Tuesday, September 25, 2007

My Business Failure - AnywhereCD:

With CD sales slumping sharply, I thought it would be a good time to approach the record labels with a new idea to spur sales. Obviously $1 song sales on iTunes are ongoing, but losing a $15 CD sale means a $14 net loss for the music business. I thought the labels would be receptive to the proposition of reinventing the CD by making it Internet friendly. In our web-savvy world, people expect everything immediately -- we want to bank, shop and communicate in real time. While we can buy a CD on the web immediately, we can't listen to it immediately -- instead we have to wait for the postman to show up with the plastic. It's no wonder that fewer and fewer people are buying CDs.

But what if anyone could buy a CD and immediately get the corresponding MP3 tracks to play anywhere? I assumed the labels wouldn't be too excited about users getting MP3 tracks, but CDs are perfect digital copies anyway so customers wouldn't be getting anything they couldn't already have. To entice the labels my strategy was to pay the wholesale price for CDs plus give them $2 for the digital tracks.

I met with all of the major labels (Universal, EMI, Sony, and Warner Music) and they seemed open minded to new ideas. One had a cautious 'wait and see' type of attitude. Another wanted millions of dollars up front. One insanely asked me if I would embed the purchaser's credit card number in the song files they bought. (I pointed out as politely as I could that no one would shop at Barnes and Noble if they printed your credit card number on every page of every book you bought. And, um, oh yeah, I'd be breaking a variety of federal and state laws!)