NAVR:::Navarre Creates Online Retail Site
JUNE 20, 1998
BY CHUCK TAYLOR
NEW YORK-
The software and music distributor Navarre Corp. has entered the online retail realm with the launch of CDPoint, a click-to-purchase service that operates in conjunction with its Internet radio subsidiary, NetRadio Network (Billboard Bulletin, June 10).
CDPoint (www.cdpoint.com), which was launched June 9, features more than 250,000 current and catalog music titles from all labels, and it will attempt to capitalize on the NetRadio online audience, which Navarre claims reaches more than 3 million listeners with 18 million page views per month.
NetRadio (www.netradio.net), founded in 1995, offers 150 channels of on-demand music and information, breaking typical radio formats into specialized niches. Its jazz choices, for example, include nine channels, featuring styles like acid jazz, big band, blues, classic crooners, divas, lounge music, and smooth jazz.
NetRadio senior VP of sales/marketing Jan Andersen says CDPoint will also inform Internet listeners about special offers.
"If you are listening to, say, the crooners channel," Andersen says, "you will also likely hear advertising and promotional communications about a special sale on all Frank Sinatra titles."
Navarre CEO/chairman Eric Paulson says CDPoint is "one of the primary revenue-generating sources in the NetRadio strategy," along with typical Internet banner advertising, audio advertising, and revenue from record labels whose product is carried by CDPoint.
Paulson says his company, which does its own fulfillment, has an advantage over the rising number of other online music retailers in that no third party is needed to distribute CDs to consumers. Other online retail competitors "have to have a revenue-sharing deal, since they don't actually do any fulfillment," he says. "Our strategy really is more comprehensive."
Further, Paulson says, the combination of NetRadio and CDPoint creates a perfect opportunity to capitalize on impulse buyers; he says such consumers represent 57% of the music-buying public.
"Our whole goal is to have our listening audience hear something they like and buy it right then and there," Paulson says. "It's a very encompassing way to address the [members] of the buying audience who are impulse purchasers. They can buy a record in three clicks; it's done."
He adds that the new company can be expected to increase the overall music-sales pie rather than cut into the share taken by traditional retail.
"The majority of our business is going to be people who never walk into a record store," he says. "We can add a significant volume of people who haven't even thought about buying a record. I think it adds fuel to the industry, adding a higher level of sensitivity to the business."
Paulson declined to discuss financial goals for the future, saying only that the venture is aimed at enhancing profitability while garnering market share.
A spot check of current album titles on CDPoint found prices ranging from $ 13.29 to $ 15.99. A current promotion offers free shipping on orders of three or more CDs.
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tar Tribune (Minneapolis, MN)
June 10, 1998, Metro Edition
NetRadio, using Internet radio content, launches music store based on Web
Jonathan Gaw; Staff Writer
New Hope-based Navarre Corp. jumped into the increasingly crowded online music store field Tuesday, announcing that its NetRadio Network subsidiary has launched CDPoint, offering more than 250,000 music titles.
Saying CDPoint will use traffic to NetRadio, a Web site that delivers radio-like content over the Internet, to sell music at a click of a mouse, Navarre officials said it had an edge over competitors that are either significantly larger or have a head start.
"The value of the concept was to develop compelling content that we controlled, draw traffic and then drive that traffic to buy something," said Eric Poulson, Navarre's chairman and chief executive.
The stock market, however, reacted by punishing Navarre's stock. On trading four times heavier than usual, Navarre's stock lost nearly a fifth of its value, falling from $ 6.25 to $ 5.03 .
"It's the phenomenon of 'buy on the rumor and sell on the news'; I don't know that there's any more [to it] than that," said R.J. Steichen analyst Dennis Nielsen. "The volatility in the small caps is just beyond belief."
That is doubly true lately of Internet retailing stocks.
Even though Navarre's stock is off sharply from its closing high seven weeks ago of $ 9.50, it's still twice as high as it was in late March.
Meanwhile, other local companies that recently have converted to Internet retailing have gone through similar stock price palpitations. Most notably, K-Tel International Inc. stock had been near dormant, trading at $ 3.25 in early April on volume so light that there were days that it never traded at all. Then, the television purveyor of dance mixes and compilation records used the word "Internet" in a press release and its stock soared.
After hitting a peak of $ 33.93 in early May on volume of 25.8 million shares, more than three times the number of shares outstanding, the stock has been on a constant downward slide, closing Tuesday at $ 11.25.
The jury is out on exactly what will make for the best Internet strategy, as dozens of music sellers scramble onto the Web. As products and services move to the Internet, price has been key as items such as common stocks and books have become commodified.
"Every bit that you have to differentiate yourself from just a warehouse of music helps," said Bill Burnham, an analyst at Deutsche Bank Securities in San Francisco. "It's likely that this industry will boil down to buying scale and advertising intensity."
Navarre hopes that its NetRadio site, which draws listeners by playing music online and has 3 million listening sessions per month, will draw buying traffic.
"The majority of music shoppers buy on impulse, and I can go after those purchases," said Paulson. |
