Music buyers have stopped buying CDs forcing retailers into drastic action. Fopp, for instance, has closed down all 105 of its High Street stores. At the same time, music giant HMV has seen its profits halve in the past 12 months. At the same time digital music sales have doubled in the past year and "file sharing" is proving immensely popular - and easy. Indeed, only yesterday the music industry pounced on a manufacturing plant where it was thought that a major music piracy scam was taking place.

Yet the demise of CDs appears to have taken the music industry by surprise. It is only in the last couple of years that they even realised they could make money online from selling music. Yet that was an obvious development out of the proposal made by Philips in 1991. It seems as though the music industry had its ears closed to the sounds coming out of the technology world. Now, they are in trouble.

But it's only the retailers who have big problems. Traditionally most of the money you spent on a CD would actually go to the retailer - at least 50% of the price of a CD went to the retailer. Of the remainder, around 10% went on distribution, 15% on production costs, leaving 25% to be split between the record company and the artistes. The bands actually made most of their money from radio airplay and live gigs, CD sales were not that important in financial terms. For record companies, live concerts, TV and radio plays and all the other licensing deals were important sources of income as well. So for the producers of music, CD sales are not that important.

Retailers, however, seemed to think it was the record producers and artistes who should do something about falling CD sales - yet why should they as it was of little real financial concern to them. Music retailers have had a "head in the sand" or "it's not our fault" kind of attitude for several years now. That's why they are suffering; they only have themselves to blame.

It has happened right across a range of industries affected by the Internet. We saw book publishers and bookshops bleating about the "damage" being done by Amazon. We have seen the film industry moan like crazy about online film availability. Well guess what guys, the world has changed. What worked yesterday might not work tomorrow. The problem is that for many industries their systems have worked for decades; they are entrenched in old ways of thinking and cannot adapt to the new world opened up by the Internet. Yet, the online world changes rapidly and the audience moves quickly. If you have any kind of business and your online systems do not adapt and change at the same pace as the Internet does, you will lose out. In the coming years we will see online retailers complaining and suffering in the same way as CD stores now. These online businesses will not have adapted to the new ways of shopping and will suffer as a result. If you want to succeed online you must stay at the cutting edge. And unlike record retailers you must not allow developments made 16 years ago to sit unnoticed before you act.

Labels: shopping

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People all over the world are logging onto to social networks. At least that's what you would believe if you looked at the media coverage of things like MySpace and Facebook. However, new research from Nielsen NetRatings suggests something altogether different.

According to their latest analysis less than one in ten people who use the Internet are actually visiting any of the social networking sites. Even though the number of visitors is growing, it still represents a minority of web users. In other words the "fuss" about social networking does not represent the degree of usage.

While MySpace and Facebook battle it out for being the "top dog" in social networking, the rest of the world is happily going about its business without even bothering with either of them. Meanwhile "behind the scenes" of the big push of such general social networking sites, smaller, more specific social networking sites are being built. Social networking sites for instance like Bounty, for new mums which appears to attract a significant slice of mums-to-be. What might be called "vertical market" social networking is gaining more audience share than general sites like MySpace.

Rupert Murdoch may have sunk tons of cash into MySpace and, for all we know, may be making a return on his investment. However, it is more likely from these figures that more profit will be made from niche networks, rather than general ones. People rarely connect generally - there is always some common interest they share. Owning a collection of niche social networking sites will be more profitable for a big company than owning one general site.

On the other hand - you could always start your own social networking site for your own niche. Several pieces of software now exist to enable you to do this relatively easily. Ning is proving to be highly popular and so too is KickApps - both worth a look.

Labels: social networking

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At June 29, 2007 5:59 PM  Eric Alterman said…

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Women prefer web sites to help advise them in making purchasing decisions. New research shows that over half of women will take the advice of a web site over the information provided by friends or family.

In the past people generally took the advice of friends, family and colleagues first, only using the web as backup or for confirmation. Now it seems that the credibility of the web is greater than that of the people we know. Earlier studies have demonstrated the fact that in the past business people tended to refer to their contacts for advice and information. Similarly, they now go to the web first, only referring to people they know if they can't find what they want online.

