COI: Cost of Inaction United Breaks Guitars

United Airlines broke a guitar. What ensued online was comprehensively a brand trashing and demonstrated what happens if you don’t pay attention to social media – even just monitoring it – it can cost your company $180,000,000. This is a follow on from my posts on Cost of Inaction, also Steak and Shake and Apple vs Engadget.

Dave Carroll’s guitar got broken on a United plane flight. If you watched the video, you’ll know he got the run around before being told NO. So he wrote this song, recorded it, made a video and popped it up on YouTube.

  • 3 million views within 10 days, 5 800,000  views now – and 36,500 ratings (5 out of 5), 22,700 comments. (Mashable)
  • In Google search, just under 20 million returns for “United Breaks Guitars” (Google)
  • Number one downloaded song on iTunes (Toronto Star) after only a week
  • When I scanned through, BoingBoing, Mashable, The Huffington Post, and traditional media like the Telegraph (UK), Rolling Stone, LA Times, and Australia’s Crikey, Sydney Morning Herald, Brisbane Times, etc  had picked up in the story.
  • $180 million dollars lost in share price. (see later)

I think UnTied the anti- United community is an interesting development (was around before this incident though).

The Times claims that it cost United 180,000,000 smackeroos because the share price plummeted.

Meanwhile, within four days of the song going online, the gathering thunderclouds of bad PR caused United Airlines’ stock price to suffer a mid-flight stall, and it plunged by 10 per cent, costing shareholders $180 million. Which, incidentally, would have bought Carroll more than 51,000 replacement guitars.

The Huffington Post disputes that claim:

it’s borderline silly to suggest that a something like a cheeky web video could move such a prominent stock 10 percent. United is an enormous, struggling company, with a stock price that has been on a downward trend since last fall. In other words, it’s a typical airline stock.What do you think? Is there any way Carroll’s song could have cost United $180 million? What kind of damage did it do to United’s brand? How do you value bad PR like this?

My response? Apple lost 4.6 billion dollars market cap when Engadget blogged something negative withing minutes of the blog post. Not exactly the same as a silly YouTube video but you can never be sure of the market…

Apple stock engadget chart

C.O.I – the cost of sitting there saying that social media is for people with too much time on their hands, and that no one need  pay attention to Loser Generated Crap. A dangerous place to sit, indeed.

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  1. Brilliant synopsis of a brilliant ‘customer fights back’ story, Laurel. Haven’t seen anything as creative & damning since Jonah Peretti took on Nike’s sweatshops in the early noughties.

    The major challenge for organisations is that their processes have been established to nullify / eradicate customised human intervention. Unfortunately for them, that’s what social media is all about.

    The aircraft carriers are starting to turn but it needs enlightened people at the helm.

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