Management author Peter Drucker tells this story: "I have worked with musician Peter Gabriel on several projects....
At a workshop we were holding for AT&T he was asked, 'How do you deal with piracy of your albums?' Gabriel said, 'Oh, I treat it as free advertising. I follow it with a rock concert. When they steal my albums in Indonesia, I go there and I perform'."
Musician Brian Eno says, "I've always thought one of the most fantastic things about the Grateful Dead was that instead of sending heavies down into the crowd to smash people over the head and take their cassette recorders, they offered them a nice board to plug into so at least they got a decent recording."
Both comments were made more than 15 years ago. The media businesses have still not caught on.
IT systems can't cope
That much is clear from research just published by Oracle Communications. It found that media companies are trying to "supersize" their products in an effort to "deepen customer intimacy" with richer content. Ironically, they are frustrated because their IT systems, especially billing systems can't cope.
Gordon Rawling, Oracle Communications' director of marketing for Europe, Middle East and Africa and the report's author, says media companies need to win back their customers all over again.
Competition to provide free content has had catastrophic effects on revenue, so content providers have been trying to find alternative ways of monetising their content, just as Gabriel and the Grateful Dead did, three decades ago.
Rawling acknowledges that music and movies, the audio-visual arts, may be a special case where the issues are stark, and amenable to digitisation. "News is a tough prospect," he says.
Furthermore, Rawling believes that media and telecommunications firms must make common cause. Media companies know how to produce content; telecoms companies know how to distribute it and how to get money for it.
Top five priorities
Rawling says the top five priorities for the 50 CIOs at top media firms were about providing a reassuring and compelling customer experience.
- Information security was a major focus for three-quarters of respondents
- Seven of 10 wanted consumers to trust them more
- 68% aimed to provide a compelling user experience
- Two-thirds believed that tailoring offerings were the way to do this
- And six of 10 aimed to provide value-added services around basic content.
But just 48% were able to monitor customers' interactions with the organisation across all channels. Only one in six could provide insight into individual customer behaviour. Less than a fifth could recommend content to customers based on their interactions across all digital channels.
Media firms seem more interested in delivering content to customers than in getting money for it. Only just over half (56%) had developed billing systems to collect and allocate payment for providing extra content. Just under half (46%) couldn't process micropayments, 26% couldn't manage subscriptions, and 18% couldn't handle one-off payments.
That must change, says Rawling, and telcos have the systems and the experience to do it.
But allowing customers access to the delivery device, such as IP-enabled television, or more intrusively, their mobile phone, requires a quantum leap in the trust relationship between the three parties.
But it also opens a door, Rawling says. He notes that his professional Linked-In community knows in advance his movements in some detail. But no-one has thought to tell him what's on in his destination towns, and perhaps recommend and book seats to a restaurant or concert he'd like.
"I'd pay money for someone to do that," he says.
He is not alone. A mobile phone user survey from Evolving Systems shows that European telecoms operators could tap into new revenue streams by letting customers choose their numbers and delivering personalised services to prepaid customers.
The fight is not just between the media companies and the telcos. Google, Microsoft, Apple, Spotify, Reuters and Bloomberg, even Victoria's Secret are becoming the competition, thanks to the World Wide Web.
Who controls the account?
But the big question remains: who controls the account?
Actually, the question is fallacious because it suggests there is more than one answer. In fact, as Gabriel, Eno and the Grateful Dead realised, the only person who really controls the account is the customer.
Given the increasing range of pathways, many of which include time-shifting delivery, to reach the customer, content becomes not the king, but the route to the king.
How important this distinction is emerged at a recent Westminster Media Forum where representatives from the BBC and Sky entertained the audience with a very public squabble. The BBC said Sky should be forced to give up its hard-won monopoly over Premiership football matches; Sky said it should be allowed to enjoy the fruits of free enterprise, and that to level the playing field, the BBC should not receive state support in the form of the TV licence.
But both were missing the point. As American songwriter Bruce Springsteen noted, there's 57 channels but there's nothing on. Content for content's sake is irrelevant; the consumer is the only person that gives meaning to it.
Finding what he or she wants, and how they want it, and when they want it, is the key. That automatically segments the market, defines which delivery media to use, and sets the price. That, in turn says who you partner with, and sets the limits of the relationship.
All the rest is sound and fury, signifying nothing.