What this means is that your business can no longer afford to simply have some kind of brochure site. It needs to have a range of credible advice and information available online in a variety of formats. People are making decisions based on advice and information they get online, rather than the ideas they get from their friends and colleagues. Your Internet "footprint" is even more important than ever, it seems.

Labels: internet psychology

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At June 29, 2007 1:33 AM  Jeremy Jacobs said…

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Gordon Brown becomes the Prime Minister of the UK today. In a much heralded move, after ten years as Chancellor of the Exchequer, he gets the job he really wanted in the first place - the boss.

How Dr Brown achieved this is a tale that anyone marketing on the Internet needs to take note of. A long time ago, in a land far away - well Scotland to be precise - Gordon Brown was a university lecturer in politics before becoming a TV journalist. He had clearly wanted to become a politician because it took him a couple of attempts to get elected.

But once he was elected as an MP he quickly rose through the ranks of the party. He did this because his Ph.D studies, his lecturing and his journalism brought him into contact with the people who mattered - the powers that be within the Labour Party. Gordon Brown clearly spent several years connecting with people in the Party, glad-handing the important people and generally making himself known.

There is the supposed restaurant "deal" between himself and Tony Blair during which they agreed that once Tony resigned from being Prime Minister, Gordon would take over. We are now seeing that deal come into play. But how did Gordon Brown get into the position in which he could make such a deal?

He achieved this by becoming known. He is widely known within the Labour Party, within the circles of power and within the political world generally. The same is true for anyone in the higher reaches of Government. True, they may have ability, but most of all they are simply well-known.

Gordon Brown achieved such "fame" without the benefit of the Internet - though he could have used it. Instead, it was face-to-face meetings, articles, speeches and books that got him known amongst the right people.

Yet translate that onto the world of Internet marketing and what do we see? We see so-called experts telling us to tweak our headlines, to use "secret" methods to get to the top of Google, or to pile our pages with bonus offers. Yet consider the truly successful people and businesses, like Gordon Brown or Richard Branson's Virgin Group. They all achieve their success without such minutiae. They spend most of their time connecting with real people.

For anyone trying to succeed online this means learning from the Gordon Brown experience. Get out there, meet people, give talks, write articles and generally make yourself and your company known. You will gain more online sales this way than following the advice of so-called gurus who the world has never heard about.

Labels: internet marketing

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At June 27, 2007 11:27 PM  Jeremy Jacobs said…

At June 28, 2007 3:37 PM  Gerald said…

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Blogging can contribute a great deal to your web site. But if you don't back up your blog and your blog server breaks down, there's a chance you will lose everything. Even if you only write around 150 words a day, that would be 55,000 words over the year. If your blog broke down in any way, you would have to re-create the whole lot again - a complete book's worth...!

Thankfully there's a new service around which automatically backs up your blog every day - and it works with all the main blogging services. At the moment it is in beta form, so accounts are being issued free of charge.

It could be well worth looking at BlogBackupOnline.

Labels: blogging

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Bloggers are rare. Strange as it may seem with millions of blogs being posted every day, blogging is a minority activity. Yet as anyone who knows anything about Search Engine Optimisation will tell you, blogging is a sure-fire way to get attention. So it's a surprise that so few businesses are turning their web sites into blogs.

Research published in Entrepreneur magazine shows that 21% of business marketing staff are not familiar with the term "Web 2.0" - the new technology collection that includes blogging, social networking and so on. Surprisingly, of the marketing people who are aware of what Web 2.0 can offer, only a third of them are using such technologies. What this means is that three quarters of all businesses are not using any kind of Web 2.0 features, such as blogs.

Considering that the term "Web 2.0" was brought into play over four years ago it is worrying that business has become slow to change online. Most businesses do find change difficult anyway, but online things change within days, so speed of response is essential. What has happened now is that most businesses have allowed a huge four-year window to open up, meaning that online competition has grown against these traditional firms. That means when they do eventually take up blogging, they are going to find it very hard to get search engine positioning and resulting traffic because of the people who have been blogging away happily on their topic for the past few years.

The lesson for anyone in business is do not put off adopting new online technologies. If you do, someone online will take up the challenge and reduce your future impact. So if you haven't started a blog yet - do it today.

