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Digital Music Retail: Identifying the New Success FormulaPublished by: Generator Research Limited Published: Jul. 3, 2006 - 18 Pages Table of Contents
Abstract
Music retail has traditionally been a reasonable business yielding good gross margins, although the downside has been the costs associated with acquiring or accessing prime real estate in urban centers. On the other hand, selling digital music downloads is turning out to be a pretty challenging business, and that's putting it mildly. Because retail pricing hasn't changed much, the problem is due to the underlying costs, which have increased. This might seem strange because distributing music digitally was supposed to be cheaper than using physical CDs. This report will explain why the reality has turned out to be very different to the early theory. The report begins by reviewing the value chain for the CD which is then contrasted with the still-evolving value chain for digital music. Based on historic and current industry norms, the report then identifies how the money collected from consumers is shared out along the value chain, for both physical and digital formats. Having identified the intrinsic profitability of digital music retail the report then looks more broadly at how the music retail market will evolve. Included in this section are questions such as whether pure-play digital music retailers have a bright future and, if not, what this might mean for them and those that offer digital music retail platform solutions. This section also takes a detailed look at the strategy of bundling music with other product and service categories. In conclusion, the report describes two markedly different strategies for success in digital music retail and contains recommendations for existing retailers who are selling music, either in a physical or digital format. Get Full Details About This Report >> |
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