Russell E. Glaue and Ronald J. Bauerly
Western Illinois University
Top Pure Internet Industries
The Music Industry has willingly grasped onto this developing technology but when considered as a whole, it is one of the many industries that still lags behind many of the leading Internet industries. According to Internet World, the top pure Internet industries based on revenue are providers of internet access, security, software, general e-commerce (e.g., amazon.com and barnesand noble.com), infrastructure commerce, portal services (e.g.,, yahoo.com and excite.com), content, and advertising (Internet World, 1998). The last of these top industries are music e-commerce sites CDnow and N2K, two online music retailers who announced their merger in the last few months of 1998. This merger under CDnow was made in order to keep up with the general e-commerce industry that also sells music. CDnow has become one of the biggest players in the online sale of music as a result.
With the development of newer technologies that would seem to benefit the music industry like the MP3 format and Diamond multimedia’s MP3 player, there is instead much resistance. Some wonder why the Music Industry doesn’t take full advantage of these technologies to facilitate its basic resource, music. There is still resistance because music is not yet a secure online product. Although, some companies are benefiting from the sales of music using the developing technologies that can minimally help keep it secure. But these companies that do use these means are as scarce in ratio as those who sell computer software online in similar profit-making efforts. But because the Music Industry’s major resource is not yet a totally viable internet product does not mean it cannot participate constructively in marketing efforts to sell and distribute other principal products.
Aside from tangible products, the Internet distributes information to consumers in a growing number every year. Since 1995, there has been a substantial increase every year. It was during 1995 when many major organizations in the music Industry created a presence on the WWW. Some were just striving to keep up with their competitors, or beat their competitors to the WWW. Most music industry organizations made their way onto the Internet being hosted by external service providers not related to the music industry.
The Internet as a Resource for the Music Industry
|What users do when they go online.|
|Gather News or Information||91.20%||87.80%|
|Surf Various Sites||68.50%||75.30%|
|Post to Bulletin Boards||22.70%||30.00%|
|Participate in Chats||18.40%||30.80%|
|None of These||1.20%||1.90%|
|Maddox, Advertising Age, October 26, 1998|
The WWW offers many opportunities in which to promote a company. According to a recent survey, the number one reason (91.2%), why a typical user goes online is to gather news and information (Advertising Age, Oct. 26, 1998). The third reason at 79.4% is to conduct research. Consumers are actively seeking out information on products and companies. Any information that is in a standard hard copy form (e.g., printed format) can be online for access from a wider consumer base than what can be achieve through other means of distribution. Online information can be kept consistently updated with a company’s activities. The consumer can retrieve it without the organization’s costly investment in distributing product information updates.
The WWW is a rich medium in providing resources. The MEIEA (Music and Entertainment Industry Educators Association) provides an interactive panel in which members help provide answers to industry related questions from web users that visit MEIEA’s WWW site. Many of the questions asked can be answered from information provided on music industry company web sites. By funneling such user inquires to a well constructed web-site, any music company can begin to deepen its relationship to its customers
Not only can an organization provide informational resources, but also functional resources that can benefit both an organization and its customer base. Many companies like Seagate and Mylex (two computer hardware companies) have already implemented online functional resources that include detailed product information including manuals, and online technical support. Providing functional resources like these, companies can cut costs by having fewer requests for technical support and lower costs in reproducing product information. Consumers benefit as well because they have 24-hour access to materials and information that they might otherwise have to request and then wait for its receipt, or wait for an answer to a problem.
One of the major reasons why music industry companies may not have reached their potential with the Internet is internal structuring. To some extent, this may result from the race to get online. Particularly in the early years of WWW development circa 1995-96, some companies gave the job of web-site development to the person most WWW knowledgeable. This person was given the entire job of maintaining the organization’s Internet presence. In what might be termed “The Internet Scramble,” realizing that it should be on the Internet a company uses the means it has to make its home on the WWW. This usually entails gathering together anyone who knows enough about computers or the Internet to create their web site. The company believes that down the road, after their initial web site is up and running, they can restructure the administration of their internet presence. These companies often do just that. However, the means is usually not measured and maintenance of the organization’s internet presence is often inadequate.