Labels: blogging

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Criminals are having fine old time online. Indeed, yesterday The Pentagon had to shut down its entire email system because it had been broken into by hackers. This news comes less than a week after a study showed that almost half of online businesses are victims of cybercrime.

The editor of PC World magazine said in his editorial this month that when online we appear to accept lower standards of security than for offline businesses. If a bank lost our pin numbers, he wrote, we would be furious. But if a web site gets hacked and our passwords get stolen, we just accept it and start using a new password.

Crime is easy online. Few web sites are secure. Everyone argues it is someone else's responsibility. If your business is broken into online your service provider can argue it is your web designer's fault. Your web designer can argue it is the broadband provider who is to blame. And your broadband provider can argue it is your own PC where the problem lies. Offline, if your premises were broken into its clear - it would be your own security measures that were at fault.

However, in the physical world we feel we can do something about crime prevention. Online we seem to believe that we can do nothing about it. For instance, a significant proportion of people have no anti-virus protection because they think they are going to get attacked anyway, so why waste money on the software? Others store customer credit card details in a text file on their server, assuming that no-one could get to the data, even if they wanted to.

But your online business stands a real chance of being broken into. Plus, there are several things you can do to enhance your company's security. Cases like The Pentagon's recent break in make us think that if they can't prevent cybercrime, what hope do the rest of us have. In the weeks to come, though, we will discover they had made a fundamental and basic error in their systems. Every online break in comes down to simple security measures that were not taken. In most instances, web sites are behaving rather like shop owners who leave the front door open at night.

Labels: internet

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Internet users of the future are unlikely to have full concentration on your web page. New research on teenagers shows that they are significant "multitaskers". In other words, unlike the average Internet user (aged in their mid-40s) the future Internet users will not only be looking at your web page - they will be doing something else at the same time.

The report on "multitasking consumers" shows that the vast majority of Internet users aged between 11 and 17 look at a web page whilst also doing something else. Most commonly, this age group is watching TV whilst surfing the web. The chances are this ability will persist into adulthood. When current adults were children they were told to concentrate on one thing; that's why we find it more difficult to multitask. Today's growing teens are not given such advice, or they are ignoring it, because they clearly can do several things at the same time.

The problem for online businesses is this - which task is in the "foreground"? Are these teens able to keep all their current tasks active in their mind, or do some tasks take a higher priority? We need answers to those questions, otherwise your advertising and promotional messages could be in the wrong medium.

Clearly, researchers will be looking into the multitasking phenomenon. In the meantime, it means that online business should not rely on a single medium for their message. What you have on your web site needs repeating in other media as well. So your web site can only be a part of your business strategy - you need offline media use as well.

Labels: future, internet psychology

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At June 24, 2007 11:16 PM  Gerald said…

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Researchers at Dartmouth College in New Hampshire have discovered some interesting new information on the effect of choice in buyer behaviour. According to the study published in Psychological Science, choice of available options has a varied effect on buyer behaviour.

Previous research suggested that choice actually prevented buyers from making a purchasing decision. There was evidence that people did not buy items if there was a multitude of choices. However, there is also research which shows that people do not buy if there is no choice.

The Dartmouth College researchers have looked at this conundrum and found that choice and buying behaviour are not linked in a straightforward manner. It seems that too few choices means less purchasing taking place, as does too many choices. There appears to be an "optimum" level of choice which makes it much more likely that people will buy.

In the study more than twice as many purchases were made for 10 choices compared with four choices. However, purchasing hit rock bottom for 16 options. In other words, if you give your buyers too few options to choose from, they will decide not to buy. Equally if you give your buyers too many options to choose from they also are less likely to buy. Having 10 options to choose from appears to be the level at which most purchases are made.

This has implications for the way web shops are designed. Too many items that can be seen or too few and you cut down your likely sales. Similarly, for single item sales letters, it would seem that having options to choose from would increase conversion rates as well. For instance, if you are selling an ebook perhaps give people the choice of having the ebook, the printed version, the audio version, the emailed version, the web page version or a package of all of these. Giving a selection like this would appear, from this research, to increase sales.

