July 13, 2007 | Friday
Lessons learned from Prince, Green Day, and Google
By Jackie Danicki - Blogger in Marketing |Online Sales |Search Engines |Google |Yahoo |Microsoft
Former SAP notable and all-around good guy Jeff Nolan, who I had the pleasure to meet last year in Silicon Valley, writes at Venture Chronicles:
[T]he best way to disrupt a competitor’s strategy is to restructure the environment in which the competitor operates…
Jeff was writing with regard to Boeing and Airbus in light of the debut of Boeing’s amazing new Dreamliner, but prompted me to consider this in the context of search and making money online. Google, eBay, Microsoft, Yahoo...Who amongst them is really making moves to restructure the environment in which all the others - or at least one of the others - operate?
Let’s see…
Everyone seems to be gunning for Google, because they are the ones to beat (for now).
One principle that Google has embraced is the Because Effect, which JP Rangaswami (another brilliant mind and wonderful person to know) defines as:
When something that was originally scarce starts becoming abundant, something strange happens. You find that you start making money because of that thing rather than with that thing. That’s the Because Effect.
JP uses the example of Prince, who sent record company chiefs into fits of rage by agreeing to give away copies of his new album free with the Mail on Sunday before it even hits the shops. (Whether Mail readers are Prince’s natural constituents is another post for another time...and probably for another blog.)
The point is that Prince understands how he makes money, what’s scarce and what’s abundant about it. Digital downloads are abundant. Concert appearances are scarce. He makes money because of his CDs and not with them.
American band Green Day has also grasped this principle quite well, by (for example) offering free downloads of their tracks and selling specially designed CDs onto which fans can burn them. It just so happens (or does it?) that Green Day is now making more money than they ever have.
So what does this have to do with online marketing?
Well, think of all that Google has freed (literally) from scarcity into abundance, taking once costly products and services and letting anyone use them for nothing. We can start with vast email storage (Gmail), move on to website performance analytics (Google Analytics, formerly the pricey service called Urchin), cast a glance at photo management (Picasa), geek out on RSS feed management tools (Feedburner) and speculate that one of its latest acquisitions, enterprise security company Postini, will soon have its capabilities offered gratis, too. (That last one will really chap hides at major Google competitor Microsoft, and any other company selling spam control software.)
All of this has been essential in Google landing such an enviously huge chunk of the global online marketing market. They don’t make money from these services, but because they offer them and as a result become the powerhouse to beat. If that isn’t a shake-up of the environment in which its competitors operate, well, show me one of their competitors who has been prepared for this and reacted accordingly.
The fact that they are forced to react is a victory for Google in itself. How long before another company starts beating them at their own game? Nobody knows, but it sure will be fun to watch - and to have free access to more and more cool stuff - as events unfold.
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