One of the benefits of the rise of music distribution via MP3 is that loads of cool old bands are touring again. Not so great for them or their record companies because the precipitous plummet in residual earnings means that they have to get off their collective bottoms and earn a living the old-fashioned way – on the touring circuit.

For fans it means an opportunity to have seen bands like the Police and the Pixies again, years (decades) after acrimonious bust ups.

I’m sure that money was not the only reason for reforming but topping up pension plans must have played a great motivator in patching up the petty differences and soothing egos.

Record companies and the RIAA still seem to be fighting to preserve the old revenue models. A look on the RIAA site shows a woefully small number of legal download sites. And when you narrow that down to sites that sell unrestricted MP3s with no DRM, the list drops down to around three – including my favorite Amazon.

When the Zune was announced in 2006, Microsoft had a cool filesharing feature that would allow you to send your favorite tracks wirelessly to other people with Zunes. Record companies killed that cool community feature by restricting the functionality to the point where it became useless.

Yes, I know that human nature means that sharing tracks with friends without paying doesn’t seem like a crime, but it is a fact of life. Really, the industry should be looking for new and interesting ways to get the fans to pay for music in the format they desire. Unfortunately for them, most successful attempts seem to involve bypassing the record company. The honesty box for Radiohead’s last release is probably the best example.

What kicked off this post was the announcement that MySpace Music would be working with as yet unnamed record companies to provide brands with a way to connect with consumers through branded downloads, streams and playlists. This isn’t anything new except for the scale involved as they have 35 million registered users.

For me, the issue here is the connection of the brand to the music in this environment is tenuous and is not going to provide real value.

True connectedness comes from common cultural roots. Look at the Warped Tour in its early days for a great example of a cultural connection that brands like Volcom have carried forward into their own labels.

Most of the brands like McDonalds and State Farm need to view this as buying some sort of media time rather than anything more.

McDonalds probably know this and have been working with the Zune team on an upgrade Microsoft that provides wireless access to the Web at no charge from more than 9,800 McDonald’s restaurants across the United States. The Zunesters can listen to FM radio (like our local KEXP here in Seattle) and click on a track to buy it immediately.

Now that is a great connection. Understanding their place and providing an environment that creates a positive experience will have way more brand impact than a McDonalds sponsored track or player.

Gartner have that famous hype cycle where the peak of inflated expectation is followed by the trough of disillusionment.

Gartner recently predicted that community marketing will hit the Peak of Inflated Expectations early in 2009. As mentioned in previous blog, we are hearing a lot of companies in this space are starting to hit the limits of their funding, so while I generally agree with the peak prediction, my feeling is that the cycle will be condensed and the trough will follow rapidly. The implication for clients and agencies is to vet suppliers thoroughly if there is any long term exposure to your business.

 The other thing that caught my eye was the Gartner definition of Generation Virtual (also known as Generation V) “is not defined by age — or gender, social demographic or geography — but is based on demonstrated achievement, accomplishments and an increasing preference for the use of digital media channels to discover information, build knowledge and share insights”.

The paper went on to describe a pretty standard four quadrant taxonomy of social media users but the Generation V definition was interesting because it is behavior rather than age driven.

There are so many companies out involved in Social Media in one way or another that is pretty confusing to try and keep up and recommend the right companies to colleagues and clients.

The easy one to knock would be the social media sites themselves. How many can you name? How many do you think will be around in two years?

In May I was told by a very successful Bay area entrepreneur that he had bought shares directly off the Facebook founder. This story broke in business week  today so I don’t feel that I am breaching confidence. That conversation in May immediately told me all I needed to know about what the founder felt about the inflated valuation of his company.

I’m sure that Facebook’s critical mass will carry it through the downdraft that is going to blow through this sector but I am hearing stories of companies reaching the bottom of their funding barrel before they can move into a cash flow positive situation.

We went through this with the dot com boom so it isn’t a new story, just part of the business cycle that keeps all of us guessing.

This is a good thing. When the dust settles, it becomes a lot clearer who the real players are and how to engage in a way that will not waste your time and client marketing cycles.

My recommendation is to look at the companies that you intend to use carefully because given the economic downturn, the boom will turn sharply.

http://roychristopher.com/ambient-identity

After I posted yesterday one of my colleagues pointed me to this blog. There is a really cool update to the Johari window which covers your ambient identity – definitely worth a look.

I have a Plaxo account which I haven’t used it for months because it was connected to a little used email account. I finally went in last week to accept all the people who have invited me to connect.

