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Thursday, July 7, 2011

Death To The QR Code

Death to the QR Code

Over the past few years, "QR codes" -- those square, mobile barcodes -- have started to show up in some U.S. advertising.

Enough already.

While QR codes are cute and novel, and may be big in Japan, they're not the future of advertising here. So it's time to drop them. Even Google is.

For the uninitiated, mobile barcodes work with the camera in your smartphone, and generally tell your phone to take you to a web address. You take a picture of the barcode, and the barcode reader software does its thing. In theory, they are supposed to be a shortcut, so you don't have to type anything in.

But in practice, they don't often work out that way. Mobile barcodes can be confusing and can waste time. And as mobile technology progresses, they probably aren't even necessary.

Most people, before scanning their first barcode, have to download scanning apps manually and figure out how to use them. Then, each time there's a barcode to scan, they have to make sure they're using the right scanning app for the right barcode. That's because different types of barcodes, like Microsoft's "Tag" codes, don't always work in all the same apps.

And then there are the inevitable delays in finding the barcode app in your phone, waiting for the camera to prepare itself to shoot photos, getting the right distance and focus on the barcode, and hoping the mobile data network responds to your query quickly enough to be worthwhile.

That's just on the user's end.

Then there's the complexity of creating and managing mobile barcodes on the advertiser's end. And making sure different types of phones get the right kind of content. And the space the barcode takes up in the ad. And the decision about how much space in the ad to devote to instructing people what to do with the barcode, etc.

By that time, you've spent more time teaching people what to do with the barcode than the time they'd spend doing whatever it is you want them to do. All that for what?

JetBlue QR 2D barcode Nevermind the advertisers who have been putting QR codes on their ads underground -- such as on the NYC subway -- where there is no Internet connectivity at all.

Is this really still a shortcut?

So, what could be better? There are several options.

The simplest could be just to ask people to do what the barcode was going to take them to, anyway. "Go to Facebook.com/mybrand." Or "follow us on Twitter." Or "find our closest store on Google Maps." Or "download the MyBrand app from the app store." That sort of stuff isn't actually very tricky to type in.

If you insist, you can even use a custom short URL for each ad placement, and that can get you some of the traffic measurement tools you were (theoretically) going to use mobile barcodes for. But, remember: The easier this is for people, the better -- and the more likely it's going to work.

If you're going to ask people to photograph something, you might as well just let them photograph the whole thing. Image recognition is getting good enough -- and servers fast enough, and apps smart enough -- to recognize the whole thing you're taking a picture of, instead of asking someone just to zoom in on a barcode. Even if that "whole thing" is an ad.

For example, a recent Buick magazine ad encourages people to use the Google app's "Goggles" feature for iPhone or Android to photograph the entire ad to "unlock" its interactive features. In our informal test, it worked quickly, on our first try -- in low light. Perhaps Google will roll this out broadly.

And in the future, if "near-field communication" mobile technology takes off, you may be able to just bump your phone up against a sensor to tell it to do something, whether it be to check you into a bar on Foursquare, take you to a website, or even pay for dinner. That's faster and easier than a barcode, too.

Big picture: Yes, obviously, barcodes have a place in the world. They are simple and cheap for commerce and logistics, and barcodes are widespread. There are cool consumer experiments where people use QR mobile barcodes for shopping in virtual supermarkets in Korean subway stations. And for now, they seem to be a novelty for some U.S. advertisers.

But as far as the future of advertising goes, particularly in the U.S., it's hard to see them really taking off. Their utility hasn't yet made up for their awkwardness.

More from our special report on the Future of Advertising:

- 10 Advertising Terms You'll Be Hearing For Years, So Learn Them Now

- TV Advertising Is Begging For Disruption... But It's Getting Insanely Complicated

- POLL: What Kinds Of Advertising Do You Actually WANT More Of?

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Death To The QR Code

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Friday, June 10, 2011

The Death Of The Phone Number

I hate phone numbers. They’re a relic of an outmoded system that both wireless and wireline carriers use to keep people trapped on their services — a false technological prison built of nothing but laziness and hostility to consumers.

In fact, I can’t think of a single telecom service that is as restrictive as the phone number: email can be accessed from any device, Skype makes apps for nearly every platform, IM works across any number of clients, there are web-based messaging solutions that transcend platforms entirely — the list goes on. We expect modern telecom services to be universal, cheap, and easily-accessible, and those that aren’t tend to be immediate failures. Ask Cisco how Umi went for them sometime.

