Best Buy’s success is due to a lot of factors. One of the more important decisions was to “Feed the Machines,” by aggressively assorting CDs, VHS tapes (that became DVDs) and Games. We know this drove frequency and we think it helped create a “buzz” that made it more fun to shop in a Best Buy than our more traditional competitors. And by connecting people to their passions (the content) we believed it gave us a better opportunity to build more meaningful connections with consumers.
These benefits have become somewhat eroded as consumers have increasingly moved to digital for their content. In order to maintain/strengthen our consumer relationships, we believe we need to continue being a Brand that can connect consumers to their Entertainment passions. Thus, becoming a bigger presence in the digital space via a Napster acquisition is seemed like a step towards that aim.
We know that buying Napster on its face means relatively little. the space is moving so fast, the business model will likely need to change rapidly and often. But we do think it gives us a great head start and strong platform to be iterating from. And since we sell 1 in 3 PCs in the US, as well as have 30 million Reward Zone Members, we do have an engine, we think that can drive trial.
This is a business that needs a lot of ideas. I invite you to help us think through how we can use the Napster capability to create value for our customers
Hello Barry,
I believe the Napster acquisition will provide Best Buy a nice content platform and conduit for delivery. As you said, the space is moving very fast, but one trend is beginning to coalesce as I read my tea leaves: the power of affinity algorithms.
Last.fm, Pandora, Netfilx, Amazon, and others are already doing this, and I believe iTunes’ Genius feature is about to take it to the next level in the digital space, but BB’s combination of brick & mortar and web presences offers a unique opportunity to extend affinity *into physical space* in a way other competitors can’t. How can you lead b&m customers through the store, using the same kind of affinity recommendations they can receive on-line? That could be a fun and profitable question to answer.
Being known as the brand that knows its customers tastes best–online and off–the brand whose affinity algorithm makes recommendations that inspire a sense of “being known” and “understood” could provide a unique experiential dimension of brand distinctiveness– a powerful archetypal connection that could engender a long term bond with the Best Buy brand while providing a high utility benefit for customers that leads to additional purchases.
Best wishes for your success.
Rick Julian
CEO
QUO VADIS
http://www.qvbrands.com
I’d like to see BBY be the one that finally brings the cost of downloadable music to a level where:
- It’s significantly cheaper than physical shiny discs.
- Buying a disc from an unknown artist is less of a risk.
- It’s no longer worth the extra hassle of downloading for free elsewhere.
It frustrates me that I can go in-store and buy the physical CD for $11, or buy from iTunes for $10. For the extra dollar, I’d rather have the physical copy. As a customer, I should benefit greatly from the huge savings of not having to create, ship, store, handle and sell the physical item.
I think if you could get the cost of an album down to, say, $5 or so… then you would see a significant shift of traffic from iTunes/Amazon to BBY.
After it takes off, you could reclaim much of the floor space used in physical stores for your current CD selection to more profitable items/services. Buy the machine at BBY, feed the machine at home.
Hi Barry,
The continuation of the “fill the boxes” strategy is spot on – but presumably BB could have created their own distribution platform or bought any number of companies that can handle that kind of digital distribution. The fact that you went and bought a company with a failing business model – or to be fair – a business model that might work in 10 years time with the ubiquity of wireless – hopefully indicates that you guys are excited about the brand.
Napster was the ultimate game changer – in the way that any political scandal now comes with the word gate attached – the number of websites ending in “…ster” immediately connect to this iconic identity. I think the challenge for you guys is how you get the excitement back to the brand. Napster was the ultimate cool brand and it hasn’t been that way for a while – if you make your name on killing an economic model and then try to exist within the model – well – it doesn’t make sense – however, as an operating unit with sole responsibility to drive traffic and generate awareness around the BB brand – now you’ve got something.
Napster wasn’t so much about the music to me as it was about changing the game. If Best Buy can bring the Napster vibe under its wing – treat it like the badly behaved but hip younger brother – particularly in the music sector then just think of the potential stories – oh and while I’m on that – once you’ve established the Napster brand purpose for BB – you can extend it into all media – thereby allowing it to bleed into movies, TV etc.
I think you guys have a huge opportunity here – good luck.
If we can make it like Pandora, where we can introduce people to new music – not just what is already in their music library – that would be a huge win.
My feeling is that Pandora’s popularity stems from discovering new music that you can try out for free to see if you like it. People love new music, but hate paying for something when they don’t know what they’re buying.
Why go to Napster when you can listen to new music on Pandora for free?
If we can leverage our relationships with the record labels, stream music based on customer’s likes for free, then give them the option to buy… people would be listening to it every day. Add music bookmarks, let users share music channels with friends – make it social and provide a mechanism to buy the music DRM-free so you can add it to your mp3 player….
I would be a lifer in a heart-beat.
Oh, and of course we’d need an iPhone application.
Wow, FoolishAndy is not so foolish. Great idea.
you are so wise to have a platform to control the content side of the business. It is critical that you have a fighter platform that enables you to deal from a position of strength with any best buy partner that is commanding a market share (read I tunes) that needs a governor.
Just a few thoughts..
Napster is dead as a Brand. Scrap it and re-brand the infrastructure.
Digital can complement brick-and-mortar shopping. How cool would it be for in-store kiosks fill in the gaps of what’s in stock? Allow customers to get ANY album downloaded to a flash drive.
Ditch DRM. People hate it. It may be a tough sell to the music industry, but you’ll do much better long-term without it.
