What Jay Z's failed music app can teach healthcare about branding, consumerism

Less than a month after its launch, Jay Z's music streaming app Tidal dropped from its rank as the 19th most download app to No. 664, according to Business Insider. By comparison, Spotify, the most in-demand music streaming app, rests as the 17th most downloaded app in the U.S. Beats Music sits at No. 58 as it undergoes a major makeover from owner Apple.

While almost all "hot new apps" experience a big drop in demand after the hype of its initial launch dissipates, this doesn't appear to be Tidal's problem, according to the report.

Instead, observers have cited the app's ill-delivered marketing campaign and expensive price tag as the main sources of its limited success. Healthcare, an increasingly consumer-driven industry, could take note of a few strategies not to borrow from Tidal.

Tidal's premise is to ensure musicians are compensated more for their music than other streaming companies, such as Spotify, which pays artists mere cents per stream. While its mission has merit, Tidal's marketing strategy failed to convey this effectively at its launch ceremony, where Jay Z, Beyoncé and several other highly successful and wealthy pop stars introduced the app. Madonna, Jack White, Kanye West, Daft Punk, Rihanna and Nicki Minaj — all of whom own equity in the app — were there in solidarity, according to the report.

"I think they totally blew it by bringing out a bunch of millionaires and billionaires and propping them up on stage and then having them all complain about not being paid," Ben Gibbard of Death Cab for Cutie told Business Insider.

Additionally, the Los Angeles Times reported that Tidal pays 75 percent of its revenue to artists and rights holders, not much better than Spotify, which pays 70 percent.  

Another, more significant issue that is likely responsible for capping Tidal's potential: It is only a paid service. Unlike Spotify, which offers a free, ad-supported tier to attract users, Tidal only offers a $9.99 basic package or a $19.99 premier package for lossless, high-fidelity audio — superior audio quality with minimal noise and distortion and more accurate frequency response — which only true music fanatics would be willing to pay extra for.

To attract and retain customers in the most fundamental way, Tidal must offer consumers a highly superior service than existing competitors, or present a more convincing case that music streaming as it operates today is harming the music industry. While some listeners would be willing to pay more for access to exclusive content, most consumers are just interested in cheap access to high volumes of music. Furthermore, consumers are not likely to care about music artists enough to voluntarily pay more for services available elsewhere at a fraction of the cost, at least not as an abstract category.

Likewise, in healthcare, prospective patients are taking a much more engaged and proactive stance when it comes to shopping for medical care.

"For every strategy we have, at some point in this decade consumers will take charge. Consumerism will be the new normal and there will be nowhere to run and nowhere to hide," said Keith Pitts, vice chairman of Tenet Healthcare Corporation, according to the Huron Healthcare CEO Forum report "Leading the Journey: Cultivating Success in Healthcare."

With "nowhere to hide," hospitals will be forced to take a number of actions to attract consumers, maintain a competitive edge and hold onto their market share.

Like users of music streaming apps, first and foremost, consumers will use price comparisons across hospitals to inform their decisions on where to seek care. As in certain areas where patients are already responsible for paying the entire cost of a medical bill, such as LASIK procedures or cosmetic surgery, providers are used to cutting prices to attract larger patient populations who pursue different providers based largely on price.

In addition to price, consumers are more engaged in comparing hospitals' quality and safety ratings. For instance, the Leapfrog Group released its Spring 2015 Hospital Safety Scores Wednesday, which uses a letter grading system to assess more than 2,500 U.S. hospitals. For the first time, the Hospital Safety Score website allows consumers to see a hospital's current score alongside its previous scores, so they can easily see if a hospital has maintained performance, improved or gotten worse. To further simplify the comparison process, Leapfrog labeled the 182 hospitals that consistently received an A grade for safety with a "Straight A's" logo on the Leapfrog website.

This emphasis on simplicity — assigning letter grades consumers are familiar with and making tracking performance easy to view — is designed in an effort to make the "shopping" experience more convenient for consumers. Hospitals that don't stand out as safe, or rather, hospitals that stand out as particularly unsafe, risk losing new patients and face difficulty maintaining loyalty among previous patients.

In addition to comparing quality and price of services, consumer loyalty is largely influenced by branding. Unlike Tidal, whose marketing message was obscured by its delivery by the rich and famous, hospitals with strong brand identities are most likely to have high patient loyalty.

According to the National Research Corp's 2014 Market Insights Study of National Brands, familiarity with a hospital brand has a significant impact on how consumers make decisions about their healthcare.

Findings from the study show certain hospitals and health systems are some of the biggest names in healthcare because they have the strongest brands. Mayo Clinic, Johns Hopkins, Cleveland Clinic and Kaiser Permanente are in the top stratum in terms of national name recognition and reputation.

About 12 percent of survey respondents said they used the services of the most familiar national brand hospital in the last three years, and one out of three consumers would consider using their most familiar national brand for any treatment or surgery. Additionally, 77 percent of consumers would recommend their most familiar brand to their friends and family. The survey also found consumers associate a positive brand identity with quality, as 56 percent of respondents described their most familiar brand as having a "long-standing reputation for great medicine" and 38 percent described the brand as an "elite provider of health and wellness education."

There are numerous components that contribute to a company's success. The ability to fulfill fundamental consumer demands — whether in the music or healthcare industry — will always be the most powerful.

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