The music plays on(line) Sep 1, 1998 12:00 PM
, Shannon Oberndorf
JobZone
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Marketing research firm Jupiter Communications predicts that annual online
music sales will reach $1.6 billion by 2002. So it's no wonder that
Amazon.com, the $121 billion online bookseller, is singing a different
tune. On June 11, the Internet-only firm launched a music store offering
125,000 music titles for up to a 40% discount, including 30% off the top
100 bestselling CDs.
The music store was designed with the help of more than 20,000 customers
who responded to Amazon.com's call to "build the music storeof your
dreams." But it wasn't until the company conducted numerous focus groups
and surveys of its 2.2 million customers that it moved forward. "We had to
make sure our customers were comfortable buying music from us as well as
books," says Jenifer Cast, general manager of Amazon's Music Store.
In addition to music reviews and powerful search capabilities, such as
choosing jazz by featured instrument, Amazon's music store also features
the MoodMatcher, which recommends music to match the listener's mood, and
more than 225,000 song clips from 30,000 CDs. And the site features reviews
from customers and well-known music editors from Rolling Stone, People and
Time magazines.
Amazon also cross-sells its books through the music store. Music customers
searching for Miles Davis, for instance, also see a list of Miles Davis
books, just a hotlink away. "Books and music are like peanut butter and
jelly," Cast says. "They just go together."
But the online music competition is steep. Internet music retailer CDnow
($17.4 million) led the market in 1997 with 33% of online music sales,
twice the share of Music Boulevard, the category's second-highest revenue
generator, according to Jupiter.
Other well-known rivals are entering the online fray as well. Music
retailer Tower Records, mail-order clubs K-Tel and Columbia House, movie
retailer Blockbuster, and bookseller Borders have opened up music
cyberstores within the past year.
Beyond core products
Many cybermarketers are expanding their offerings beyond their core
products. CDnow offers movie titles. Barnesandnoble. com, the $25 million
online division of book retailer Barnes & Noble, also sells software on its
site.
"The new products are a natural fit for each marketplace," says Marion V.
Marchese, co-founder of VirTu Inc., an Internet business consultancy and
management firm.
By offering a new product category, "these online retailers are leveraging
their customer base and selling more products," says Lauren Freedman,
president of the e-tailing group, an electronic research consultancy based
in Chicago. "But there are inherent risks involved. Companies need to
remember they can't be experts in everything, even if the new product
relates to the core merchandise."
