As 2010 draws closer, I am reflecting back on 10 (well, 11, really) years working in the tumultuous intersection of music and technology. I’m still here, and although I have scars, I have benefited greatly from the experience, and I still hold out hope that both innovation and music will win the day.

While I cannot possibly document all of the lessons I’ve learned throughout an 11 year career, this post is a quick digest of some of the more interesting things to note.  I have, indeed, been looking at things through an “economic lens”  lately (more on that coming in new posts), and I apologize to those who find this boring or uninformative … I am but one man with one experience, so grains of salt taketh thou.

1. Its Complicated

Whenever a pundit, a colleague, or even my own big mouth would try condense the  problems and/or solutions of digital music into a “unified theory” or an “if / then /only” scenario, they were, are, and will always be wrong.  There are too many moving parts in an enormously complex system that touches copyright law, technology, government regulation, international trade, pop culture, consumer trends, markets, and … oh yeah – sometimes music. The blame game was, and is ,not only unproductive, but also fundamentally flawed if our goal is to understand how to move forward positively – - which brings me to the next lesson…

2. Incentives Matter and little else does

As I just stated… its complicated, but if you want to try and understand any one trend or event, the best way to accomplish this is to: 1 – understand the parties involved, and 2 – understand their incentives. We naturally do this when analyzing complex interactions, but ultimately, as I look back at all of the craziness and turmoil, it seems especially important to examine them very closely.  Now, just because someone acts on their incentive doesn’t mean they make a good decision (see: Bertelsmann/Napster, Sony Rootkit, RIAA suing dead grandmothers just to name a scant few) – - let’s just be clear on that, but if we can understand incentives, things start to make more sense, and it becomes easier to operate within the environement  – - mostly because we know where we can and cannot change behavior – - we should mostly disregard behavior and focus on changing incentives.  Which, leads me to my next lesson…

4. The Music business is a lot like the Oil business or illegal drug trade than anything else

Hear me out… I am NOT saying that people in the music industry are global warming drug traffickers…  I am over simplifying here to help make my point.  If we look at the most blamed digital media “culprits” of the last decade (Major labels/ RIAA, Publishers), we can look at their incentives, their core business structure, and then the clash with technology and their downfall becomes easier to understand.  The key takeaway is to understand that at its core, the music business is a “rent-seeking” business model, and that has been both its benefactor and now its apparent nemesis.  I like the Economist’s brief definition of “rent seeking:

Cutting yourself a bigger slice of the cake rather than making the cake bigger. Trying to make more money without producing more for customers. Classic examples of rent-seeking, a phrase coined by an economist, Gordon Tullock, include:

• a protection racket, in which the gang takes a cut from the shopkeeper’s PROFIT;

• a CARTEL of FIRMS agreeing to raise PRICES;

• a UNION demanding higher WAGES without offering any increase in PRODUCTIVITY;

• lobbying the GOVERNMENT for tax, spending or regulatory policies that benefit the lobbyists at the expense of taxpayers or consumers or some other rivals.

Whether legal or illegal, as they do not create any value, rent-seeking activities can impose large costs on an economy.

Hmm… sound familiar? Cartel behavior and price collusion? Government policies that benefit the firms at the expense of consumers and rivals? Well, normally, its great work if you can get it… being a rent-seeking monopoly normally pays off big, and it did for a long time for the music business when they controlled enough of the supply chain, but they don’t anymore, and now their incentives are no longer aligned with their potential partners (tech start-ups, for example), their “assets” (artists), or, and this is the biggest problem – - their customers.  Frankly, their incentives were never aligned with their customers… that’s the nature of rent-seeking.  In order to succeed in the present and future, they are going to need to get away from the that model, get off the government tit, and align their incentives with their artists and customers – - sorry — its a lot harder, but welcome to the world other competitive firms live in.

