Amazon.com expands Internet site to sell music
Reuters Story - June 10, 1998 22:16
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By Martin Wolk
SEATTLE, June 10 (Reuters) - Online retailer Amazon.com
Inc. moves beyond books for the first time on Thursday, making
a play for the rapidly growing market of music sales over the
Internet.
The Seattle-based company, the leader in online book sales
with $87 million in sales in its most recent quarter, faces
stiff competition in the new market, notably from online music
sellers CD Now Inc. and Music Boulevard, a unit of N2K Inc.
But with sales of recorded music over the Internet
projected to rise from about $300 million this year to $2.5
billion in 2002, analysts and industry executives say
Amazon.com (http://www.amazon.com) is well positioned to get a
piece of the market.
"They're going to be able to carve out a space, but I don't
think they're going to take over," James McQuivey, an analyst
at Forrester Research, said. "I don't think it's going to pull
the rug out from under CD Now and Music Boulevard."
"I think it will be a three- or four-horse race," agreed
Vernon Keenan, senior analyst at Zona Research.
Amazon.com executives say music is a natural extension for
the 3-year-old company that pioneered retail sales over the
Internet and now calls itself the nation's third-largest
bookseller.
"The No. 1 request we've gotten from our customers is to
add music," said David Risher, senior vice president of
Amazon.com. "Our customers have told us in no uncertain terms
they want to buy music from us."
He hopes the company's new site surprises skeptics who
contend Amazon.com will forever be known as a bookseller that
happens to sell music.
"We've done a lot of hiring of people who are passionate
about music," Risher said. Online editors have built a database
of 750,000 words of original content about all genres of music
other than classical, which will be added later, he said.
Amazon.com's music site will be easily accessible from the
company's main Internet page with a single click on a tab at
the top. Compact disc titles will be offered at discounts of 10
percent to 40 percent off retail, with top sellers sold at 30
percent off.
Amazon.com is striking at a time when excitement over music
sales on the Web is at a near-fever pitch.
In April, retailer Ktel Inc., best known for its late-night
television direct-sales pitches, announced an Internet plan
(http://www.ktel.com) and saw its stock rise more than 300
percent in just three weeks before plummeting back.
Amazon.com itself has seen its stock rise to record levels
this week, closing Tuesday at $51.25, up $5, on Nasdaq.
"It would be foolish to underestimate Amazon," Jim Coane,
president of Music Boulevard (http://www.musicboulevard.com)
owner N2K, said.
"They've done an incredible job of establishing themselves
as the leader of their space -- their space being books," he
said. "But creating a compelling experience for books online is
different than creating a compelling experience for music
online."
He said Music Boulevard's planned launch of European and
Japanese sites this summer will triple the company's online
catalog to more than 600,000 titles.
Amazon.com will offer about 100,000 titles at launch,
compared with about 40,000 in a typical retail store, Risher
said.
While Internet sales are expected to drain sales from the
big brick-and mortar chains, which have been slow with their
own online offerings, Risher and others said the Web is
generating new sales from customers who might not buy from
traditional stores.
"I think there are a lot of people who are uncomfortable
with music stores," said Jason Olim, chief executive officer of
CD Now (http://www.cdnow.com). "Half of music buyers are over
30, and a lot of them don't want to put a Yanni or a John Tesh
album in front of a sales clerk with a Mohawk or a pierced
eyebrow."
He said CD Now would remain the online music leader through
its partnerships with Rolling Stone magazine and MTV networks,
a division of Viacom Inc.
Meanwhile Amazon.com is forging ahead with its expansion
plans. In April, the company announced the acquisition of
Internet Movie Database Ltd. (http://www.imdb.com) as a
possible prelude to online sales of videos.
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