Labels: internet psychology, shopping

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At June 24, 2007 11:12 PM  Gerald said…

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Readers of the Financial Times are a canny lot. After all, you don't get to be concerned with the financing of the country unless you know a thing or two. So it was interesting to read in yesterday's newspaper that the City believes that social networking on the Internet is at least as important as the dot com boom of the late 1990s.

Back then companies invested millions of pounds in business ideas, only a few of which worked online. Now, the likes of YouTube, MySpace and so on are racing around the globe in a bid to set up localised versions of their successful US sites. Everyone it seems from the companies themselves, their investors and the FT believes that social networking is the holy grail of Internet money making.

We have been here before, of course. Ten years ago everyone knew that dot com businesses would make millions - only to have their fingers burned. This could be the same story all over again.

Social networking is a significant step in the online world. It is an important development because it starts to replicate online what we have offline. It therefore means that from a psychological perspective the Internet starts to appear more like our "real" world.

However, it doesn't mean that big business is going to win. The FT may be confident that the global chase being made by YouTube and MySpace is the way ahead, but history tells us otherwise. The real winners of the dot com boom were the solo entrepreneurs. Thousands of them have made multimillion pound fortunes by doing what the big dot co companies failed to do - niche.

The same will be true for social networking. General social networking sites will eventually lose out to niche social networking sites. In the "real world" we don't have a single social group. Instead we belong to several social groupings that serve different purposes - neighbours, work colleagues, sports fans, people at the gym and so on. We don't mix them up into one big group. Hence MySpace and its like do not completely replicate what we do offline.

As the solo entrepreneurs capitalise on social networking and start creating niche social networking sites, the big companies will lose out - just as they did in the dot com bust that followed the boom. Don't put your money in MySpace just yet!

Labels: internet, social networking

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At June 24, 2007 7:21 AM  Deborah Carraro said…

At June 24, 2007 11:04 PM  Gerald said…

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Gordon Brown plans to "revolutionise" the British education system. According to his Mansion House speech last night when he becomes Prime Minister he wants a world class education system. At least that's what he told us.

However, he is either missing the point, doesn't understand what is happening in the real world, is badly advised or simply lying to us; you decide. The reason is that we already have a world class education system - it is called the Internet. Since the introduction of the web and the growth in information, hundreds of thousands of families have "home educated". In most nations it is not a legal requirement to send your children to school, merely to have them educated. For some families home education is thought to be better. And it often is.

Children educated at home, via the Internet, often get higher exam grades and can tackle their exams at earlier ages than their school counterparts. Equally, home educated children often get a broader knowledge base than children taught in schools using rigid timetables and inflexible teaching practices.

And if you are worried about the social life of home educated children, there appears to be no problem. Indeed, they get a more flexible social arrangement than children in schools and can join more clubs and societies, meeting and being with more peers from a variety of backgrounds.

Gordon Brown doesn't appear from his speech last night to have noticed that home education via the Internet already offers world class education. Instead, he wants the school leaving age to be extended to 18 instead of 16. He wants businesses to be involved with schools. And he wants children placed in "sets" according to ability.

Why does he want this? Jobs for men, that's why. We are in a similar social situation as we were at the end of the Second World War. At that time millions of women worked in factories, on farms and so on. Then the men came home from the battlefields and needed their jobs back. So, several "studies" were published showing that women were indeed better off in the home because of the impact it had on children. This emotional blackmail led women away from work, allowing men to get their jobs back.

In the coming years we are going to need fewer jobs being done. Automation, technology and the rise in self employment are all combining to reduce the jobs market. That means if there are too many younger people and too many women at work, those jobs cannot go to men. The answer to this is to tell women they should look after their children - several new "studies" have criticised nursery care, for instance. Also, you extend schooling so that you remove young people from the jobs market. Indeed, sociologists have been pointing out for years that schools were only invented in the 19th Century in order to get children out of the jobs market.

So, it is curious that now, when the jobs market is shrinking that Gordon Brown comes up with a grand idea that will enable supply of talent to be restricted. He hasn't counted on the Internet though. He has misunderstood that people are now voting with their feet and their keyboards. You can expect dramatic increases in home education via the Internet - indeed it is already rising exponentially - with more and more young people working for themselves. Gordon Brown and his advisers appear to be living in a previous Century.

