December 2, 2003, 12:00 AM

Computers / Electronics / CDs / Videos:Building on a market made for the web

(Page 3 of 4)

 


Apple.com/iTunes
Tuning in to a trend to build market

Apple Computer Inc.’s iTunes has hit the music scene like the latest rock star, with more than 17 million digital songs downloaded from the iTunes Music Store at Apple.com/iTunes since its April launch. ITunes was one of the first viable demonstrations that a significant number of consumers will pay for music online. So the market can’t blame Apple CEO Steve Jobs for a self-congratulatory remark after a recent iTunes milestone, which he described as “historic for the music industry, musicians and music lovers everywhere.”

But Apple’s road toward long-term growth and profits in the fledgling market for legitimate distribution of digital music won’t be easy, analysts say. It already faces a slew of competitors from the likes of Roxio Inc.’s Napster 2, RealOne Rhapsody, Buy.com’s BuyMusic.com, eMusic and MusicMatch. Dell Inc. is marketing its own Dell Digital Jukebox software and devices for downloading music from Dell.com.

Still, iTunes has made its mark in ways that no one else can, and Apple stands to reap big gains from iTunes in more than just digital music sales, says Joe Beaulieu, an analyst with investment research firm Morningstar Inc. “ITunes is a very effective branding campaign for Apple,” he says.

Apple offers its iTunes software for free to entice users to pay 99 cents per song. But with margins slim at that price, particularly with the cost of running servers to support music downloads, Apple will be looking for wider margins on sales of its $300 handheld iPods as well as desktops that can play digital music, Beaulieu says.

But Apple has a broader coup in the works. Its successful recent launch of a Windows PC version of iTunes gives it the advantage of serving both Mac and PC owners. “I was concerned that someone else would get into the digital music market for PCs ahead of them, but they managed to pull out the first viable online music store for the PC,” Beaulieu says. “When they came out with the PC version, they captured the look and feel of the Mac version very well.”

Indeed, he figures the most important aspect of the digital music business for Apple will be the new business it will bring for its broader line of computers and peripherals. “Apple will make money on iTunes, but not as much as it will make on hardware sales by using iTunes to get more young people thinking about Macs,” Beaulieu says.

And now that the latest versions of Mac desktops and laptops are easily networked with PCs, he adds, Apple should find it easier than ever to woo iTunes PC users with offers of new Macs. m

iTunes
Date
2003
Unique Visitors (monthly)
1,380,000*
Site Design
NA
CRM
NA
Fulfillment
NA
Order Management
NA
Payment Processor
ClearCommerce
E-Mail Management
NA
Site Search
NA
*As reported by comScore Networks Inc.

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MusiciansFriend.com
Harmonizing with its musical clientele

Selling over the Internet to a niche customer base is a lot different from selling to a mass audience. But few web sites do it better than MusiciansFriend.com.

Since only one in 10 Americans even plays a musical instrument, MusiciansFriend knows that few web shoppers are likely to even look at the musical instruments and related accessories that it sells. Therefore, it has focused everything in its site-from the editorial content to the product selection-squarely on meeting the needs of those who do play.

But MusiciansFriend’s niche is still quite wide as it sells to a range of music lovers-from young students just learning an instrument to professionals. To meet those needs, it offers more than 36,000 products. “The products and services are geared to all levels,” says Rob Gallo, consultant with Retail Forward Inc. “They have a clearance center for budget-conscious consumers just learning to play as well as a top-quality section for serious musicians. Also, the advice columns and editorial content cater to musicians of all ranges.”

In addition to a broad selection, MusiciansFriend lives up to its name by providing strong editorial content that attracts musicians (read “potential buyers”) to the site, Gallo says. “They offer a lot of good advice, such as improving your sound or how to get copyrighted,” he says. “They want to be viewed as a central source of products and information for the music industry.”

Also important to attracting customers is the use of search engines. “We can’t do mass advertising like a lot of retailers do and make it work,” says Eric Meadows, Internet director. “Before, we mostly advertised in trade magazines, but a lot of people don’t read them. Now, we identify keywords with search engines and that drives a lot of traffic to our site.” MusiciansFriend.com also has links to 30,000 music-related affiliates.

Selling musical instruments online has its unique challenges. Many serious and professional musicians like to try out instruments before buying. MusiciansFriend.com relieves some of that concern with a policy that allows returns up to 45 days. “Guitar players especially get involved with their instruments. We need to remove all fear from purchasing instruments online,” Meadows says.

But not all musicians are fearful of buying sight unseen. “A lot of musicians are on the road and can’t always get to a store when they need something,” Gallo says. “Most know exactly what they want and are very brand conscious. Also, serious musicians in small towns often find local stores don’t offer much of a selection and they like the selection MusiciansFriend offers.”

MusiciansFriend.com
Date
1996
Unique Visitors (monthly)
1,303,000*
Sales (annual)
$208,000,000(est.)
Site Design
in-house
CRM
in-house
Affiliate Management
Be Free
Fulfillment
in-house
Order Management
in-house
Web Analytics
FireClick
Payment Processor
Paymentech
Content Management
in-house
E-Mail Management
DoubleClick
Site Search
in-house
Search Engine Management
in-house
*As reported by comScore Networks Inc.

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