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Saturday, December 31, 2005

Online Intersections With Traditional Media

USA Today ran a story about U.S. music album sales. Get this: 2005 album sales were down 7% from the previous year while digital downloads of music doubled! U.S. album sales were down about 7% as 2005 drew to a close, but the budding market for music downloads, which more than doubled over last year, helped narrow the revenue gap. The article goes on to note that this isn’t particularly bad news for recording companies, but “it doesn’t bode well for music retailers.” Combined, album and singles sales fell about 8% over the same time last year. More than 95% of music is sold in CD format. Downloaded tracks from online retailers soared to 332.7 million this year, compared with 134.2 million in 2004, an increase of 148%. Download sales increased by 350% over the prior year. Michael Hyatt predicts, a big enough slice of the book reading public will opt for digital delivery and that will have a significant, disruptive effect on the entire industry. As he sees it, 5-10 percent reduction in sales would wreak havoc. It’s already happening with newspapers and magazines. On the other hand, publishing companies that anticipate this shift and prepare accordingly will prosper.He is spot on when he sees that when technology shifts happen – quality does not matter beyond a certain level - The quality of MP3 files is not as good as the quality of CD tracks. Yet, customers are switching in unprecedented numbers. The trend of having 10,000 songs at your fingertips in a device that can fit in your pocket is intoxicating—at least to millions of people.
Apple has 84% of the legal download market and has sold 600 million songs to-date and has more than 10 million customers. If we look at the publishing industry as Michael sees it – may not portend the death of traditional book publishing, but it will mean a significant shift, perhaps a seismic shift. But this calls for a radically different business model for book publishers. Like the USA today combining e-newsroom and print media. I hold a slightly different view in respect of online presence for major media - online presence advances easy reach and more sales - numerous studies suggest that several consumers look at websites - before making the actual purchase either online or offline. Recenty Dow Jones announced more profits from online compared to traditional media(This in my opinion reflects two things: Online making traditional media reach to larger people and rise of online world can't be resisted - better embrace it -Indications are that combined strength of both online and offline readership of WSJ is larger than traditional print media readership).Retailers can definitely experience that buyers of all trendy and unique things surf online, do their research before any purchase - In the online world through comparison shopping, targetted advertising, promotional schemes, personalisation and preference patterns all provide unique value that can potentially drive offline sale as well quite significantly. Add mobile technologies and online world - the combination can really create deep impact in the offline world.

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