The question is, who should maintain the organization’s internet presence? There are actually four potential departments that exist within the company. These four departments are Information Technology, Information Systems, Marketing, and Advertising/Graphic Design. In a smaller organization, there might be one person who handles the technology and one who does the marketing and advertising. In this case it would make sense to just team the two people together. However, for a larger company with internal departments of significant staff, this most likely will not be a feasible solution.
The larger the company, the more segregation is likely to be found. Information Technology has to do with the company’s intranet (or internal networking) including the maintenance of network connections and computers. The Information Systems department deals more with maintenance of system integrity and information resources internal or external to the company. Marketing contends with matters that directly affect the company’s dealings with its current and potential customer base. The advertising and/or graphic design staff is basically in existence to make everything look appealing or physically function effectively.
The fact is that all these internal departments have something to do with the end product customers see on the WWW. In fact, advertising/graphics and marketing should combine their efforts because even outside the WWW, neither one can properly communicate effectively without the other. Externally on the WWW, IT (Information Technology) will play a major role since it will control the medium the information is ultimately distributed on, the organization’s WWW server. But as technology grows, IT is playing an even bigger role than ever before in external consumer relations. The IS (Information Systems) department controls the key to the organizational information. The information on the orga-nization’s web site needs to be provided and maintained. Since IS is already in charge of maintaining the organiza-tion’s information system, information maintenance on the WWW will entail little in the way of different tasks.
Despite the underlying technology, the WWW functions mostly as a medium for marketing to the consumer. The marketing and advertising/graphic design departments create the forum in which the organization effectively communicates to the consumer. Those who use the web know that it is frustrating to not be able to find information you are looking for on a site, or are turned off by a poorly designed web site. These two departments should be active in achieving an organization’s effective presence online. Only the organization itself can determine the best structuring to meet its needs. However, a team that includes efforts from all contributing resources in the decision making process is one that will allow the company to move ahead of its competitors.
In developing an internet presence, the music industry organization should figure out its niche. In other words, a company must make sure its intended audience can easily identify its web site as one of interest. The company needs to figure out its target market, and develop content that caters to its consumer needs. Offering new free materials on a regularly scheduled basis which support the implied expertise of the company and offerings of the web site will bring the consumer back for repeated visits. Providing a list of WWW links to external resources may cause your web site to be book marked by a visiting web user who finds the information offerings useful (Wolosky, 1997). If a reason is provided for repeated visits, traffic to the web site will increase since a higher percentage of web users that visit the site will return again.
Once the site is up with valued content, a company has an effective marketing tool. But now it needs to be used. It is not an isolated tool, but something that should be a part of an organization’s entire marketing strategy. Such as including the WWW address on printed material that would be distributed. An online approach would consist of joint ventures with other sites in exchanging links, or paid advertising on high traffic sites in order to bring consumers to the organization’s site, or make the consumers more aware of the organizations presence.
Another currently implemented strategy that some companies have been using is sponsorships. Engaging in a sponsorship entails supporting a secondary, but usually an informational resource rich, web site that is not directly affiliated with any organization. Usually these sites will be sponsored internet events like an AIDS awareness campaign or other worthy cause on the Internet the organization could associate with. Click-throughs in banner advertising have supposedly been going down and more web advertisers are leaning towards sponsorships (Wang, 1998).
Projected 1998 spending for internet advertising was release by the Internet Advertising Bureau as $2 billion. Second quarter spending was 60% for banner advertising and 37% for sponsorships (Roberts, 1998). The industry is determining that pay-for-performance terms are the preferred method for banner advertising. Thus an increase in banner advertising is being seen. The two methods for banner pricing most widely used are pay-for-performance or also known as paying for the amount of click-throughs caused by the advertising banner, or more commonly on high traffic sites a web advertiser will pay for exposure. Pay-for-exposure amounts to a figure based on the amount of times the web advertiser’s banner appears, since banners are changed each time the web page is requested.
