Sony’s Music Unlimited vs Spotify: the Battle for Streaming takes off

Sony’s release of its Apple (iOS) compatible Music Unlimited streaming service, intended to challenge Spotify’s iPhone app, is a natural and welcome step in line with changing customer music needs and behaviours. Streaming is the future for all forms of digital entertainment, and music is leading the charge.

But I think Sony is missing a trick here. They offer two subscription packages: $3.99/month for listening to pre-determined channels (radio-style?) and $9.99 for access to Sony’s music library consisting of 15 million songs. Spotify’s catalogue has long surpassed 15 million, but more importantly, there is no clear incentive for any one customer group to switch to Music Unlimited.

As I have argued before, Spotify’s finest trick was to get people hooked in the first place by offering free music access. Consumers do not appreciate the value of technological innovation until they’ve tried it themselves. There are high barriers to adoption in place, and only a truly motivating and appealing incentive will push people to give new technology a go – and therefore fully experience the benefits that innovation offers.

Sony is not offering any such incentive. There is no free service to get customers to buy in, so Music Unlimited will struggle to convert iTunes/CD people to streaming. And for those of us who are with Spotify – well, there are no clear benefits to switching. And switching is a pain in itself.

One thing’s for sure: the Battle of Streaming has only just begun.

Sony's Music Unlimited

Boutique Budget Hotel: Redefining Luxury Customer Experience

Once upon a time, luxury brands were premium and budget brands were mass-market. Yet as consumers become more demanding, brands are becoming ever more creative in meeting multiple, seemingly irreconcilable customer needs.

The launch of Bloc Hotels is in Birmingham is the latest in a series of such feats. A ‘Boutique Budget’ hotel brand, Bloc has developed a new model based on an in-depth understanding of customers’ behaviour and needs when travelling on a budget (rooms start at £30).

As most short-stay travellers do not unpack and prefer not to eat in their hotels, Bloc has chosen not to offer storage or dining facilities. The resulting savings mean that its hotels can focus on those elements that cue a premium accommodation experience for guests: for example luxury linen, powerful drench showers, state-of-the-art WiFi and HD TVs, and a superb location.

By focusing on the brand touch points that make a real difference to its customers, Bloc is able to provide a luxurious experience in spite of its failure to tick all of the customary ‘luxury hotel’ boxes (with associated price tags). This innovative challenger model has potential to shake up not only the travel industry, but also potentially any luxury product category.

Even if you can’t build your customer experience from the ground up, do you have a full understanding of what’s important to your customers and what isn’t? Focus on the elements that have a real impact on consumers’ perceptions, rather than wasting resources on those that don’t, and you can create a superior experience without an associated increase in cost.

Spotify: Redefining Music Monetization

I’m a Spotify Premium customer, meaning I pay £9.99/month for unlimited access to virtually all music that is out there – including streaming onto my iPhone. I do not own any music, don’t use the iPod function or even have iTunes. Spotify meets my music needs better than any other provider.

In the pre-Spotify era I would not have dreamed of spending £120/year on CDs or downloads, but now feel it’s providing me with such good value I don’t think twice about it. It is their ability to innovatively monetize the market that seemed like it was fast heading into the abyss of promotions (HMV) and giveaways (YouTube) that I admire most.

It’s true that Spotify’s profitability and financial future is a very controversial issue. Yet no matter how healthy their finances are, it is critical to appreciate the revolutionary nature of their new revenue model. At a time when piracy threatens the music industry an approach that gets customers to pay more for accessing music whilst feeling they are getting better value is not to be sniffed at. The consumer interface of this model is a brilliant innovation, and even if Spotify are unsuccessful at making its financial ends meet other music providers should take note.

Spotify have not yet got it right. But they’re onto something, and the music industry better take notice of this completely new way of engaging with their audiences. After all – iTunes caught the big players unaware, and many (HMV included) have still not developed a strong enough platform to compete with Apple. History might be about to repeat itself.

Price is a Number, Value is a Benefit

In our cash strapped times all we seem to hear about is the need for competitive pricing and offering consumers good value for money. These deceptively simple phrases conveniently hide the fact that ‘value’ is a very relative term which is used – and interpreted – in very different ways.

The relationship between ‘value’ and ‘price’ is not a straightforward one. John Lewis and Waitrose are both premium brands which have managed to position themselves as offering customers ‘good value’ despite their price tags. Their offer is centred on great customer service and confidence in the origins and quality of their products, which goes a long way to justify the added expense.

For many consumers ‘value for money’ means investment. The initial outlay may be high, but the longevity of the product and little need to maintain it means that a saving is made in the long run. We can see this across a wide range of categories from white goods (Bosch: ‘Invented for Life’) to groceries (Florette: ‘Fresher for Longer’). And which one of us girls has not at some point tried to justify those expensive boots (bag/coat/etc.) by claiming that they will last for a decade longer than the cheaper alternative?

It is hard to pin down the value of something unique – which is why some brands use tailor-ability to add value to their offer. Moonpig.com has pioneered personalised cards, whilst Nike ID enables customers to custom-make their own trainers. Such flexibility produces products that make consumers feel special, and this emotional feel-good sentiment is impossible to define in monetary terms.

Consumer need for ‘value’ but reluctance to pay more for it has recently given rise to some interesting communications.

In the context of current supermarket warfare ‘value where it matters’ is a strong tag line. If Sainsbury’s wants to keep its position as a somewhat premium brand, it cannot scoop down to merely price-matching Asda. Focus on ‘Value’ rather than ‘Price’ keeps customers thinking about the benefits of good food rather than their price tag.

British Airways are similarly at pains to defend their apparently higher flight costs in the face of budget airlines such as EasyJet and Ryan Air. Their latest ad campaign is an aggressive defence move which seeks to show how low cost flying fails to deliver on ‘value.’ Moreover, BA’s ‘value calculator’ demonstrates how EasyJet and Ryan Air’s potential extra costs can rack up the overall journey price in a way that actually makes flying with British Airways cheaper.

To conclude, some aspects of ‘value’ are emotional, whilst others – such as longevity – are rational. But whichever principles you choose to adopt to demonstrate the value of your brand do not forget:

PRICE IS A NUMBER ON A TAG. VALUE IS THE BENEFIT TO CUSTOMER.