The Decline of Physical Media – a self fulfilling prophecy?

From my frame of reference as a packaging designer, I’ve had a fairly close connection with the media and home entertainment (HE) industry for several years now. I have always been a keen music lover both as an amateur performer and avid collector. It is with this in mind along with the recent news of the impending HMV administration that I thought I’d express some of my concerns about the state and future of physical media.

HMV

It was at a recent National Trust visit that I realised how far the heritage and familiar logo of HMV (His Master’s Voice) spans. As purveyors of music playing devices since 1899, the Gramophone company opened a music shop in London in 1921. Following acquisition by RCA, HMV were also instrumental in building well known brands such as EMI and JVC in the 60’s and 70’s.

Aside from continued growth during the 90’s and some unsuccessful attempts at innovation, I witnessed, along with everyone of my generation a much more rapid decline in the availability of music in disc format over the coming years.

After a sales peak in 2001 fuelled by the popularity of CDs – and as my music buying appetite began to flourish, there grew an air of doom and gloom across the industry as talk of piracy and internet downloads (and of course supermarkets) threatened physical sales. Not constrained to music, film, TV and games also felt the impact of internet technologies. Although difficult to identify, I wonder how much of this decline was due to demand and how much was availability against convenience?

Record Shop

In my parents’ generation, going to the music store was an event. My Mum will recount stories of travelling with her mates into the local record shop to listen to music, grab a milkshake or coffee and choose albums to take home. Even as I was growing up, I had a wide variety of choice – Tower Records, Our Price, Virgin Megastore, I would travel into the city and spend 4-5 hours listening to the ever diminishing vinyl sections and be really proud of myself when I found a great record before it became popular through radio airplay. As time went on, and the internet age overtook, Vinyls and listening stations vanished from the high street to be replaced with everything from clothes to fruit-bars to headphones. A modern HMV store would struggle to boast more than 25% of floor space devoted to music. So even as a committed fan of the shopping experience, I find it increasingly difficult to satisfy my (admittedly eclectic) taste.

listening booth

If I talk to a marketer from any other industry sector they would start by telling me that one of the key motivators of their trade is buyer behaviour. Although there is now a generation of consumers who have never experienced the listening booth, I’m not sure their needs are any different to mine – I buy music over the internet too, in fact I purchase through several channels – music on subscription, music downloads, physical media purchase through the internet and shopping in store. I listen to the radio for recommendations, I also like the ‘listen’ buttons on websites – and my favourite feature of internet shopping is the “you might like this” suggestions. These features used to be available in-store although I fear that this added value and personal touch was too difficult to quantify against sales in a demanding retail environment. What I am very sad to have lost through internet shopping is the additional content, the artwork, booklets and inserts (and obviously packaging) which for me was very much a part of the whole purchase experience.

sgt peppers lonely hearts club band

With its self-fulfilling prophecy, I worry that the music industry and HE sector in general has lost sight of what’s important for the consumer. I will personally be very sad to see the demise of music on the high street, and would love to see a wave of innovation which sets to improve the terrible audible quality that people seem to tolerate for convenience sake. For now, however, I leave you with some hope that I will at least cling on to:

2012 Vinyl Sales grew by 39% in the UK (similar figures reflected in US) – about 15x growth since 1993
Digital downloads reflect less than 1/3rd of all album sales
Even with a 13-14% decline in sales last year – we bought 43.6 million CDs in the UK (86 million US)

Even in the high turnaround, impersonal world of modern music, our appetite is greater than ever.
Provided the industry pulls itself back together and re-invigorates its focus, I am optimistic for the future of physical media.

Advertisements

Procure! for procurement sake

Although politicians have been avoiding phrases like “green shoots” in recent months, the general consensus seems to be that the economy is once again starting to cultivate. Whether spending or saving is the best route to recovery, many companies have been erring towards caution by cutting as many ‘unnecessary’ costs as possible. I wanted to reflect on how this has affected the packaging industry.

First some facts…

P&G known as the biggest spender in the world of marketing implemented a 5.4% budget reduction between 2010 and 2011 having already reduced their advertising spend by 20% in 2009. At the same time General Motors reduced its yearly marketing budget by 16%, while concurrently channelling 15.7% towards online methods.
Even within the world of media, ironically, there is a reported drop of 11% in marketing spend across the board.
(sources: Times Business, Research-live.com, EHow.co.uk)

The general trend is to spend more effectively by targeting consumers covertly through social marketing campaigns. Analysts therefore predict that marketing using online channels will overtake all other streams by 2016.

“P&G lay off 1600 staff members after discovering it’s free to advertise on Facebook”

So how does this affect packaging?

One of the prevalent strategies that companies seem to have adopted is to re-focus this spend in areas such as procurement. In the boom years, the driving force behind packaging sourcing and spend was the marketing department whereas in recent times, there seems to have been a significant increase of incumbent procurement companies and departments. There have been many new agencies offering these services on behalf of brand owners, while existing print management companies such as WilliamsLee-Tag and HH-Global have been diverting their attention to the world of packaging.

“Why you should consider a career in procurement”

If we can reduce cost of goods and increase competition in the world of packaging this is a good thing, although sometimes the ‘cheaper’ solution isn’t always the most cost-effective.

When outsourcing packaging, it is easy to reduce the cost of materials (e.g. weight reduction or material conversion strategies) or simply remove additional supply chain costs such as print enhancements, reducing the amount of component parts or offering a ‘generic’ branding alternative across territories or form factors. These kind of cost savings are quick hit and easy to quantify.

The Procurement Strategy

The problem with cost reduction strategies is that even when comparing direct campaign effectiveness, the long-term benefits of brand quality can be difficult to measure when trying to gain trust and recognition in the new world of social media. Cost inherently (but not always) affects quality so it is important when designing packaging that we fully understand the benefits and effectiveness of the plethora of finishes and materials in our toolbox.

The good news is that many of the manufacturers, meeting the challenge by being careful with costs and reducing spend during the recession have started to see comfortable balance sheets leading to new investment in premises, technology and machinery.

The packaging holy grail…

I’ve always believed that it’s the little details that count in the battle between good and mediocre design. By understanding the brand message and intended usage it becomes easier to convey this through use of materials and design. But even then, it is important to involve the right people throughout the supply chain from marketing through to manufacturing to ensure that the initial message is communicated in an effective and coherent way.

If you’re looking to promote a product through the viral effects of social marketing, the way it looks on shelf (or tiny .gif thumbnail) is no longer enough. In order to achieve the holy grail of a “YouTube unboxing moment” we must consider the whole opening experience. The unquantifiable and subjective ‘look, feel and quality aspects’ are key to the “I want one of those” effect. It is therefore important, while being conscious of price, to consider all the elements of the packaging such as material choice and design style during the evaluation stage. This way we can begin to really understand the wider effects of packaging upon brand effectiveness and customer opinion.