Saturday, August 27, 2011

The Importance of Execution in Music and Content Sales

I am a great admirer of I spend far too much there. I use almost exclusively for buying music in spite of also having a subscription to Best Buy's Napster.

One of the reasons I enjoy Amazon (and enjoyment is something many MBAs forget in their 40,000 foot view of strategy) is that when I visit Amazon, which I do every day, they offer free music that I might otherwise not listen to. To be frank, the hit rate is low. Few of the free songs end up in my playlists or my favorites list, but Amazon is a little like college radio, lots of coal and the occasional diamond (which sounds a lot like the addictive behavior of a variable ratio schedule of reinforcement for the followers of behaviorist B. F. Skinner)

This past week, Amazon offered a new album by Barbra Streisand as a promotional item at $3.99. An extended version of the album with more songs was priced at $16.99. I decided against the album, figuring I could always listen to it under my Napster subscription where it would cost me nothing.

But in a rare experience, listening to it on Napster made me fall in love with the album (appropriate given that the album is very sentimental). So I decided to buy the album on Amazon because I prefer the download experience with Amazon - songs get stored in the cloud and the integration with iTunes is better.

But strangely the extended version of the album did not show up in Amazon just the shorter version now back to its price of $9.99. Now it's quite rare that I cannot find something in Amazon, so I bought the extended album at Napster for $16.99

It's a small example, but it does show the importance, and, perhaps, the difficulty of perfect execution, particularly in a software based retailer.

What are the take-aways from this experience?

1. Amazon does not just sell products. It focuses upon the experience of shopping by offering bargains and implicitly recommendations on good or at least new music.

2. Search tools matter. My inability to find the album I was looking for led to a rare lost sale for Amazon.

3. User interface and integration matters. My preference for Amazon is, in no small part, due to its seamless integration of music downloads with iTunes. I find the same integration with my Kindle downloads and Audible. The strength of my preference is reinforced by the ability to store my music in the Amazon cloud (though to be fair it has taken several months for music stored in the cloud to be automatically downloaded reliably to my machine)

4. One of the small annoyances with Napster is that when music is downloaded, it does not end up grouped into a directory under the artist and album. Someone at Napster is not on their toes. I would be relatively indifferent between buying from Amazon and Napster if their download integration were comparable.

5. While Napster is a cloud based music service and exceptionally good value, its marketing people are not keeping up. Offering a service where music can only be downloaded once is not comparable to the Amazon offering where a buyer has the security of knowing his/her music collection is backed up in the cloud or redownloadable in the case of Kindle books or Audible audio books.

It's tough doing e-commerce. You not only need to have a good business model, you need to consider your search engine capabilities, your pricing, the experience you create with customers, user interface and integration issues. It's no wonder that many fail and the best pull ahead.

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