[Update 25 May 02005: Five Eight's editor has kindly agreed that this article is now a 'catalogue' item and can be published here in its entirety, so here it is (including links not available in the print version!).]

One Recommendation Under a Groove

Put yourself in the shoes of a general music punter, looking to discover new music. The number of sources of information and recommendations is bewildering — and growing.

Rule of Thumb #1
People prefer to find a habit that they trust and which works for them and then stick with it as long as they can.

(I'm calling these rules of thumb because there will always be counter-examples, like 'early adopters' of new technologies, but the rules work for most people most of the time.)

The tendency is to identify a few sources you find you can trust, and rely on them as a source of new material until something happens to shunt you out of that rut.

Rule of Thumb #2
To be a trusted source requires some degree of independence from artists and labels (unless Rule #4 applies).

Remember these sources may include just information (magazines, web site reviews), audio (radio, TV), and/or purchasing opportunities (online stores, some other web sites). Online and mobile communications enable more and more channels to offer routes to purchasing, and affiliate deals with online stores are inevitably attractive to providers of online reviews in the absence of other revenue streams.

So far the major online stores are following Amazon's lead: combining a comprehensive all-tastes-catered-for catalogue with 'community' features for consumers to rate items and curate their own collections.

Back in the shoes of our curious punter, the risk is that — while vastly more review information is available — the integrity and quality of reviews diminishes: a Tower of Babel of opinion and counter-opinion. The problem of contradictory views sometimes leads to risible technical solutions, such as Amazon's introduction of ratings for the raters (as in 'Top 500 reviewer' etc). There are few places left for the authoritative, opinionated love-it-or-hate-it standpoint that characterises strong criticism.

Faced with this, the alternative is the long-winded option of sifting and weighing different sources of information to determine the balance of opinion.

Rule of Thumb #3
Trust in one source is reinforced and amplified if consistently backed up by other sources.

Reluctantly our punter is more or less forced to spread her attention across a wider range of media and channels, almost in spite of Rule #1 — though again preference will be to stick to a select range.

The 'killer app' in this domain would be a system that reliably gave new music exposure to an audience that trusted the system enough to pay attention. Two approaches have been attempted. One is to use 'intelligent' technology to track audience preferences and anticipate individuals' future interests on the basis of profiling — this is the Customer Relationship Management or one-to-one marketing approach. The second relies more on the audience's own intelligence, providing them with online social spaces where they can align themselves with peer groups and then the peer group acts as a social filter and channel for new music to spread. Examples include BBC Collective and, the latter having recently tried a two-way promotion whereby REM fans might have been attracted to become members and enjoy an exclusive online album preview, which might in turn create an advance buzz for the wider release.

Both approaches have their evangelists and sceptics. While it's too soon to say whether either or neither will create the killer app, it's clear that they haven't yet.

The Internet has been trumpeted as an end to 'intermediaries' of all kinds, from record labels to music radio. What Rules #1-3 show is that people still need some context in which to discover new music. The nature of the intermediaries is changing, however: they are more diffuse; and possibly less powerful individually as a result, but more powerful collectively.

The Internet lowers the barriers to becoming a source of new music or any kind of intermediary, but it raises the barriers to being noticed and trusted.

This leaves open a window of opportunity for artists and labels who can count on being noticed.

Rule of Thumb #4
Once you have enough trust and reputation in the bank, you can trade directly with almost anyone.

Effectively what this means is that your audience attaches more credibility to your music than to someone else's review of your music. Now you really can cut out intermediaries when dealing with that audience, as the likes of David Bowie, Phish and Marillion have shown.

Again there are counter-examples — Damien Rice has been cited as showing that you can 'go direct' before you've established a major audience. But it would be as foolish to see this as a model for all artists as it was to predict that The Blair Witch Project would threaten the Hollywood big-budget model (though, at the time, some commentators did!). And conversely, established acts with fiercely loyal followings, such as King Crimson, have found that the financial viability of trading direct can be marginal at best.

What does this mean for an industry keen to promote new product and exploit new channels?

For the foreseeable future — until the format wars and brand profile tussles are settled — the big online stores (iTunes, Napster, mycokemusic etc) are likely to compete for dominance on size of catalogue rather than style or content. They will offer few opportunities to break new bands.

In dealing with the other, proliferating, media sources promoting new music, there is no magic bullet for the industry, just as there is no straightforward solution for the punter. Guided by Rules #1-3, anyone promoting a new act should spend some time researching and understanding the main target audience: what are the media and channels that they trust and feel comfortable with?

Having identified several routes to the audience, be prepared to play a long game, and keep it as broad as possible across the target channels. Remember the punter's attention is increasingly spread across several of these sources. What you are aiming for is to create for them not a short, sharp media blitz — or at least, not just that — but a consistent, extended awareness that gets reinforced by repetition and recommendation from several directions.

If you can build a reputation in this way, you may ultimately be able to bank it by building a direct relationship with your audience.

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