Plaxo is interesting because it also seeks out and aggregates other stuff you have posted. I’m not clear how it happens and it misses stuff (like it doesn’t pick up this blog) but it somehow picked up on my Amazon wishlist postings.

To be specific, it picked up on a Wii game that my kid wanted me to buy for him and figured that if I put it on my wish list, I would get around to it at some point.

Seeing the game come up spooked me slightly. What else had I put on the wishlist and had been published to my plaxo list? Thankfully, the list was pretty tame but it got me thinking again about privacy and the concept of a universal identity.

Shouldn’t it be my decision on what content gets created on my behalf or did I give that right up because the Amazon wishlist is public?

I went back and re-read the Bill of Rights for Users of the Social Web (Joseph Smarr, the Chief Platform Architect of Plaxo is one of the authors) which is focused on data portability and openness. I really like the idea of interconnecting services but how do we then keep personal and private separate if we so desire?

For some of my friends this isn’t an issue but for most people there are probably areas that they would want to keep off limits. It is a sliding scale depending on how much of your life you are comfortable with airing publically.

Here is a great example. There is an art dealer through whom I have bought and sold prints over the years. I lost her details and looked up her name on the web. I was intrigued to find that she had listed herself on her myspace gallery page as a ‘swinger’. Now that may be a selling point to some punters but I wouldn’t want to take the chance. Would you?

Waggener Edstrom recently published a study on how young Internet voters (those 18 to 25 years old) are using digital communications to gather information on the 2008 U.S. presidential election.

I am deeply uninterested in politics so nearly ignored the study but was glad I did take a quick look. The interesting question was down in the survey results which you can download as a pdf.

The statement ‘I choose online sources rather than traditional news sources because traditional news sources attempt to control and shape the news and I want to make up my own mind independently’ – which 76% of the respondents agreed with – simply doesn’t ring true.

The problem is that with politics, supporters polarize very quickly and there is no real middle ground where people can debate issues rationally. Take a quick look at comments on sites like Little Green Footballs and the Daily Kos. Both are well trafficked blogs representing the core left and right of the political spectrum but are not the place for reasoned debate – simply because politics is emotional.

‘Echo chambers’ is the common criticism of blogs because they tend to attract likeminded people. The other factor is that people generally hide behind their tags and tend to be much less considerate and restrained as a result. I know a few sites that are considering only allowing comments if your full name is shown.

To illustrate the political polarity point there are two interesting visualization sites that are definitely worth a look. The first is http://www.orgnet.com/divided.html which shows an update of the famous 2004 Amazon political book analysis. The image shows two distinct clusters with very few books bridging the gap.

Taking that concept into the political blogosphere, have a look at http://presidentialwatch08.com/index.php/map/. Set the maximal link slider about 25% in from the left and you see a very similar distribution with most of the linking between like-minded blogs and very few links crossing the political divide.

Any surprises or wild conclusions? Not really. This is common human behavior across any interest group – including your product set. Changing prevailing thinking and opinions needs a long term, well thought out strategy that has to be true to the company and your underlying set of beliefs. And know what you are getting into because you are engaging on your customers’ terms, not your own.

I met with a bay area startup last week for a chemistry meeting to discuss how we would approach their business.

We don’t normally work with startups but these guys had a particularly strong track records as individuals so we pulled together what we thought was a cool approach to an interesting business problem (and, by the way, an interesting product offer as well).

Turned out that the chemistry was not that good and they didn’t appreciate the way we tried to differentiate ourselves – you can’t win them all.

However, what really stood out in the meet was that the founder, who made his money in tech, completely dismissed social media as a pillar strategy for the launch. He was adamant that his target, which will be women aged 35+ (with an interest in nutrition, organics and health) would not either blog or read blogs in any meaningful number.

We were so taken aback by his outright dismissal because this tech-smart team simply didn’t get the new landscape and were completely out of sync with the way we are approaching the marketing mix for our clients.

When someone challenges your beliefs so strongly I felt I had to go back and re-look at the demographics.

According to a recent study by BlogHer and Compass Partners, more than one-third (35%) of all women in the U.S. aged 18 to 75 participate in the blogosphere at least once a week. And that number increases if less-frequent visits are factored in. Of those women who are online any amount of time, 53% read blogs, 37% post comments to blogs and 28% write or update blogs, according to the study.

Yes, I’m sure the figures could be challenged by a smart stats guy but if half your audience are reading blogs shouldn’t you at least be considering how to build that in the marketing mix?

