Are Consumers Actually Customers?

Here’s an interesting article from PC World about how consumers are listening to more music but paying less for it, meaning less revenue for the recording industry. The overabundance of media and its ready accessibility to consumers likely increases their perception that their merest attention is valuable to the media that is competing for their eardrums, eyeballs and spending loyalty. The irony is that the media was made available to sell products, and it’s causing the recording industry to have enormous losses instead. Consumers of media have stopped being actual paying customers.

The ready availability of free video upload sites, social networks, blogs and online review sites has enabled the average Joe to post his two cents and be heard by major media outlets, brands and big business. Marketing campaigns like the Doritos and Pepsi Max Crash The Super Bowl promotion, where consumers are invited to submit their own ads for national recognition are giving consumers (the marketing people call them “brand enthusiasts”) giving a thunderous new volume to their collective voice.

Groupon promises businesses a minimum set amount of customers in return for a gigantic per-item discount (minimum 50% off). Consumers buy at the discount and if the minimum number of customers is met, the deal is on. However, Groupon takes half of the proceeds, and the business fulfills the sales, with mixed results. Some of them say they are able to bring in more customers this way than through other advertising channels, and since they don’t pay Groupon any advertising fees, the cost of the discount versus what they would have spent in advertising ends up a wash. Other businesses just lose money – see this article on NPR.org that references a wine bar that went out of business.

Is it a good idea to entice new listeners with free music, new fans with free video or get new customers who make their first contact with a business expecting at least half off the regular price? Are customers changing “how they shop” or are they becoming increasingly self-entitled “consumers” with unrealistic expectations about what they should pay? How long will businesses encourage, then tolerate the behavior?

More on this trend to come….