Visiting the office of a successful online music-selling company and conversing with the CFO and CTO, turned out to be very much informative. You might think, being such accomplished professionals they would have certain sense of aloofness or pride, but Max Smith and Richard Caccappolo were so down-to-earth and open to all that we had to say to them.
Richard started off with the topic of how to make money in an online business. The three main ways would be Advertisements, Commerce and Subscriptions. He introduced us to the advertisement pricing strategies of Cost per Thousand (CPM), Cost per Click (CPC) and Cost per Acquisition (CPA). The CPM method would be the most profitable since the publishers are paid for every 1000 ads and he also mentioned that once you go to CPC, you would have a hard time getting back on to CPM method. He talked about the Ad Exchange where Ads are considered as unsold inventory and they place those ads for the maximum amount possible.
He discussed the example of the NY times to elaborate how many people actually pay for the online news or generally any content. Not surprisingly, most of our class did not. Although the statistics might say that a lot of people do pay for stuff which they might get free otherwise, I believe that most of us wouldn't want to pay if we knew that we can get the same thing for free. So I find the fact, that companies such as eMusic are popular to such an extent, very much intriguing and its great to get a perspective into their marketing strategy. It almost seems to me like a battle wherein they have to strategize perfectly in order to not give in to the surge of free music available online.
Max spoke to us about the basics of the music industry; how the obsolete music players have paved the way for more compact ones and how technology changed the marketing strategies for companies like eMusic. Earlier, if you liked a particular song in an album, you would end up buying the entire album, that implies selling 10 songs when actually the buyer is interested in just one. Whereas today, you can purchase single songs and hence it has become tougher for the artists to profit. This change brought by technology has led to change in the marketing strategy too. Each song has 2 rights sold, one to the recording artist and second to the writer.
The five dimensions of the music experience would be discovery, buying, owning, listening and sharing. Max spoke to us about the different consumer types and the one that they focus on consists of those 'off-beat leaders' as well as followers who like to explore new music, not just following the mainstream and are passionate about the music they wish to own. The fact that so much planning and research goes into the functioning of a simple music-selling online company amazes me. It gives a great perspective as to what is expected of any business which is targeting a niche audience and is competing with several others offering similar services.
No comments:
Post a Comment