Cdnow

CASE 12
CD-NOW IN THE ONLINE MUSIC BUSINESS

CURRENT SITUATION
Founded in 1994, by twin brothers Jason and Matt Olim, CDnow is one of the oldest and largest online retailers, having sold different forms of music on the World Wide Web.
It carries approximately 500,000 different albums about 10 times as many as the typical bricks and mortar mega store and it reports store traffic of over200,000 visitors per day. During its first have years of operations, CDNOW attracted over 700,000 unique customers who made purchases at the Web site.
In this work, they focused on a single cohort of new customers who made their First purchase at the CDNOW Web site in the First quarter of 1997. They have data covering their initial and subsequent purchases for the three month period during whichover 23,000 individuals bought the leading online music store, and one of the most popular shopping sites on the Internet. It has a customer base of 4 million people, and an average daily audience of over 800,000 people.
CDnow provides access to over 500,000 music-related products and 650,000 sound samples, as well as music reviews, cover art, daily music news, features, guides to music genres,and exclusive interviews and reviews from CDnow's award-winning editorial staff. CDnow is also driving the digital distribution of music, and was the first site to offer the sale of music downloads and custom CDs.

PEST
Political-Legal

Gained licenses for the Acquisition of Super Sonic Boom.
The traffic statistics came very instrumental to sell advertising on the website.
Had goodreliability in the web site with a good reputation in their service.

Economic

The CDnow target market was the people of the United States, specifically the middle to upper income customer who is in the over 30 age group.
At the start of the business, the company sold music CD’s to its customers at competitive price compared to brick and mortar music retailers.
The value gained from the websitewas revenue of $103,000, the website added value to the company as a place to do business with customers, and to provide a store front that allowed a cheaper investment compared to having a brick and mortar company.
The order fulfillment processes provided CDnow with efficiency in its process, the order fulfillment process also contributed to the revenue by supplying the CD’s that were sold.
Therobust design of CDnow website, the strategic marketing alliances and the order fulfillment process allowed to maintain a High level economic.

Socio-cultural

Potential customers are people who have diverse music interests that want a wide variety of music to choose from, this depending on their culture, as we are now globalized and each country has their music that gives the culturalidentity.
Different cultures should have computer literate and know how to purchase over the internet.
In 1998 CDnow, expand to provide a better online environment for its customers of European and Middle Eastern. The merger with N2K, Inc allowed CDnow to expand its market to customers who purchased classical, jazz and country music since N2K specialised in these genres of music. Because although iscertainly this music is autochthonous Europe.
The introduction of my CDnow helped the company differentiate itself by using technology to provide a music environment the customer could customize to his/her preference, depending on country of origin, ages, sex and style of music.

Technological

The introduction of my CD-now helped the company differentiate itself by using technology to providea music environment the customer could customize to his/her preference.
CD-NOW combines advanced technology including:
* Automatic labeling
* Structures website hyperlink
* Complex web site classification
* Global patterns of Internet traffic and Statistics

FIVE FORCES PORTER

Intensity of rivalry among competitors (High)

In this industry, the intensity of competition is...