technology transfers content currently owned by the consumer to a digital
format, bridging the technology gap and broadening the market for digital
products. Once a CD library is
digitized, consumers are more likely to become “digital” consumers and begin
consuming new digital services. Until
consumers are converted, digital consumption is mainly curiosity based with no
commitment to any product or premium service.
Forrester Research reports that only 1 in 4 digital music player owners
download music, leaving a big gap in potential revenue.
In just 2005, the RIAA reports nearly 800 million in CD sales
(or nearly 10 billion songs). Over
the life of the CD, RIAA data shows over 11 billion units in circulation, or
about 132 billion songs.
How Conversion Works
interested in digital music can easily make the transition to digital by taking
their CD collection to a local retailer.
Select Best Buy,
and Tweeter locations are currently selling this type of service.
offers an in-store service where CDs are loaded into a CD autoloader, and for
$0.99/CD, the customer’s collection is converted to a digital music library
compatible with any player.
will also load your iPod, or other MP3 player on-site, and provides you with a
few DVDs containing your new digital library and instructions to copy the
content to your computer.
Retailer Profit Per
Ancillary Advantages for Retailers &
Retailers sell the service, assist
in loading digital players and computers for additional service revenue.
The real advantage for retailers by offering an in-store solution, is
that the risky mail-order alternative is eliminated, as well as consumers are
far more likely to purchase peripheral devices and solutions, rather than being
sent away to a secondary company for a remote and time consuming process.
Retailers also keep a much larger majority of the highly profitable
conversion service, with very little equipment and resource investment.
providers interested in capturing dollars from new digital media users can
capitalize on the conversion process by presenting the consumer with a digital
media experience. Once the
consumer brings their DVD of MP3s home, a customized experience could be
presented offering preference based premium content and opt-in subscription
services. Imagine a Yahoo or Apple
based service easily blending the newly converted content with premium and
downloadable content all configured by inserting the MP3 DVD into a computer.
converted, consumers are now open to a world of digital services, content, and
experiences. The sales strategy
shifts from “Can I try to sell you a digital copy of what you already own on
CD,” or “Can you pay me $10/month to subscribe and listen to what you already
own on CD,” to “Now that I know what you like, and what is already in your
collection, here are some premium products tailored specifically to your new
digital music experience.”