5. This is one broken-ass marketplace.

Healthy marketplaces all have some things in common: free flows of information and transparency, low barriers to entry, pricing mechanisms that clear markets (you know… where supply = demand), clear and easily enforced property rights, competition… I guess I should just rest my case right here.

6. We aren’t Special

Like Schopenhauer, I believe that music is a special art form that is essential to our well-being.  Hell – we probably all believe that. Music IS special.  As a business, it is not, however, nor should it be.  People who work in the music business are also not special. We should be exposed to the same harsh market forces and consumer fickleness as any other industry (the industry would be in better shape if it had been toughened up over time), and just because something’s “not fair” doesn’t mean its not happening (P2p, Oasis breaking up, etc.).  Many of the “less productive” discussions I have had during my career have pitted logic against emotion and a sense of entitlement, and this is uncovers the deep cultural problems industries face when they operate for so long in non-competitive environments.

7.  The Long Tail is both right and wrong

Chris Anderson’s Long Tail hypothesis was perhaps the most controversial, repeated, and otherwise most “2.0″ of all the decade’s digital music memes.  In 2009, it almost seems passe, and perhaps the general consensus is that its been partially debunked. Maybe so, but there were events, trends, and companies that broke the mold and did it Long Tail style… how about the Electronic and DJ crowd taking their ball and going to Beatport? How about artists shrinking their businesses and going it alone on the web?  How about social media allowing unprecedented connection between artist and their fans? Some of this stuff IS happening.  Was it a global phenomenon that changed everything? No, but in the chaos, it appears that the niche can survive and thrive… and like #1 says above… its complicated.

8. There is no silver bullet

This should go without saying, but it seems like every week, either Spotify or  some internet tax or some mobile play (or Apple) is getting credited with “being the next big thing” or “saving the industry”.  For 11 years going back, every week – - there was something – believe me.  All of these things in aggregate will lead to something, and that’s  the natural and bumpy maturation of the market, where trial and error eventually lead to better and better models. There is, however, no “one thing” – - no one model or company that is going to restructure or “save” the entire music vertical. In fact, when the industry focused its efforts on making sure there was just “one thing” (LP’s, CD’s, commercial radio), they created seeded their future doom.

9. Careful What You Wish For

When things get bad enough, you look in all directions for a way out – - that’s  human nature.  I mentioned the “internet tax” above, and to a lot of people, it might seem like a good idea.  It would be an absolute disaster for the industry, for technology companies, for everyone.  I can’t think of something more harmful to innovation than a tax at the core of the infrastructure.  But lot of people will keep wishing for some flavor of government intervention. We can only hope the industry doesn’t get what they ask for. The other “careful what you wish for” lesson I learned is that most indie labels are happiest when they can act just like majors. The law of unintended consequences is well in play, folks… be careful.

10. There is always hope

Is it darkest before the light? I don’t know, but what I did learn is that while things might move 5 steps forward and 7 back, sometimes the trend reverses itself. I still believe that innovation always wins, and I still believe the “industry” is in the process of aligning themselves with customers to create a new, healthy marketplace and business.  There are always counter-forces pushing back on this progress, but that will always be true. The one aphorism that always seemed to ring true all these years was “people aren’t going to stop listening to music” — that, I DO believe, and that is ultimately what is most important.

For a long time, I have been a fan of the “ecosystem” thinking with regards to product concepts and business practices, and it will undoubtedly become a consistent theme in this blog. My affinity towards ecosystem thinking comes at least partially from the frustration of working quite a while in an industry (digital music) where a healthy ecosystem is both lacking and desperately needed.  The core concept of the “Business Ecosystem” has been around for over a decade, and while the concept may be overused a bit, the logic behind it still rings especially true for media and the internet. Many of us in the digital media world have often found ourselves in a position of “explainer/evangelist” of the concept, due to the lack of a cohesive ecosystem – sometimes its hard for those at or near the top of the food chain to understand “balance” in a healthy ecosystem… but I digress – - different post.