The WWW is just a simple tool to market the organization. But with the speed in progression of technology today, content administrators have to be constantly updating information and resources. The WWW is great in delivering up-to-the-minute information, but the feature that makes it great is also its downfall. Web sites can easily go stale and turn into what is sometimes referred to as a cobweb. Content administrators or marketers should be listening to consumer complaints and/or comments about the organization’s web site. Many sites have instigated the use of guest books or online comment forms to get user feed back on services or the web site itself.
Today, people are very wary about giving information about themselves. However if an organization decides to gather information properly, personal information about the user and his/her location is needed. Many resources available to companies are databases of information on people listing other pertinent information that can be useful in determining what type of people are visiting them. This method presses the issue of consumer information privacy. But with just the web user’s name and zip code with the date and time plus the additional information that the web user’s browser can provide, including the web user’s machine’s internet address and domain name, useful statistical information can be gathered. Once a web user’s name and zip code have been obtained, this information can be combined with the web server statistics to track who is doing what. How? If web server logging is activated, the web server logs the internet address of the web user every time an item is accessed from the web site. Using a program, the name and zip provided from the user can be matched up with their activity of requesting items on the web site during a block of time.
Organizations should consider what consumer information is really needed. The expression, “there is no such thing as a free lunch,” holds in this context. Since most consumers are cautious about submitting any information, organizations should consider rewarding the user for compliance with an informational request. Examples of rewards include contests or free items like posters. Other sites which provide very useful and perhaps highly requested information can request this information in return for access to data. But you must reassure the consumer that information provided will not be given out or sold in any way.
Once this tracking method is set up, the organization is one step away from implementing Relationship Marketing. To build on this strategy an organization can add to its site a way for consumers to be added to the organizations mailing list. Simply asking for the web user’s name and zip code along with the e-mail address will tie it all together. However, many people are turned off when they see that the e-mail address is required because they envision spam and junk mail. This can be less of a threat if the e-mail address is explicitly listed as optional in these situations. An organization can ask for the e-mail address as optional with a check box asking if they wish to be added to the organization’s mailing list and/or newsletter list if an e-mail address is submitted. It will make the consumer feel more in control as well as making it easier for getting consumers signed up and put in the organization’s database if there is a convenient way for them to unsubscribe their e-mail address from any list.
Although most users connect to the Internet with an ISP that gives them a different internet address each time they dial up for internet access, the statistics can still be pulled for that block of time the user was online. This information collected can show you exactly what the strong and weak points of your web site are. Usually the web master, the one who administers the programs and software that functionally run the organization’s web site, will work with the content manager in this area to figure out what is not working with the weak resources or what needs to be changed. It should be determined what can be expanded on with the stronger resources, because the stronger resources are what attract the visitors. It is also possible that the strong resources are clumping up the activity. If most or a large amount of an organization’s traffic is isolated to one area of their web site, the organization should consider either expanding that resource, creating byproducts of it, or both.
To justify cost-effectiveness of an organization’s web site or to get more in-depth statistical reports of a web site’s activity is still difficult. The WWW is still young and many technologies are still surfacing. Hopefully better tracking tools and methods will be available by 2001, from such companies as AndroMedia, Accrue, and Marketwave (McCune, 1998).
The Internet is becoming not just a popular way but a necessary tool to market to consumers. An organization’s web site should be included in any marketing strategies now that it is becoming more popular for consumers to investigate products and companies online.
|Do consumers visit company web sites?|
|What do you do on a company’s web site?|
|Look for product information||89.50%||90.50%|
|Look for company information||88.00%||87.80%|
|Receive discount, coupons||29.60%||31.70%|
|Buy/shop for products||22.90%||34.50%|
|Maddox, Advertising Age, October 26, 1998|
Of consumers surveyed, 71.9% and 76.7% in 1997 and 1998 respectively, said that they visited company’s web sites. Of those who visit the companies online, 89.5% look for product information followed by 88% who look for company information. An additional 39% sought discount coupons, shopped for or bought products or entered contests at company web sites (Maddox, 1998).