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The Death Of The Phone Number

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Friday, February 18, 2011

The REAL Death Of The Music Industry

In January, Bain & Company produced the following chart as part of their report on “Publishing in the Digital Age” (PDF):

Music Industry

Then on Tuesday, someone posted it on Flickr. Subsequently, Peter Kafka of Wall Street Journal's MediaMemo noticed it and passed it along to Jay Yarow, who made it Business Insider’s Chart of the Day on Wednesday, citing Kafka and the Flickr post. On Thursday, the excellent John Gruber at Daring Fireball linked to it and between those two postings the chart garnered a fair bit of attention, including from the likes of apparent digital music expert Bob Lefsetz (“First in Music Analysis”). No one seems to have tracked it back to the original source nor noticed what happened to catch my eye straight away:

This chart sucks.

What’s Wrong With It

Oh, Bain – I hope no one has hired you for your expert “analysis” in this field:

The chart uses raw revenue numbers, not adjusted for inflation or population.

The chart is labeled “Global Music Turnover” but the data is actually US only. ¹

The chart says “Bain Analysis” but it’s very unclear that they did any analysis, since anyone paying the RIAA $25 can login and immediately see virtually the same chart, albeit formatted slightly differently.

They fail to clarify how & if they distribute the RIAA's 16 sometimes vague categories amongst the 4 they use.

The Right Chart

Music Industry

All discussion herein is for US recorded music as covered by the RIAA. The above chart is adjusted for inflation & population – for full details, see below.

So let’s correct the inaccurate conclusions one might reasonably draw from the misleading Bain chart:

Wrong: The music industry is down around 40% from its peak in 1999

Correct: The music industry is down 64% from its peak.

Wrong: At least the music industry is almost 4 times better off than in 1973.

Correct: The music industry is actually down 45% from where it was in 1973.

Wrong: The CD era was the aberration. (Mr. Gruber’s reasonable take)

Correct: The CD peak was only 13% better than the vinyl peak, not over 250% better as the Bain chart implies.

The overall conclusion is that the music industry is actually doing much worse than the Bain chart implies:

10 years ago the average American spent almost 3 times as much on recorded music products as they do today.

26 years ago they spent almost twice as much as they do today.

What Happened?

Turns out that, somewhat unsurprisingly, the recording industry makes almost all their money from full-length albums:

Music Industry

Equally unsurprising, no one is buying full albums any more:

Music Industry

That’s just over 1 album per person per year now, and only 0.25 downloaded albums per year. Here Mr. Gruber’s guess is more on target, though current numbers are still substantially below pre-CD numbers. In addition to piracy and the general lack of interest in buying albums vs singles (see below), it’s also possible that consumers' ability to convert CD to digital versus having to rebuy vinyl albums on CD accounts for some of the disparity as well.

What Does The Future Hold?

Let’s dig deeper into those precious few newer sources of revenue, all of which were at zero in 2003:

Music Industry

Downloaded albums & singles have grown nicely, but we’ve already established that is not nearly enough to offset the loss of the physical equivalents.

Mobile, which includes “Master Ringtunes, Ringbacks, Music Videos, Full Length Downloads, and Other Mobile”, hit its peak in 2007 and has actually been in decline the past 2 years. Looks like the death of the ringtone - and possibly the birth of the iPhone?

Subscriptions – presumably Rhapsody, Zune Pass, and the like — have also drifted downward the past 2 years.

To reiterate what I was very surprised to find: two of the big new areas, mobile and subscriptions, appear to both already be in decline.

That only leaves internet & satellite radio – Pandora, etc — and others that pay via SoundExchange. It had a good uptick since 2007, but that’s when they negotiated royalty rates for online broadcasters. Even if they maintain some solid growth, it still adds up to a pittance.

Looks like the smaller and shrinking recorded music industry is here to stay.

A Few Additional Charts

Digital really does appear to have brought about the era of the single:

Music Industry

For what it's worth, here is the inflation adjusted (but not population adjusted) version of the revenue chart: Music Industry

Finally, since I couldn’t be sure what was and wasn’t included in the Bain chart, here’s my version of the raw unadjusted revenue numbers:

Music Industry

The Gory Details

The population data I used comes from http://www.census.gov/popest/
The inflation data I used comes from the CPI-U at http://data.bls.gov/cgi-bin/surveymost?cu
I used 2011 dollars (January 2011, the latest available) because I feel present day dollars provide a better visceral understanding of the sums involved than using some other arbitrary date.
Here’s how I grouped the RIAA categories:

8-Track: Includes “8-Track” & “Other Tapes” (described as “reel-to-reel and quadraphonic”)
Vinyl: Includes “LP/EP” & “Vinyl Single”
Cassettes: Includes “Cassettes” & “Cassette Single”
CD: Includes “CD”, “CD Single”, “DVD Audio”, & “SACD”
Videos: Includes “Music Video”
Digital: Includes “Download Single”, “Download Album”, “Kiosk”, “Download Music Video”, “Mobile”, “Subscription”, & “Digital Performance Royalties” (described as SoundExchange royalties)

1. The RIAA at http://www.riaa.com/shipmentfaq.php: “This database includes year-end shipment statistics for the recorded music industry in the United States going back to 1973”

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