Tuesday, September 12, 2006

Trying to market music? Don't try to predict hits

This month's Harvard Business Review discusses a study by three Columbia academics on the effect of social influence on selecting music ("Marketing in an Unpredictable World" - $$). Students were grouped into "worlds" and allowed to see how many others in their worlds had downloaded certain songs, compared to a control group who didn't have any information about who else was listening to what.

There were three main findings of the study:

First, social influence increased the inequality of outcomes in all eight worlds, meaning that popular songs were more popular and unpopular songs were less popular. Second, however, which particular songs would turn out to be successful in any given world was more difficult to predict. And third, both inequality and unpredictability increased as the strength of social influence was experimentally increased.

It is well-understood that social networks influence music purchases (what are the metalheads listening to? the goths? etc.). And it's always been impossible to predict certain hits (where did "Mambo No. 5" come from? Or "Come On Eileen"?).

Given the rise of the internet, especially social networking sites like MySpace (never mind the decline in terrestrial radio), social influence--electronic word-of-mouth--is increasing. This study clearly refutes the conventional wisdom that the best way to run a music business today is to find raw talent, create hit songs for them, and force them to the top of the charts via marketing.

The HBR article recommends that media companies instead make lots of smaller bets, monitor the market carefully, and adjust to it as it changes. "Marketers," they conclude, "should therefore abandon the notion that they can either anticipate or determine specific outcomes and instead develop their ability to measure and exploit consumer demand as it arises."

Marketers hate losing control. Can they embrace this world where groups of listeners decide what hits are, and the record companies simply respond to those groups? We'll see.

, ,