As music merchants struggle to adapt their business models, one New York shop is embracing the Web
Summary
The internet has steamrolled music retailers and as consumers fill their Ipods with digital downloads (both legal and illegal) the sales of CDs (hardware) has dwindled noticeably. 25% of the US record stores were gone by 2005, a total of 1900 stores. This is mainly due to the increase of internet sales from $20 million in 2003 to $2.9 billion in 2007, online and mobile downloads accounting for 15% of all music sales last year. This is why Josh Madell, the owner of OTHER MUSIC started to look for a new way to expand their business model while at the same time upending their old one. However it is noted that data suggests that small retailers have a better chance of staying in the market than large ones. This is because OTHER MUSIC specializes in selling obscure CDs and Vinyl, which have higher markups and attracts collectors giving it an ‘edge’. This is because casual customers more interested in singles than albums can download their fix more easily than the fanatics who haunt places like OTHER MUSIC. Madell believed that hard work will see entrepreneurs through, and wanted to bring the experience of shopping at his store available on the internet.
The digital download store that OTHER MUSIC launched last year now accounts for almost a quarter of sales. This may be because labels/artists that may not be featured on other sites turn up on OTHER MUSIC first, and it also uses eBay and a mail-ordering system.
However, while OTHER MUSIC expands to the online world, it tries to stay in focus of what its original business plan was (it created identity and a unique advantage). For example, the store sells tickets to local concerts and hosts free in-store shows. Both get customers in the door and build the Other Music brand as a place for aficionados (someone who has an intense, occasionally overwhelming liking). The in-store shows are recorded and archived on the store's Web site, along with artist interviews, which can boost sales online. Madell hopes to have sponsors underwrite the video series soon.
Opinion
Due to the explosion of digital sales, it became inevitable that the company had to attempt a different approach to its music business. It is true that a lot of small companies/retailers face many difficulties in situations where they are disrupted by technology. However, through hard work and effort (most probably research & development included) they were able to make a successful entrance into the global market through the internet (that provides economies of time/place/scope). Madell states that “there's a lot of opportunity if you're willing to shake up your way of thinking, and approach things in different ways and experiment and take chances”. However, I am sure that he is aware of the fact that there be no end to the efforts he has to put it to keep up with the ever changing technologies of today.
SummaryThe internet has steamrolled music retailers and as consumers fill their Ipods with digital downloads (both legal and illegal) the sales of CDs (hardware) has dwindled noticeably. 25% of the US record stores were gone by 2005, a total of 1900 stores. This is mainly due to the increase of internet sales from $20 million in 2003 to $2.9 billion in 2007, online and mobile downloads accounting for 15% of all music sales last year. This is why Josh Madell, the owner of OTHER MUSIC started to look for a new way to expand their business model while at the same time upending their old one. However it is noted that data suggests that small retailers have a better chance of staying in the market than large ones. This is because OTHER MUSIC specializes in selling obscure CDs and Vinyl, which have higher markups and attracts collectors giving it an ‘edge’. This is because casual customers more interested in singles than albums can download their fix more easily than the fanatics who haunt places like OTHER MUSIC. Madell believed that hard work will see entrepreneurs through, and wanted to bring the experience of shopping at his store available on the internet.
The digital download store that OTHER MUSIC launched last year now accounts for almost a quarter of sales. This may be because labels/artists that may not be featured on other sites turn up on OTHER MUSIC first, and it also uses eBay and a mail-ordering system.
However, while OTHER MUSIC expands to the online world, it tries to stay in focus of what its original business plan was (it created identity and a unique advantage). For example, the store sells tickets to local concerts and hosts free in-store shows. Both get customers in the door and build the Other Music brand as a place for aficionados (someone who has an intense, occasionally overwhelming liking). The in-store shows are recorded and archived on the store's Web site, along with artist interviews, which can boost sales online. Madell hopes to have sponsors underwrite the video series soon.
Opinion
Due to the explosion of digital sales, it became inevitable that the company had to attempt a different approach to its music business. It is true that a lot of small companies/retailers face many difficulties in situations where they are disrupted by technology. However, through hard work and effort (most probably research & development included) they were able to make a successful entrance into the global market through the internet (that provides economies of time/place/scope). Madell states that “there's a lot of opportunity if you're willing to shake up your way of thinking, and approach things in different ways and experiment and take chances”. However, I am sure that he is aware of the fact that there be no end to the efforts he has to put it to keep up with the ever changing technologies of today.
From Bricks and Mortar to Digital Music Master
by John Tozzi
Business Week
April 21, 2008
#20600392
entry #9
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