proof that amzn investors apparently believe that their frame of reference is the same as the rest of the world?
i have not seen a single reference on tmf and not one on si (though i skip over jach, cellhigh and other shills --- never missing a bateman post -- so i could have missed it)
to the WSJ's special section on monday -- 28 glorious pages dedicated to internet commerce -- amzn many mentions (don't worry bulls, it's mostly words, too much work required, so you needn't be bothered with the details)
most interesting, to me, articles --
here come the bots -- whether retailers like it or not -- points out some bot weaknesses (given the pace of technological change, i guess that they will never be able to iron these out and that they will therefore never pose a threat to amzn)
another good one
December 7, 1998
Dancing to a New Tune
Is the Web a Godsend for Music Clubs?
Columbia House and BMG May Soon Find Out.
By MICHAEL BROADHURST
One of the biggest buzzwords in e-commerce is convenience. So it's only
fitting that some of the most notoriously inconvenient businesses around --
by-mail music clubs -- are using the Internet to streamline themselves.
Clubs like industry leader Columbia House
and its chief rival, BMG Music Service, are a
great way to expand a music collection in a
hurry, offering a number of CDs free upfront if
you'll promise to buy more at full price later. But the plans require a lot of
perseverance -- forget to return the selection-of-the-month card, and you
may wind up with a CD or cassette you don't want dinner guests to see.
So it has gone for years -- but now the clubs are changing their tune. While
they're still sending mailers to subscribers, Columbia and BMG have both
created outposts on the Web that let members make their monthly
selections online instead of by mail, as well as giving subscribers access to
a fatter catalog of music to peruse.
"Effectively, what online does is it
fundamentally enhances a member's
experience," says Elizabeth Rose, vice
president for strategic planning and electronic
commerce for BMG's BMG Direct online
unit. "A customer who can effectively respond to their selection in any way
is a happier, more profitable long-term customer."
Turning a Negative
That's quite a change of pace for BMG, owned by Bertelsmann AG, and
Columbia House, a joint venture of Sony Corp. and Time Warner Inc.,
which have for years thrived on a work-intensive, "negative option" plan:
Every month, a card arrives in the mail highlighting a selection of the month
-- an album the club thinks will be to your liking. If you don't want it -- or
if you want some other selection from the club's catalog -- you send back
a card saying so. If you do want it, you don't have to do anything -- the
album arrives in the mail soon afterwards. Unfortunately, this also applies
to albums featured on cards you forget to return.
In an age before megastores -- not to mention e-commerce -- music clubs
offered not only savings but also a substantially larger selection than local
stores did. Now, however, members have a lot more choices -- and the
clubs have begun paying closer attention to gripes about having to send in
cards.
Columbia House saw the potential of cyberspace to alleviate such
complaints in 1995, according to Rick Hunt, the club's vice president of
interactive media. Which isn't to say e-commerce was an easy sell at the
venerable club. "We had some educating to do," Mr. Hunt says. "The
reaction at first was, 'Our business has run just fine for 42 years, thank you
very much.' We had to do some preaching within our own company."
Eventually, that preaching worked. Columbia House's site was launched in
January 1996, offering members the ability to complete their filing
electronically, check their account status instantly and peruse a full catalog
of selections -- instead of the pared-down one that gets mailed out every
month.
Though the club won't discuss revenue or profit figures, officials say a
"significant portion" of its 15 million members use its Web site to click off
monthly orders -- and add that the move to cyberspace has let it process
orders faster by not waiting for selection cards to show up in the mail.
BMG started its Web site in early 1996 and, like Columbia, has added
extensive customer-service options, as well as some editorial content to
help members decide what to buy. With eight million club members, BMG
is half the size of Columbia House, but says it is adding 100,000 online
users per month. It is also working on an online-only membership option,
responding to members' inquiries about such a plan.
Looking to Grow
But the clubs' ambitions don't end with simply creating online versions of
their franchises. The clubs are creating conventional online stores -- open
to anyone, not just subscribers -- to combat another one of the biggest
complaints about the plans: limited selection.
Music clubs are generally limited to artists that are handled by their parent
company. What this means for Columbia's music club, for example, is that
members have access to about 15,000 titles, compared with around
250,000 for customers of CDNow (www.cdnow.com).
Thus, Columbia has started Total E, an online store that sells movies, CDs
and cassettes from a wide range of record labels. Columbia House hopes
that cross-marketing between the music club and Total E will help create
an e-commerce giant.
Meanwhile, Bertelsmann, BMG's parent, has agreed to acquire 50% of
Barnes & Noble Inc.'s Barnesandnoble.com unit
(www.barnesandnoble.com) with a goal of creating a music, movie and
book superstore on the Web. At the moment, BMG's online music store
and music-club businesses operate as separate business units, Ms. Rose
says -- but adds that the club is interested in finding an online music store
with which to join forces. "The question is who has the most to offer for us
-- and who we have the most to offer," she says.
Accentuating the Positive
The architect of the original Columbia Record Club thinks changes have
been needed.
"Negative option was a good idea when there weren't better ways for the
member to communicate his wishes," says 77-year-old Lester
Wunderman. "I'm not certain that if I were designing a club now I would
offer to send people something that they didn't specifically ask for. The fact
that people can so easily say yes or no to something might lead me to
positive option, which never worked in the past."
But that could have consequences, warns the direct-marketing legend,
who left Columbia House in the early 1990s and now works as an
independent consultant to direct marketers. "The history of all
positive-option clubs" -- ones that only ship what members request -- "is
that people buy less," he says. (Columbia House does have a
lesser-known positive-option club, Play.)
Meanwhile, he suggests that there are other cracks in the music-club
model -- cracks that may have more to do with plain old commerce than
with the electronic variety.
In the past, clubs of all stripes could assume a certain position of
importance and taste, Mr. Wunderman says: "The club with its judges
became an arbiter of taste, and they could declare a book of the month,
and they were credible." But now, he adds, club members are generally
better-educated -- or at least more aware of popular culture -- than they
were in the past.
Then there is the rise of the online megastores, offering a new choice for
customers seeking music at a discount from the price charged by local
retailers -- precisely the desired alternative once supplied by the Columbia
Record Club.
"Certainly, Amazon has indicated that people will order books of their
choice, and the club idea may have been weakened by that," Mr.
Wunderman says. "The existence of the Web sales of records or CDs and
the choices offered changed that."
In light of that fact, he suggests, music clubs may need to pursue not a
technological change, but a cultural one: to convince consumers that they're
joining a club for the long term, not just to get 12 free CDs.
"I think the club is a very modern form, but it may not have updated itself
yet in practice," he says. "They still think they're selling subscriptions, I
believe."
--Mr. Broadhurst is an editor for The Wall Street Journal Interactive
Edition in New York.
for a full TOC of the articles go to
interactive.wsj.com
lp
ps is there any one other than glenn and hjm who care about these posts i slap up here from bus week, wsj, barron's etc.? seriously, if not, i've corresponded with both of them before and can just send it in private email -- this board is cluttered enough. |