4 Currency Explanation

Eric Ries’ well-crafted post, titled “Business ecology and the four customer currencies“, explains the “4 currencies” of money, time, skill, and passion and how they influence customers’ decisions. He does a fantastic job of illustrating the currency concepts and how important realistic customer segmentation is.  Eric has lots of good posts on Freemium concepts, and the ecology discussion is closely related.   He also pointed me to this DEEP article by Andrew Chen that goes into some interesting underlying economic concepts behind creating a successful freemium model – - definitely worth the read.

I have been thinking a lot about business ecosystems lately as I’ve been working through product concepts, and I think that as a “product people”, we ought to consider that our customers self-segment based on their mix of “customer currencies”. Ries provides currency definitions using gaming as an example, wherein the different user types achieve success using different currencies.  The basic concept is simple to understand (I”ll paraphrase here): players with money can buy success, players with lots of time can slog out success, and players with skill are good enough to achieve success quickly and cheaply. The players with a lot of passion are put into a special category, and he argues that while it may not seem like they have “what it takes” to be successful, they are often the hidden reason for the success of the game (and thus the ecosystem) overall.

Each of these four currencies represents a way for a customer to “pay” for services from a company. And this is true outside of games. Constructing a working business model is a form of ecosystem design. A great product enables customers, developers, partners, and even competitors to exchange their unique currencies in combinations that lead to financial success for the company that organizes them.

Ye Olde MRD

Customer Currency and Engagement

Applied 4 currencies Process

Recently, I’ve been trying to sort out my social media universe (insert joke here). Anyway, the last time I really thought about this stuff (maybe a year ago?), there a few and options, and now the bad news is that there are endless  options.  What I’m really talking about is managing multiple services and identities,  and  figuring out which service does what the best and how it all comes together.  I’ve come to a some conclusions for myself on how all of these pieces fit together, and it might be helpful for others to see one persons’ approach.  The first one to figure out is the two big ones, and how they should or should not interact.  Basically, I’m getting tired of seeing status updates posted twice in FB because people have their accounts linked, and I’ve stopped it, but for more reasons that just the annoyance factor.  I think I’m violating some kind of twitter etiquette by blogging about it – which is what Fast Company said Scoble said, but the post they link to on Scobelizer doesn’t actually say that… but really, I couldn’t care less, but you know there are rules, I guess.

Facebook vs. Twitter

The first real issue I had to resolve for myself  was to understand the relationship of these two services for me, and how to change my social networking behavior to match an optimal usage of each.  What I discovered (after 2 weeks in a sensory deprivation tank) is that Facebook = Fun, Twitter = Work.  That’s really an oversimplification, but its accurate.  Ultimately, it boils down to the nature of how each network is built, and the fact that I’ve been on Facebook much longer. The reality is that I like to use Facebook mostly socially to engage with (and joke around with) my friends.  Some of the things I say and do on Facebook I wouldn’t necessarily want broadcast to the world, which is what Twitter does best, IMO.

For me, Facebook is (or at least I’d like it to be) for friends, sharing links photos and videos, and frankly, for joking around.  I have discovered that my Twitter profile is, in a way, much more important for me as a public communication tool and identity.  Anyone can see my Twitter account and follow me (spammers aside), and I like it that way. As an internet professional, I must maintain a discipline (much as I must on my blog) to not divulge or say anything that would be harmful to the company I am working for (and as a result myself), but also, as an internet professional, I believe its imperative for me to share information and be an active and integral part of the internet. I would guess that more people will see a Tweet from me before they ever see my blog, my LinkedIn profile, or my Facebook profile. For me, Twitter is about acquiring knowledge, promoting what I do, and sharing ideas.  Those are some big concepts for 140 characters or less, but it seems to be the best platform. I think a lot of other people agree with me, and I see a lot of posts out there that share the same idea, like this one from Cogblog:

“Because Twitter is for sharing information with the world and Facebook is for interacting with friends, Facebook has an inherent virality that Twitter does not have in their current model. “

I know there are a lot of twitter fanatics out there who are adamant that it shouldn’t  be used primarily a “broadcast” tool very actively and dynamically, as is expressed in this post on Twittip.  For the record, they are right in that Twitter is a much more compelling service if used as two-way communication, and I’m starting to actually figure this out…  the “Lists” feature and the now intergrated Retweeting are going a long way to make the communication aspect more compelling.