The Napster road is quite exhilarating and maddening — from everything-for-nothing (not to mention that slightly dangerous angle of “sticking-it-to-the-Major-Label-man”) red-hot site (10M unique visitors in one month!) to suffering a heavy-handed smackdown from those “evil” Majors to this weird-world afterthought of a company floating around with no clear strategy. It’s quite a story when you think about it. And like Jason, Napster as a brand is dead. I concur with the comments from FoolishAndy and Jason.
Creating a “side” business like Apple’s iTune store or Amazon’s more traditional online shopping experience is not the way to go. It’s definitely about customer relationships and creating something exciting that is seamlessly integrated into BBY brick-and-mortar stores and bestbuy.com. Who are these people who signed up for Napster’s subscription service? Why did they? What does it all mean? These insights can form the basis for a transformation from digital media delivery to a complete music lovers’ solution from the casual listener (hottest singles) to the connoisseur (MP3s/vinyl/mix CDs/musicians and beyond) with the products to exactly meet their specific needs. How about Music Geek (squad)? Digital Geek (squad)?
A few additional comments:
- Yes, please ditch DRM completely.
- Please don’t do another Rhapsody model.
- Personally, I think you should let Pandora and Last.fm do what they do best, and keep focused Napster as a delivery platform for selling albums/tracks.
[That being said, I really dig what Netflix is doing with the Roku and streaming movies (but admittedly, I haven't tried it). ]
- Work quickly to get people to think of digital distribution for movies as a viable alternative. Again, keep it cheap. This would be a great way to distribute deeper catalog titles. I’d totally download Tron for $3! This also might be a good way to increase sales of multimedia routers. Get people to build a movie collection on their networked hard drive, and sell them the hardware to play those movies on their HDTV.
- Agree with what others said: use the Napster platform, but ditch the branding. For those who’ve been around a while, Napster was like a great fling with the crazy chick back in college. She was fun, but isn’t a good one to bring home to Mom.
Barry, i’d like to stick my neck out and disagree with the previous comments regarding the Napster brand. There’s still plenty of juice left in it. Insiders may be painfully familiar with the sick roller coaster ride the business has been on, but from the street level, i’d bet the associations are about a cool brand that has challenged the traditional ways of doing things. i’d make that meaning a piece of the platform you plan to iterate from.
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I think the Napster brand may have some juice left as well. The brand has heritage in the maverick space from its early days. I think with the right value proposition behind it, napster can be something. And one of our agency partners, Crispin, porter, has some experience in doing this very well.
Hi Barry,
I really like your blog. Some very cool ideas being posted here.
glad to hear it, barry. also agree cpb are excellent at this sort of thing… and i wonder if any of their business growth opportunity thinking might apply as well. of course, making the most of the napster brand’s maverick-plus-one
heritage means ensuring that the value proposition has some of the disruptive to it. geek squad, has kept its brand relatively intact as it pushed its application further, and part of that has been keeping the proposition fresh. best of luck as you think all these opportunities through.
Napster is like Madonna. Had it’s time, but is so far from anything remotely cool now, it’s kind of sad.I think trying to hang onto that juice is a mistake. I’m not an insider, as far as Napster goes. So if I think it’s branding is dated, lots of people do.
An opportunity for Best Buy could be to use Napster to make the boxes they sell come to life – so everything walks out working. Think about how many people still don’t have an ipod because they don’t have a computer at home and therefore can’t download content. What if everything Best Buy sold could be uploaded with content there and then? MP3 players could be customized for you there and then and you could walk out listening to it. And computers could be full of fun stuff before you even got them home. Best Buy could continue to manage and update the content for you online or in-store or you could license it to yourself.
Napster should help make the technology Best Buy sells work better. It shouldn’t compete with iTunes – it should connect all the kit Best Buy sells.
Here is why I switched from Napster to Itunes. It was easier to make it work. Napster was complicated. Lots of people besides kids like to download music but many of us are not as computer competent as the younger people who have been raised in the electronic age. I evidence this by my friends trying to maneuver on Face Book which could be made easier as well. Even some of the younger friends of my kids are confused. My best advice to you with Napster is this: SIMPLIFY! MAKE IT EASY AND CLEAR TO USE! and then, once it’s fixed, promote the livin’ heck out of it in all the right places including AARP and especially TV!!
Apple has a few things that we should learn from: primarily a focus on complete experience: device + content + proprietary accessories. Our teams are set up in silos, like Sony for example… one buyer managing devices, another accessories, another business unit altogether managing service. We should drive a business predicated on delivering a strong alternative to the iPod+iTunes experience, consolidated under one general manager.
For Napster, I think this will take a lot of investment on top of the $$ we just spent to buy it. As I understand it, it is a comparatively old platform suffering from deferred maintenance and few recent capability upgrades. Support for online communities/social networking, as well as support for video are two major elements that need to be addressed.
While we are doing this, we need to target a niche customer group that is open to developing a rabidly loyal relationship with us. This group might be based on demographics, or music tastes, or some other type of segmentation. Once we have learned how to target and build a group of zealots, we can copy this with other niche groups.
I say this because I think our experiment with BBDMS shows that trying to be all things to all people is an average way yields very little in terms of loyal repeat customers.
What if we made it truly a social marketplace…. New Artists trying to be discovered, not just musically. Digital Artists with digital cameras sharing their vision and their compositions, Short film directors and producers sharing their works…. Have a Comedy section for people wanting to be found… Then at the same time. The artists can tag their works with music that inspires them, and much like the pandora model that will recommend similar music.
We can market to and inspire people to do more with the technology that we sell.. Just a thought
it may not be constructive to add this here, but barry, what did you do with your lps from the 70s? drop that needle and i bet you’ll be surprised how much more you’ll enjoy the music. and new vinyl sales are up
that said, downloadable music doesn’t sound so great. i usually go to best buy to get my cds