May 2012

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Netflix has lost its social object.

For its initial (massive) run Netflix was defined by its “social object” of the Red Envelope. For some period of time, the Red Envelope was a sort of badge; an external manifestation of internal values:

The Red Envelope signified a person’s love (not like) of movies. Not a movie fan, but a movie fanatic.

Having this Red Envelope on your desk / coffee table allowed for the thing that the movie fanatic wanted to happen to happen:

A visitor to the movie fanatic’s home/office would see the Red Envelope, and ask about it. This allows the movie fanatic to do what he (not “wants to do”) must do: Talk about his passion.

The Red Envelope was the conversation starter, and the tool that enabled the movie fanatic to become an evangelist for Netflix. It was the tool that allowed the burden of promotion to shift from Netflix to the movie fanatic.

It was the tool that accelerated Netflix’s growth.

    The Red Envelope is largely gone. It’s been replaced by a stream.

    The stream can not and does not act as a social object.

    Markets are conversations.

    The conversation starter — the Red Envelope — is gone.

    The conversation has died down considerably.

Music has lost similar social objects.

Vinyl’s resurgence is only partly explained by its sound quality.

The main reason people crave vinyl is that it acts as a social object — an external representation of internal values — and, when seen sitting on someone’s coffee table/hanging on their wall, provides the conversation ignition for the music fanatic to become an evangelist for the band who they love.

It was the tool that accelerated music’s growth.

    The vinyl record (and its less-effective counterpart, the CD) is largely gone. It’s been replaced by a stream.

    The stream can not and does not act as a social object.

    Markets are conversations.

    The conversation starter — the Vinyl Record (and, its less-effective counterpart, the CD) — is gone.

    The conversation has died down considerably.

Writing has lost similar social objects.

Books have long been the classic example of social objects (an external manifestation of internal values). We have — museum like — portions of our house that act as a display case for these values (they’re called book cases). We have tables specifically designed to display these — coffee table — books.

These books provided the conversational ignition between the fan of the author of the book, and their friend, and allowed the fan of the author to become an evangelist for the author, and thus shift the burden of promotion from the author herself (or her less-effective counterpart, the publisher) to the fan. (“Books are the new vinyl” will become a meme, just watch).

    The book, while not gone, is rapidly being replaced by a stream (download).

    The stream can not and does not act as a social object.

    Markets are conversations.

    The conversation starter — the book — is gone.

    The conversation has died down considerably.

What are our new social objects? The iPad. People use it as an external expression of their internal values. It’s why the market for iPad covers is so high.

Apps may fill this role to a degree. You are, to a point, defined by your apps.

It’s not the same, however, and we all know it.

Savvy companies will recognize that they must create social objects even as their products largely move to the intangible.

Failure to do so deprives customers of the tools they need to make the switch from fan to evangelist, and therefore decreases the chance of the burden of promotion from the creator (or label, publisher, producer) to the constituent, and thereby puts a ceiling on growth.

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About two years ago, I wrote a post entitled “The Stream That Snuck up on You” about the ways in which streaming was inexorably becoming a larger part of how we access music.

I think that we can all agree that — with the rise of Spotify (which, at the time of that post hadn’t launched in the US), the growth of Pandora (IPO, or otherwise, I’m not sure it’s sustainable), and, the launch of Apple’s iTunes Match — streaming is now a much larger part of our life than it was in the past, and that we ain’t going back.

As is so often the case, music was the proverbial canary in the coal mine; this time, with respect to streaming. Music, because of its relatively small file sizes, and youthful (and thus more computer savvy) demographic tends to lead the way in tech disruption.

Other industries/mediums follow.

What this means is that your days of storing things on your computer — files, movies, photos, etc. — are largely coming to an end.

Don’t believe me? Think about the number of external harddrives you bought between the years 2005 and 2010. Now think about the number of external harddrives you’re buying these days. It’s not just because of a Moore’s-law-related storage capacity increase. It’s because you’re gradually, but inexorably (yes, I like that word) moving to the cloud.

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