Editor’s Note: There are two themes here – one tactical – that Apple is now in the race to stay a market leader in digital music. As Scott alludes to, iTunes needs to continue growing while they figure out how to join in the music streaming wars with their Beats Music acquisition. Perhaps more compelling is looking beyond the superficial news about U2’s new album and how it was delivered for an exploration of creative approaches to the modern digital business model. This matters in financial services big time. In a few short years, we will be out of time to just “watch” or test the waters. We’ll need to be literate and versatile with a completely new universe of investors. Are you ready?
Commentators analyzed the strategy, and proclaimed that U2 was giving away the music for free as a way to entice more people to see their next round of concerts, purchase more of their back-end catalog, or generate an increase in merchandise sales.
Perhaps, pundits wondered, if this was the most public example of the business model where you give something essential away for free — hoping potential clients will eventually compensate you to deliver your talent, services, or product in some other method where you can make a profit.
Unfortunately, the application of that concept here completely misses the point.
First, U2 did NOT “give away” their music. Apple paid them handsomely for it, thank you.
Second, Apple doesn’t care about U2’s concert profits. They only care about their own.
Overlooked, perhaps, in the hoopla surrounding the new iPhones and the Apple Watch is the fact that iTunes is slipping. Just as we advanced from vinyl to CD to download, now we’re transitioning from download to streaming. Services like Songza, Spotify, and others are moving music listeners away from buying an album online, and toward the subscription model.
Apple needed to give iTunes a shot in the arm and generate excitement for that product while they were inspiring us to upgrade our iPhone — so, they did the deal with U2.
According to today’s Wall St. Journal, “‘We’re not going in for the free music around here,’ Bono joked on stage.” As the Journal explained, “Apple didn’t pay a traditional wholesale price for each of the 500 million albums. Instead the company paid Universal and U2 an undisclosed lump sum for the exclusive window to distribute the album.”
The business that financial organizations should learn from here is not U2 — it’s Apple.
As I wrote in my latest book, one of the seven “Taxi Terry Tenets” is: “What helps your client… helps you.” Providing clients and prospects with new U2 music isn’t part of Apple’s mission — it won’t make my Mac run better, or my iPad more functional. It does, however, generate greater mindshare for iTunes… and that’s exactly what Apple is doing.
What does this mean to your practice as an FA?
A few years ago, a mutual fund company hired me to give presentations and provide training to financial advisors on how to create the distinctive experience that would enhance client retention and acquisition.
Meanwhile, during the same period, other mutual fund competitors talked to those same FA’s about the statistics and research they felt displayed the comparative superiority of their respective funds.
Guess which company had the greatest increase in sales? (By far!)
By helping their clients, the FA—the mutual fund company that engaged my company’s services enhanced their relationships with the financial advisors they targeted, and as a result grew their business.
The rest of the competitors were shouting, “Pick me! Pick me!” The fund company I was working for—guided by my innovative friend, Bruce Johnston—was quietly and confidently saying, “How may we help you?”
If you were the FA, given relatively equal marketplace performance, which fund would you choose for your clients?
Remember, a critical aspect is that clients select you not because of the strengths you have in common with your competition. Rather, they select you because of the points that make you distinctive from your competition.
Two critical takeaways:
- Be on the lookout for unusual or unexpected resources who can help you build mindshare with your clients and prospects; then,
- Partner with others who can bring value to — and interest from — those clients and prospects. You will enhance mindshare…and subsequently watch your marketshare grow, as a result.