Before getting online an organization must identify its leading products, current channels and customer base. The product(s) to be marketed will lead the organization in the way its web presence will be structured. Low-information intensive products such as valve oil, guitar strings and other accessories do not require rich media or content intensive web sites. High-information intensive products such as musical instruments and equipment, music software for the electronic musician, or sound reinforcement equipment need to deliver more in-depth content and media rich web sites. Web sites that also sell online need to have detailed information and product imagery of each item for sale (Palmer, 1998).
How a company distributes its products is a key consideration. Companies that distribute their product through resellers are reluctant to betray them by selling directly past them to the consumer (Anders, 1998). Manufacturers have additional issues to consider in their decision to go online. Resellers commonly buy their product in bulk in comparison to consumers who purchase products singly. This implies greater costs for transactions as well as product support services. Most organizations whose current channels include resellers, will cater to their needs by providing detailed product information for the resellers and the consumers to use and offer online incentives to get the consumers in the reseller’s stores. It would be to both the manufacturer and resellers’ advantage if the manufacturer provides information online that the consumer is seeking and then provide a WWW link or reseller sales contact information.
If the organization’s current channel is a direct, consumer-based one such as catalog retailers, there is no channel disruption. If the consumers are online seeking out product information, they will most likely be looking for a reseller for the product(s) being investigated. Alternatively, a lot of manufacturers will provide sales information on their own web site that would list the reseller as a carrier of their product. This allows the consumer to search out the product and find a reseller easily in one session.
The content richness of an organization’s web site should be determined by the organization’s products and customer base. Organizations with information intensive products are more likely to use free evaluations, free software, and free software downloading in combination with intensive product information. Such software may provide an inter-linking to more detailed information as well as technical support. Even organizations with low information intensive products need to maintain a presence on the Internet that communicates adequate information about the company and its products to any consumer. When creating a site for a high information intensive product, the medium’s exceptionally rich potential must be tapped (Palmer, 1998).
Web page content should be presented in an innovative and appealing manner that can visually stimulate the interest of the user. Most web users are simply surfing, and they don’t like to be held up. Speed is the ticket. Reducing written content to chunks of information makes it easier for web users to quickly scan for desired information (McCune, 1998). When a promoting a product to a customer, do not turn them off by confronting them with an overkill of information. The WWW is different from regular printed media because a smaller content viewing space is available to the consumer. A page that requires a lot of scrolling in order to read all the content may be perceived as too deep and cause the reader to lose themselves. It is okay to provide in-depth information to consumers that are really seeking it out. For such users providing an optional link to in-depth information makes more sense for it avoids the problem of smaller chunked information becoming a nuisance. A second reason to break up content into separate web pages would be the advantage of capturing more indexed pages into search engines. With multiple pages, the web site is more likely to receive more hits on single searches. This is especially true for search engines that only read in the first 20 or so words of a web page to base its indexing on.
The WWW is a good tool for conducting surveys. However, they can become as tedious as any mail survey. In many cases short surveys could do the work of longer ones and are far more likely to be completed. If the entire form can be seen on screen at one time, it seems short enough to be filled out by the consumer. If the survey extends off screen, and the consumer thus has to scroll the page in order to reach the rest of the survey, it might seem long enough to want to pass by.
|5%||of unique visitors to sites become customers|
|1.6%||of visits result in purchases|
|65%||of revenue is reinvested back into marketing|
|for online retailers (5% for traditional|
$26.00 on average is spent by online retailers to acquire new customers ($2.50 per customer for traditional retailers)
28.3% of web users have shopped online
71.6% because of security concerns 49.3% because they cannot touch the merchandise 39.2% because they are not familiar with the
merchant Inter@ctive Week, November 23, 1998
If the web page itself is to be surveyed, the organization might want to use a report card survey. This method uses java script to pop up a small additional browser window that has 5 to 10 lines of HTML form input for rating the web page. Once submitted, the additional small window disappears. This method requires minimal user effort. If a product is to be surveyed, the report card method could be used, however more information is usually required to effectively evaluate a product. A method used by some organizations is chunked survey information. Deploying chunked survey forms entails 5 to 10 questions (that can be viewed on the screen all at once) that would be filled out and then submitted. Once submitted, the user is automatically carried on to the next 5 to 10 questions. Using this method makes it seem more reasonable, and as well if the user decides half way through they wish to abort the survey, the organization giving the survey has at least some of the input. To help prevent early abortion, a feature that indicates how much of the survey has been completed as they go along may encourage the consumer to continue.