I’ve often wondered why the very shallow links that social networking sites allow between people seem to matter. An earlier blog posting looked at the vanity aspect.

The economist has a perspective in their special report on mobile telecoms written by  Andreas Kluth, that although used to explain some of the social aspects of mobile communications, has relevance here and I have extrapolated slightly

The concept is called connected presence.

I remember distinctly the doom and gloom reports about the negative impact on society from internet use when we were going through the dotcom boom. Let’s face it, there will always be people who push the limits. Like Mr Lee the unfortunate Korean gamer who died after playing Starcraft online for 50 hours with few breaks.

Most of us however are well adjusted and have adapted to our new, fast past and connected world by having frequent and short exchanges with people where less content is expected but people stay connected on an emotional level even though they are physically separated.

This is what is known as connected presence. The problem is that while it strengthens ties between distinct groups of people (family units; close friends etc) it causes these groups to turn in on themselves and weaken the ‘weak ties’ in society which bridge and joins these cliques into networks and allow the transmission of ideas, fads and trends.

The Economist conclusion is that since the ‘outburst of pessimism’ in the 90s the web has become an increasingly social medium with social networking sites allowing people to keep in contact with much larger groups of people, strengthening these ‘weak links’.

In a meeting recently with the data team, we were discussing why seriously complex predictive models weren’t yielding the expected results and subsequent ROI.

One of the data guys who creates some amazing models for our clients then said something which stopped me in my tracks.

He felt that the models were too good.

If we predict that a certain portion of the audience are most likely to renew/upgrade etc, and we trust the predictive models why should we be surprised when our audience behave in the manner predicted – even before we have had a chance to communicate with them.

Simple, logical and somewhat counterintuitive to common marketing thinking.

Ultimately  the client should be focusing their effort on convincing the people that aren’t likely to behave in the desired way.  This resonates slightly with a point in one of my earlier blogs that we make the mistake of looking for people most like our customers instead of allowing customers to identify themselves.

A second, and in this case, a more important point is how do we get into a situation like that? My belief is that we tend to allow technology to dictate our approach somewhat. This immediately throws you into a tactical, executional mode.

We often see the communication vehicle being pushed ahead of thinking about how best to achieve our communication goals. Turn it around and think about what your customers are doing and thinking for a few minutes before jumping on that cool new technology train.

I have to admit that I am very selective about reading business books as most are one idea stretched out over 200+ pages. I have a couple unfinished books on my nightstand which I use for putting myself to sleep.

Last weekend I was re-arranging our library (well mini-collection) at home and there was a copy of a business book which caught my attention. It was the Cluetrain Manifesto written in 1999. I opened it up again and nearly a decade later, the words ring true today. The book was written as a reaction to industry terms like ‘eyeballs’, ‘stickiness’ and ‘push’ (remember PointCast) where consumers are seen as entities to be trapped and fed information.

What the manifesto was saying is that we are human beings and our reach exceeds your grasp.I went back to the cluetrain homepage which has been suspended in time by the authors and lazily cut the following:

“However, employees are getting hyperlinked even as markets are. Companies need to listen carefully to both. Mostly, they need to get out of the way so intranetworked employees can converse directly with internetworked markets.

Corporate firewalls have kept smart employees in and smart markets out. It’s going to cause real pain to tear those walls down. But the result will be a new kind of conversation. And it will be the most exciting conversation business has ever engaged in. “

That’s exactly what we are saying now – but these guys said it years ago. With my interest piqued I decided to see what the Cluetrain team is up to now.

Chris Locke is still banging out some amazing writing as Rageboy while Doc Searles is extending the Cluetrain thinking into a concept he calls Vendor Relationship Management where we can turn the tables on CRM and manage vendors as well as they manage us.

An example would be a disaggregated market where I can announce my intention to hire a car of a certain type in a certain city and get offers in from the rental companies. Lending Tree comes to mind as someone with the basis for this sort of model. This reverse eBay is just one of the illustrations of a future where the markets are free and open and controlled by customers.

This is a long way off unfortunately It seems that we haven’t learnt the lessons from the dotcom boom. The ‘real’ success in web 2.0 and social media are applications like Facebook which are essentially social engineering in a walled garden. And the owners expect revenue to follow eyeballs. Much like 1999 expectations seem way ahead of reality.

Hopefully, Doc Searles will be right again because it means an exciting future for business and our role in bringing companies and consumers together in a meaningful way..