From Bricks and Mortar to Digital Music Master
As the technology grows faster, many industries, such as music record retailers are having a hard time adjusting their business model to this change. Though other music records are struggling, a store called Other Music is still making profits. How is this possible? Let’s take a closer look at this store.
Other music, in business since 1995, a New York retailer specializing in obscure CDs and vinyl, is trying to change its business model according to the industrial change. The data by the IFPI, a London record industry group tells us that worldwide digital sales mushroomed to $2.9 billion in 2007, up from $20 million in 2003. It says online and mobile downloads accounted for 15% of all music sales last year, across more than 500 digital services
Small is Beautiful
According to Aram Sinnreich, co-founder of Radar Research, small shops such as Other music has a huge advantage compared to major music shops. He says “Theses small retailers are the kinds of places that build musical communities in ways that Wal-Mart and Best Buy and even Tower Records never really could.”
Other music is doing quite well using their advantage as a small retailer shop. Followings are the few business strategy that Other music is putting stress on.
Download service
To compete with digital music stores such as iTunes or free file-sharing programs, Other Music launched its own download service, capitalizing on its close relationship with independent artists and small labels that don't sell on iTunes. Digital downloads have brought in almost a quarter of Other Music's revenue since the system launched one year ago. Only U.S. customers can access the online store now, but Other Music plans to expand it to other countries.
Selling on-line
Other Music has long sold rare vinyl records, but now the store is pushing the collectibles on eBay. The albums command higher prices at auction than off the shelf. The sales also extend the store's brand to music mavens searching the auction site who may become customers for Other Music's digital or mail-order services.
On-line news letter
Nearly a decade ago, Other Music started an e-mail newsletter to review records and tell customers about new artists and albums. Now that update, which goes to 25,000 subscribers every week, is a central part of the company's marketing, driving walk-in, mail-order, and digital sales. Through the newsletter, Other Music has built a reputation as a tastemaker in the indie music world, increasing the brand's value.
This small shop was clever enough to find what they are good and what they are not. They’d also distinguished between their opportunities and threats. In other words, Other music done well on organizing SWOT. As we learned from the class, before starting any kind of project, we need to figure out the SWOT first. Like the case in Other music, though selling CDs and vinyl discs are becoming more and more obsolete, they used their strength as a small store and overcame the obstacles. Another lesson we can learn from the lesson is the importance of segmentation and targeting. Other music did not try to sell popular and trendy albums like Kanye West, or Madonna. Instead, they targeted the manias who are interested in indie and underground music. This made them possible to earn profit by selling CDs. The last lesson we can learn is they had modified their business strategy according to the fast growing environment. Instead of sticking on the original selling method, they added on-line selling using E-bay and used on-line newsletters. This also made them to prevent getting behind the trend and constantly getting touch with the consumers at a relatively low price.
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