Selling online is receiving heightened attention as never before (Holstein, Thomas, and Vogelstein, 1998). Looking beyond the hype, one finds some sobering numbers. Only 5% of unique visitors to sites become customers; only 1.6% of visits result in purchases. Online retailers surveyed reinvest a whopping 65% of WWW generated revenue back into marketing and advertising, spending an average $26 to acquire new customers. Traditional retailers reinvest only 4% with an average cost of $2.50 per new customer acquired (Guglielmo, 1998). Only 28.3% of web users have shopped online. Of those consumers asked why they haven’t shopped online, 71.6% say it is because of security concerns, 49.3% state it is because they cannot touch the merchandise and 39.2% don’t because they are not familiar with the merchant (Maddox, 1998).
Is it important for existing resellers to set up shop on the Internet to sell products? For many retailers, the current numbers suggest it is not. Most of the organizations making big bucks are ones that are exclusive online businesses, or companies like mail order merchants that are not able to physically meet their customers in person. Compared to the amount of consumers online, the ratio of those buying is very small. Those who are making real money are sellers of computer hardware and software, travel, and music and books. Among these companies are Dell, Jupiter Communications, Barnes & Noble, Amazon.com, and the newly merged CDnow and N2K (Riedman, 1998).
However, some companies have put together partial sales transaction methods in that the consumer window shops through the products listed online and picks out what is desired. When the consumer is ready to make a purchase, a form is filled out online that is submitted to a live sales person via e-mail or other means for completion of the transaction. In this method, if the consumer does not feel safe submitting their credit card number online, the consumer can indicate on the purchase submission that he/she wishes a sales person to contact them to get the rest of the needed information to complete the sale. Of course at this length, the consumer may skip any online means and call a salesperson by an 800 number that should be listed with the organi-zation’s online sales information.
Until the Internet becomes a more stable platform for electronic commerce, it is probably safe to say that sticking strictly to marketing strategies and consumer interaction is a well-defined step onto the Internet for any organization if done correctly. Incorporating means of sales contact information, 800 numbers, transactions through e-mail with live salespeople, or partial sales transaction methods can serve adequately until the organization is more prepared financially and strategically to take a bigger step. Besides, what do retailers really sell? Relationships, services, [and] contact to a community (Levy, 1998).
The WWW is the newest tool in marketing that can greatly benefit any organization if it is implemented properly. Many companies have jumped into this technology too swiftly to have a proper handle on what is needed to make this move. A lot of companies in trying to get an internet presence together quickly have not properly structured this part of their business to effectively grow and compete online with competitors or meet the needs of their customers. In effect, online commerce can become overwhelming.
Evaluations of the company, its products, channels, and customer base need to be collected. The part of the marketing strategy that consists of the Internet needs to be based on these evaluations. Proper evaluations of customer needs and product attributes will help to put together a good marketing strategy. Understanding the aspects and potential of what the Internet has to offer and structuring a part of the organization to meet this will allow the proper deployment of a marketing strategy that can tap the real potential the Internet has to offer.
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Russell E. Glaue is the Technologies Engineer with Center for the Application of Information Technologies at Western Illinois University. He is an advocate for knowledge, actively involved in technology and education in government projects within the United States and internationally. Glaue is an active member of MEIEA.
Dr. Ronald J. Bauerly is a Professor of Marketing with the Marketing and Finance Department at Western Illinois University. He has published in the areas of promotion marketing education and online marketing. He is also Co-Editor of The Journal of Contemporary Business Issues.