Appetite For Disruption

E-commerce Sales of Physical Product - Revisited

As I mentioned in my last post - sales of physical CDs were up 2.4% at E-commerce sites last year.  E-commerce sites can offer up wider selection of product, allow customers to listen to audio clips of tracks, and peruse editorial and customer reviews of the album.  What the E-commerce experience lacks in immediate customer gratification it gains in terms of ease of shopping experience.

Yet sales of albums at E-commerce sites represent just 6% of overall album sales.  For labels with huge catalogs facing further consolidation of record retail floor space E-commerce sites represent the last best hope for the compact disc.  So where is the great marketing effort on the part of the major labels, the RIAA, and independent labels to drive customers online to purchase physical product.  This does not mean shunning label retail partners.  So many major music retailers have online sites which sell music as well.

But it also broadens the number of accounts the distribution companies ought to be targeting to sell physical product (and digital music as well).  So many "non-traditional" retailers operate E-commerce operations.  Why not get these accounts to test the viability of music sales via their web site?  How can the labels get these retailers to give them visbility on their site?

The point is this: in this area where the labels have a growth story to sell we hear little from the industry touting this success.  Now is not the time to play possum.  Now is the time to flaunt your plumage like a peacock and go out and convert the non-believers.  CDs, especially catalog and deep catalog in this current market, need to be championed.  Get out there and grind it out!

The Case for Record Retail Shelf Space Takes Another Hit, But Online... Another Story

Barnes & Noble reported weaker than expected fourth-quarter projections based on weak CD sales at the chain.  There have already been numerous rumblings about further decreases in shelf space for CDs at major chains like Wal-Mart and Best Buy.  Virgin Megastores is closing some locations.

This, on the heels of a 15% decrease in demand for album sales at record retail as a whole in 2007 - it doesn't paint a pretty picture... although sales of physical CDs via e-commerce sites experienced a 2.4% increase.  To me, that points to: A) how decreased selection at physical retail is forcing consumers to look online for titles which, until recently, could be found at major chains, and B) how the online record retail experience has just become more consumer-firendly than the physical record retail experience.  If you are starved for time - and who isn't - then going online first makes a ton of sense.  This development also illustrates "long tail" economics to a tee.

Thank You Nashville Friends!

I just returned from a great three-day trip down to Nashville.  This was my first time visiting Music City, even with all my experience dealing with country music on behalf of clients during my tenures at Universal Music Special Markets and Sony BMG Custom Marketing Group.

Everyone I met was very generous, both with their time and with their open ears.  Sometimes you hit upon an idea for a business and it ends up that you're the only guy in the room who feels it's a marketable concept.  However, I go nothing but positivity and goodwill from all I met with.

I am looking forward to sharing some more details about my dealings down there in the near future.  Stay tuned!