Labels: future, internet psychology

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At June 22, 2007 12:31 AM  Jeremy Jacobs said…

At June 22, 2007 6:50 AM  Graham Jones said…

At June 22, 2007 10:34 PM  Henry Cate said…

At June 22, 2007 11:41 PM  Jeremy Jacobs said…

At June 25, 2007 3:39 PM  Dog Obedience said…

At June 26, 2007 7:11 AM  Graham Jones said…

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Marketers are still not exploiting the potential of the Internet. In spite of record numbers of people coming online, even though there is more money being spent on the Internet than ever before and although entrepreneurs are targeting the web first, traditional marketers are still reluctant to use the Internet.

The latest "Marketing Trends" survey from the Chartered Institute of Marketing shows that marketers in many companies are not planning to use the full range of marketing technology available to them online. Indeed, for some of the leading edge technologies, such as podcasting, almost no-one is planning to use them.

Instead, marketers appear to be relying on age-old methods such as direct mail. Indeed, in the survey only one in 12 companies were prepared to use digital technologies for marketing. This is somewhat surprising. Marketing tends to be populated by young dynamic people, many of whom will have grown up with digital technology. Equally, marketeers tend to be "early adopters" of products and services - by their very nature marketeers are interested in new things.

So why are most companies not planning to exploit the Internet for marketing purposes? Change. Big business in particular does not like change. CEOs who change things don't tend to last too long because the shareholders don't like change. Customers of "bricks and mortar" stores don't like change either. Keep everything the same and it will all work out fine, appears to be the motto of big business.

Of course, avoiding change means that when steering a new course is necessary it is a major departure from the past ways that is even more difficult to undertake. Minor change helps; ask Amazon, they change their web site constantly throughout the year - so much easier than doing it all in one go, confusing buyers in the process.

Marketers in traditional companies who are avoiding change towards more technology based marketing are simply storing up trouble for the future. Equally, they are providing a huge gap for those people who do like Internet marketing, to steal customers and reduce the market share of big business. The lack of Internet marketing plans shown by this survey suggest a significant gap has opened up for Internet entrepreneurs.

Labels: internet marketing

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Web site owners complain constantly that they don't get enough traffic. Indeed, if you don't receive sufficient visitors to your web site, you won't sell anything. And if your web site is designed simply to build your reputation, you won't get far if you don't have many people reading what you say.

Blogs certainly help you get increased attention. They are search engine friendly, for a start because they provide regular, fresh content. That's what search engines love. However, even if you blog every day you may not get the traffic you want or deserve.

Interesting analysis on the relationship between blogging and traffic levels comes today from The Blog Business Summit. This shows that the blogs with the most traffic are those which have the greatest number of postings. The blogs that have multiple posts per day get to the top of the traffic rankings. But the blogs that only have a handful of postings a week are way down the list. I've done a quick correlation coefficient calculation and it is reasonably positive around +0.7, using the figures provided by The Blog Business Summit. What this means is that the more you blog, the more people you get visiting your site.

To start getting significant traffic you need to blog three or four times a day, these figures suggest. They also show that you are not going to get extremely high traffic unless you blog 25 times every day...! Now, that takes some doing if you are on your own and blogging is only a part of your business.

But it's worthwhile remembering two key factors. Firstly, getting the highest ranked site is not as important as getting the right visitors. If your web site is making money by targeting 50 people who spend lots with you, there is no need to chase traffic rankings. Who visits your site is much more important than how many visitors you get.

Secondly if you get tons of traffic from writing 25 posts a day, they are not going to keep returning if your blog posts are just drivel. You need quality content to get people coming back. If your aim for high traffic and then just write 25 or more posts each day just to achieve that, you will quickly drop down the rankings as people give up reading your nonsense.

So, what should you do? Well, if you only blog occasionally you certainly need to increase your blogging frequency. If you blog each day, you need to blog more than once a day. That may sound difficult to do and time consuming. So I have added a ten-step programme on how to easily add extra content to your blog which you can find in my in-depth section.

Labels: blogging

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At June 27, 2007 11:02 PM  Jason Preston said…