I came to the conclusion that Twitter is really good at being a big part of and promoting my blog. Using http://Twitterfeed.com, I pull in items I have “shared” from in Google Reader, and now I have a very clean and flexible way of sharing articles via Twitter. Then, with the Twitter Tools WordPress plug-in (http://wordpress.org/extend/plugins/twitter-tools/) I can auto-generate a blog post whose contents are a weekly digest of my Tweets Example: http://timjmitchell.com/2009/11/20/twitter-weekly-updates-for-2009-11-20/. This solves another problem… I have decoupled Facebook from Twitter, since I hated having to hit both networks with the same post. Once a week, I simply share my digest blog post on Facebook – - there is still integration, but its much lighter weight, and it promotes my blog and Twitter account in a much better way. I also display my Tweets directly in one of the side panels of my blog, I have a large “origami bird” follow icon always present, and every post has a “Tweet This” button provided by the “Tweet This” WordPress plug-in (http://wordpress.org/extend/plugins/tweet-this/). Twitter is now the primary way in which I promote my blog or communicate with other bloggers. I often forget to set up proper Trackbacks, and Pingbacks are becoming too un-trusted and associated with SPAM. Twitter is natural for not only promoting a post, but also for directly commenting or indirectly commenting via your own blog posts via @replies #tags, or even direct messages. I also simply cross-post to my Tumblr blog from WordPress, and again, I allow my entire Twitter stream to appear on my Tumblr profile… this is a no-effort way to promote my blog and Twitter profile to another online community.

The title of this post is probably a bit too specific. It should really say “why all people who build and work on web and software based products should blog”, but that’s a mouthful. In a recent post,  I alluded to some of the reasons I’ll discuss below:

…it behooves me to have a well organized site where I can not only express ideas, but where I can tinker, experiment, and otherwise play with whatever social media or web detritus I might want to understand.  A blog these days can be very technically sophisticated, and with all of the plug-ins, social media integration, and SEO capabilities now available…

I felt like it was an interesting enough nugget to pursue and expand upon.  The main purpose of my post isn’t to point out what I consider to be the “obvious” reasons for blogging, and these are, in my view:  sharing ideas, communicating with people in your profession, increasing your professional profile, scratching a creative itch, doing something productive while drinking, etc.  I’m sure there are many eloquent articles and posts out there espousing these benefits. My interest was in how blogging helps people in the “Product Management” world better at their jobs.

A lot of Product Managers DO blog about their profession and share useful information, and my blogroll has a lot of links that are worth checking out, but here are a few: Adaptive Path, Jeff Lash’s Blog, Silicon Valley Product Group, Derek Morrison’s Blog, and many more… I’m always on the lookout for new stuff.  Back to the task at hand, though — here are some reasons why I think Product Managers should blog.

You get to do it all.

As the blogger, you are a combined microcosm of all the departments and functions that you normally coordinate with.  You are forced to make cross-functional decisions across marketing, content, engineering, and product. This kind of authoritarian power is actually humbling, as you start to recognize your weak areas.  It offers great perspective on your “day job”, and it creates feelings of empathy for your design and engineering co-workers.  I also believe that it hones your ability to see forests and trees all at the same time. Also, for some of us, getting your hands dirty is fun.

