store (see right) add competition to the digital music distribution mix, it allows consumers the ability to be able to buy music from other companies besides Amazon and iTunes. Wal-Mart is also introducing their service with lower prices for individual songs, $0.74 and $0.94 compared to the usual $0.99. This new pricing strategy that Wal-Mart might become beneficial to not only the labels but also the consumers. The lower prices set by Wal-Mart might cause Apple and Amazon to also lower their prices to maintain their current market share and be able to compete with the lower priced songs. If lower priced songs cause more consumers to legally buy songs instead of downloading them illegally, the music industry might see an increase in revenue. I searched and found the following two blogs that gave me an insight into what the current trend and future is for the music industry, regarding digital distribution. The first blog that I found was entitled "Wal-Mart MP3 store relaunches", and it is part of CNET's Digital Noise blog. The author is Matt Rosoff, a well-regarded blogger who specializes in how technology affects music. The other blog post that I found is entitled, "Outsourced Distribution Makes Perfect Sense", it is found on coolfer blog site. This blog offers analysis on the music industry and is a well respected and widely read source of analysis and news. In addition to posting my comments directly on these blogs, I have also posted my comments below.Wal-Mart MP3 store relaunches
Comment:
Thank you for such a concise and informative post. I appreciate the fact that you reported on such a current and relevant issue that affects the way the consumers are able to obtain their music in today's digital music age. You decided to write about the relaunch of Wal-Mart's MP3 store, which in the past used to be one of the biggest music stores available to the consumer. Not until recently when they decided to close their online store, did consumers learn about the negative aspects of owning digital songs as opposed to actual CD's. When Wal-Mart decided to close their MP3 store, they decided to keep their DRM system in place for a couple of months but within the last 2 months they decided to turn off that system which would mean that thousands of songs that consumers had bought would become useless. This caused a huge u
proar and Wal-Mart later decided to not turn off that DRM system to allow users to had legally bought those songs to keep them and still be working. Do you believe that after Wal-Mart received all that negative publicity and all those letters from the consumers, they realized how big of a market digital music sales really is, and is that the reason they decided to relaunch their MP3 store? In your post you also mentioned that they are offering top hits at only 74 cents per song but standard pricing would be 94 cents, which is still cheaper than most other online stores. Do you believe that they are doing this in order to steer customers away from the iTunes music store and Amazon music store? And how do you think iTunes and Amazon will react to this new pricing strategy introduced by Wal-Mart? You made a very clear point when you mentioned that AC/DC's new album was exclusive being distributed by Wal-Mart, yet their new album was not available in their online store. Do you believe that this is the cause of AC/DC's own management ideas or Wal-Mart prefers to keep those highly anticipated albums in their brick and mortar stores only to increase foot traffic. Wal-Mart also tends to have a very negative image among many people because of how they have made small business go bankrupt and their use of cheap labor in other countries. Would this negative image keep consumers from using their new online store even though it's cheaper? I would like to see a follow up post that shows if Wal-Mart's new music store is successful and how it compares to the other big online music stores.Outsourced Distribution Makes Perfect Sense
Comment:
First of all, I want to thank you for keeping your readers up to date on current trends in the music industry and for compiling information from various sources and putting it together in nice and informative posts. You mentioned in your post that digital distribution has been getting all the attention but the physical world needs a huge overhaul in how business is conducted. I agree that labels and distribution companies no longer need to manufacture and distribute the same amount of CD's as before because of the sharp decline in music CD sales. I was wondering why I had not heard anything about these companies making changes to adapt to the present trends in consumer shopping. You mentioned how EMI is seeking to outsource (see left, above) its operations to reduce costs, but do you believe that in the long run this is going to be the right way to go? As CD sales keep dropping, the number being manufactured will also keep dropping, but this will cause a higher cost per individual CD because the fixed costs will not be spread over a larger number of CD's. Will this trend in fact make prices to go up for CD's, and if so, will customers just stop buying CD's altogether. I do like your idea that labels will have to come together and join their operations to reduce costs and increase efficiency but that as you mentioned that does raise a lot of questions regarding employee loyalty and even artist loyalty. In the end I believe that the way for the labels to go is full digital distribution but many hardcore music fans might not appreciate the fact that they will no longer be able to hold a hardcopy of their favorite music. Only time will tell when and if music CD's become obsolete.
