Co-Creating Value with Customers
Multimedia. Crossmedia. Social media. Transmedia.
Our increasingly mediated world is playing havoc with the old analog rules but has yet to fully reveal the new digital ones. Digital piracy and changing consumer behaviors aren’t helping as companies attempt to construct long-term strategy with limited short-term visibility. Having seen the music and movie industries struggle (and ultimately fail) to cope with disintermediation (cutting out the “middle man,” so to speak), e-piracy, and shifts in consumer expectations, how can publishers negotiate their way to new revenue streams without sacrificing existing ones?
The good news, in my humble opinion, is there’s more than one answer to that question. Some are already here, while others have yet to be discovered, but the answers are emerging.
Here’s the bad news: the way forward isn’t going to be a one-size-fits-all silver bullet. Publishers – indeed, writers and agents, too – have multiple challenges facing them today. Further, solutions will require time to identify and implement them and even more time to have their benefits realized.
Over a series of posts, I’m going to explore one of those opportunities to create new, long-term, and sometimes sustainable revenue streams: value co-creation with customers.
Business scholar C.K. Prahalad explored this topic from various perspectives over the past decade or so, with the culmination of his research being the book, The New Age of Innovation. This book proposes two basic tenets: “value is based on unique, personalized experiences of consumers” and “no firm is big enough in scope and scale to satisfy the experiences of one consumer at a time.” Prahalad then identifies three transformations happening in business today:
- Companies are shifting from selling products to selling services (products are still in the mix, but consumers find value from the services instead of the products).
- Companies are shifting from having transactional relationships with consumers (one-time or isolated interactions) to having service relationships with them (a series of ongoing interactions).
- Companies are finding their business-to-business and business-to-consumer models merging together.
Prahalad goes on to explain how companies should begin to build global networks of resources to support these kinds of customized value, but let’s focus just on these points. He proposes that:
Value for consumers will take the shape of products wrapped in services, and companies will create this value by establishing networks of resources they need to generate the kinds of unique, personal experiences consumers are increasingly demanding.
At the recent LA Games Conference, I heard the phrase “the game as service” more than a few times. Game distributors understand that selling commoditized game titles that are self-contained units of content is no longer sufficient to compete for consumers’ time and attention. Anyone who has taken a look at Xbox Live understands it’s about far more than shooting aliens or racing cars around a virtual track. It’s about layering a social context on top of the game, which enhances the game content. The result is a more expansive, richer experience.
And that’s ultimately where I think we’re headed: experience-driven offerings (value) co-constructed in resource networks (co-creation).
Traditional business models involve a chain of interconnecting parties, with the last link in the chain being a customer passively consuming a product. It’s a one-way monologue of value transition.
However, emerging business models involve a network of parties, with no clear endpoint. Consumers become active participants, creating an ongoing conversation of value creation and consumption.
How might this apply to publishing?
Up to now, the common perspective of publishers has been to view themselves as the link in the transaction chain between authors and distributors. In most cases, this one-way chain of production still holds true: secure rights to a book (often via an agent), work with the author to produce that book, sell that book to as many distribution points as possible. Repeat.
Increasingly, however, the ability to link to other entities in non-traditional ways is presenting publishers with some interesting choices. For example, the direct-to-consumer market is a nascent but rapidly growing opportunity. More important is the realization that there are multiple ways to market to consumers and monetize content.
But I caution against viewing this shift as simply a way to extract dollars directly from consumers. In fact, I’m suggesting something more akin to viewing consumers as a valid and reliable partner in the overall publishing industry.
I’ll explore some specific examples of this in future posts, but until then, please consider the new opportunities made possible by viewing consumers as another resource in the publishing network – a resource not just capable but willing to co-create value.
Scott Walker likes to play in the collaborative sandbox of entertainment, building bridges between creatives and audiences. His most recent project is Shared Story Worlds, a site focused on participatory commercial entertainment. Scott is also a member of the StoryWorld Conference Council.
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