Social Media Bootcamp

Creating, updating, and promoting a blog is, IMO, an amazing way to really get in deep and understand how the social web really works.  You get to see interrelationships and integration options that you probably never knew existed, since your regular work is typically focused on a few areas at a time.  I remember that a lot of people were confused about  @replies, early on , on Twitter, but the hardcore blogger weren’t … they saw them as trackbacks/pingbacks for micro-blog posts, which is, pretty much what they are.  Recently, I read a post in Dave Winer’s Blog, where he pointed out:

Meanwhile, TechCrunch has caught onto the idea I borrowed from Steve Rubel, almost. They noted that WordPress was growing while Twitter’s growth has (perhaps temporarily) stalled.  The phenomenon is not, as some have said, the “death” of blogging (I hate that word!) — rather huge growth in blogging at the low-end as NBBs discover its joys through Twitter and Facebook. Perhaps very few of them will want more, but even a few is a lot! Expect a huge surge in medium-range and high-end blogging in the coming years, with products like Tumblr and Posterous and WordPress perfectly poised to capture the growth.

I agree with him, and once you start to head down the rabbit hole of how you can integrate your blog across the social web and how you can intertwine your blog with all of your web identities and application, you become blown away by the sheer number of options, but also the abundance of quality solutions that are really effective and cool.  I was recently working for almost two months straight on social integration to an e-commerce site, and I did a ton of research and testing.  I probably learned just as much from tinkering with my blog.  Which leads to my next reason…

Tinkering

I’ll admit that I like tinkering with my blog maybe as much as I do writing for it.  Our world is now full of multi-platform capable, socially integrated, SEO’d, API using, user interacting products. With even a semi-sophisticated blog, there are a lot of interesting decisions youneed to make about what app, plug-in, widget, social aggregation service, RSS feed, or whatever is right for what you want to accomplish… and that’s after you figure out what you are trying to accomplish with is half the battle.  Since its just your blog, you probably aren’t going to go through the hand-ringing process of MRD/PRD/ Cost Analysis stuff… you are just gonna tinker and see what works best, which is a great exercise for those of us who are sort of paid to do all of that hand wringing, its liberating and enlightening to not have to. From a research perspective,  its really interesting to see how different plug-in developers, who all properly identify a particular need, develop so many different solutions to the problem that add value in different ways.  All of that tinkering really helps you to get grounded really see what the web is, how the software functions, and where is all comes together in the user experience.

Product Marketing

Blog promotion is a great exercise in Product Marketing. Your blog is the sum of all of its parts, and your users may be coming to your blog for a lot of different reasons.  Sometimes its other bloggers just checking out how you’ve done something, sometimes its someone searching for information you’ve covered, and sometimes its someone interested in you.  Your “mix” of advice giving, commenting on other blogs and articles, personal anecdotes, and everything else that can be slapped on a web page is all up to you.  You have to think about your “brand” and how your product choices affect the brand.  Believe me – - as soon as more than a couple of people check out your blog, you are thinking about it. If you are someone like me who is typically being hired for how I think perhaps more than anything, your blog might be more important that your resume to some people.

It provides freedom to look “outside” for inspiration and answers.

It would be pretty hard, and frankly, pretty pretentious  to casually mention that Locke’s Social Contract theory may have something to do a confusing user behavior being analyzed in a meeting; however, looking at other disciplines is really useful.  My personal “fetish” is economics.  This is partially because it was my major in college and I’ve stayed interested in the field, but its also because the more I think through economic theories (mostly micro)  that explain  people’s behaviors, the more it becomes relevant to my work.  When I can think through and view a problem from a different perspective that is grounded in an established theory, it can often yield really sound insight. I’ll be working on a post soon about how I think that Vincent and Eleanor Ostrom’s theories of rational choice might help explain why digital media piracy “seems ok” in the minds of piraters.  Not exactly something you want to throw out in a strategy meeting, but its useful for me to think about, since a lot of my career has been trying to figure out how to get people to pay for stuff they can easily steal.

There are lot of other benefits, but the downside is the time-suck, and this is where the discipline part comes in.  That’s good for you too.