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My
newest business, AnywhereCD,
is unfortunately on its last flicker of light before it officially
flames out in a few days (my contract expires at midnight on September
30th
so check out the close-out sale here
where you can get a CD and instant delivery of 192k MP3s for
only $7). It's
a real shame because I think it was a solid business idea and in an
effort to get some value from it, I want to tell you about it so you
can learn from my mistakes.
I believe that if you give people real value (music or anything else)
they are happy to pay. The
AnywhereCD concept was quite simple: create an online store where
customers could get the immediacy of digital files along with the
permanence and familiarity of a physical CD. For one purchase price
they would get the best of both worlds, with no need to take any extra
steps just to get a MP3 file to play on their player. Sounds great in
theory, but I wasn't able to pull it off.
With CD sales slumping sharply, I thought it would be a good time to
approach
the record labels with a new idea to spur sales. Obviously $1 song sales
on iTunes are ongoing, but losing a $15 CD sale means a $14 net
loss
for the music business. I thought the labels would be receptive to the
proposition of reinventing the CD by making it Internet friendly. In
our web-savvy world, people expect everything immediately -- we want
to bank, shop and communicate in real time. While we can buy a CD on
the web immediately, we can't listen to it immediately -- instead we
have to
wait for the postman to show up with the plastic. It's no wonder that
fewer and fewer
people are buying CDs.
But what if anyone could buy a CD and immediately
get the corresponding MP3 tracks to play anywhere? I assumed the labels
wouldn't be
too excited about users getting MP3 tracks, but CDs
are perfect digital copies anyway so customers wouldn't be
getting
anything they couldn't already have. To entice the labels my
strategy was to pay
the wholesale price for CDs plus give them $2 for the digital tracks.
I met with all of the major labels (Universal, EMI, Sony, and
Warner Music) and they seemed open minded to new ideas. One had a
cautious 'wait
and see' type of attitude. Another wanted millions of dollars up front.
One insanely asked me if I would embed the purchaser's credit card
number in the song files they bought. (I pointed out as politely as I
could that no one would shop at Barnes and Noble if they
printed
your
credit card number on every page of every book you bought. And,
um, oh yeah, I'd be
breaking a variety of federal and state laws!)
AnywhereCD
eventually launched with the inventory from
only one major label -- Warner Music. Of
course, I wanted to launch with all the labels since most people don't
have a clue what label any particular artist is on -- but we decided to
open AnywhereCD
with just Warner Music titles in the hopes that other labels would see
the light.
After signing the contract we invested months of labor and resources
into building
the technology to amass the digital inventory, creating the web site,
constructing the e-commerce system and testing the process. While we
were
working on this, Apple announced that they had entered into a deal to sell EMI tracks without DRM. That definitely stole some of
AnywhereCD's thunder even though Apple's was just a
pre-announce and wouldn't have music available for weeks. Days
later we launched AnywhereCD.
Sadly, few press outlets covered our grand opening. Looking back I
suspect there were probably many contributing factors. Maybe the price
for the CD+MP3 bundle was too high? Thanks to iTunes the world thinks
albums are worth $9.99 and many of the CDs on AnywhereCD
were more expensive. Maybe nobody cares about CDs anymore? Clearly they
are becoming less relevant as people adapt to a digital-only
world. Maybe having just a fraction of the major label music made for a
disappointing consumer experience? Warner Music represents roughly 20%
of the major label titles -- so we were missing 80%. Maybe I didn't
give the leading off-line publications enough notice to compete with
the bloggers? Maybe the press is Apple-fixated? Maybe I didn't do a
good job explaining the system to Warner Music who could have helped to
educate a confused press? The answer is
probably a combination of all these factors.
AnywhereCD will
close-up shop shortly and surely be forgotten in digital music history.
In spite of its ultimate
demise I do think AnywhereCD helped push the world towards MP3. I was
able to make a case -- that record labels will make more money if they
utilize MP3 as part of their offerings. This is something I did
once before when I started MP3.com in 1998, but they nearly threw me
out of their offices. This time they
listened intently to my proposal and responded promptly. I think record
labels are becoming more comfortable with the fact that selling MP3
files can have a positive impact on their business. Since my
campaigning, EMI is selling their entire catalog in MP3. Universal just
recently kicked off a significant test with several major retailers
vending MP3 tracks. This week, Warner Music is selling the
new James Blunt CD with digital tracks that you can load into an iPod
for $9.99.
Although AnywhereCD was
an expensive experience for me and not my proudest business
accomplishment, I hope you get some value from my experience. And even
if you don't give a rip about the business experience, but you like
music, you can benefit right now! In its final week of
existence, AnywhereCD
will be selling most of its CD inventory for a mere $7.
For that 7 bucks you will get a new CD plus high quality 192k MP3
tracks
that you can immediately download, stream and sync with your iPod. And
hey, I'd rather take
a loss, see music fans get great music at great prices and empower
their music freedom.
--MR
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