Author: Matthew Gladstone (@gladstonematt), Partner, BBH London
So it’s official, “Applications are the white goods of the 21st century” and sales of virtual goods have crossed the $2bn threshold in the US and iTunes has over a billion downloads.
But, as we all know, not everyone is enjoying the party – Thom Yorke has told young bands not to tie themselves to the sinking ship of music companies, Murdoch is trying out pay walls for his newspapers, and a US court has caused outcry by ruling that people who have bought discs of software don’t actually “own” them – they cannot sell them second hand on eBay.
I think the difference is a lot to do with packaging and branding. Or, to be precise, virtual packaging and branding. People who are getting it right are getting paid more than those who aren’t.
What packaging and branding do is to create a sense of property and ownership. And property and ownership are norms that tell us to value and pay for things. Which are big problems in the virtual economy.
So my provocation is this: “Virtual packaging” is one way to create that sense of ownership and property. Just as the pioneers of branding created commercial value when they put trade-marks onto commodities in the tangible world – branded them as “theirs” – we have to reinvent packaging and branding for the virtual world.
The most obvious examples of this are Apps (packaged, single-purpose, branded on the button, tangible with a finger, made unique to you through use) and, at the other extreme, music (downloaded via anonymous browser, no presence other than a line of text in a database, totally generic). And who is persuading people to pay more successfully?
I think that one day we will look back at the App v.2010 and laugh at its crudity. One day we will have virtual packaging as iconic as this:
But let’s go back to the beginning.
My first wake up call was overhearing the oft-debated morality of downloading music. Free file sharing? Fine. Normal. That’s how you get music. Why the question? But walking out of a store with a cd without paying for it? Shoplifting. Stealing. Wrong. Equally obvious.
So what’s the difference between download and CD? To the artist, none. But to the user, one was packaged – physical, shiny, found in a shop – the other, just a piece of anonymous data accessed through a browser.
Look at Murdoch vs. the App. No detailed data are available yet, but anecdotal reports say that iPad apps are performing disproportionately well vs. subscriptions accessed via browser. And Ben Hughes, global commercial director and deputy CEO of the Financial Times, says the iPad is a “game-changer” for the newspaper industry. It’s the app vs the generic packaging of the browser.
And then the success of iTunes or Amazon? These are also “packaged” environments – clearly understood as “shops” where you pay for stuff. Unlike Limewire or Piratebay.
Which leaves our last example – the action against someone selling software discs on eBay. The Software and Information Industry Association (USA) is breaking our norms of ownership and property when it says “I own that physical thing you bought”. We all feel that physical things belong to the person who buys them.
So the App is really just a virtual box. iTunes or Amazon just a virtual shop (no shit). Things that have cleverly used the norms of ownership and property in the virtual space, to make us more likely to pay for them. Right now the virtual retailers seem to be way more sophisticated than the products they sell – but hopefully that will change.
So here are some starters on creating virtual packaging (some of these may seem uncannily obvious or familiar to the real world, but maybe that’s the point):
– visual identity which differentiates the object
– tangible, touchable
– a differentiated experience (sounds, colours, even haptic “textures”)
– adaptive to the owner – evolving into something distinctively personal to the owner
– hard to copy and transfer; the sense of a physical transfer, not a lossless virtual one
Perhaps it’s time music came in Apps. As we said earlier: branded on the button, tangible, with a memory of what I did last time, with an experience unique to each app or band. Perhaps it would even be like a gatefold of old, but on steroids. Now that’s something I’d pay for.
We’d like to know what you think. Who’s doing this well? Do you know anyone who works in the world of packaging who’d want to comment?