The Short Story of 1–800 MUSIC NOW
Earlier this summer, the parent company of Columbia House filed for bankruptcy. The one-time music (and movie) club loved by few died a slow death probably 10 years after it should’ve. Even though the news wasn’t surprising, it did get me thinking about the industry in general. Music services, music buying clubs, etc… so many of them fall each year, and someone has yet to properly eulogize them all.
Therefore, I’m starting a brand new writeup series where I take a look at services that have risen and subsequently fallen (sometimes spectacularly so) in an effort to revolutionize the way we interact with music. With each of these services, we’ll look at their journey from launch, all the way to failure, and try to figure out exactly what went wrong.
First up is a phone-based music store from the mid-90’s, which was started by then telecom conglomerate MCI. The service was built to mimic the specialty brick and mortar experience (think Borders), allowing customers to preview songs over the phone before purchasing them. Given the fact that it launched in November 1995, the heyday of words with 1–800 numbers, the service was aptly named “1–800 MUSIC NOW”.
Obviously now, the music buying experience is completely different than it was in the 90’s. Rather than buying a whole album, you can purchase virtually any song on its own. Hell, you don’t even need to worry about previewing a song, you can listen to almost anything by searching for it on Google. In 1995, however, a record or specialty store was the only real way (outside of a library) you could go about browsing and listening to music before purchasing. Previews over the phone gave customers a buying experience similar to if they had walked into their local record shop or Barnes & Noble.
Not only were you getting audio previews before purchasing albums, MCI also customized the service to 30 different radio markets across the country. Allowing, in the company’s words, “to welcome and guide callers to special buys, local events and the latest releases on-air in their market [1].”
MCI wasn’t just selling CDs over the phone, however. The company also launched a website (http://www.1800musicnow.mci.com/), which was one of the first to feature audio previews of music (powered by RealAudio)[2]. You couldn’t download songs, but the same CD’s and cassettes found over the phone were available on the website. The service began with a catalog of 5,000 titles for purchase.
The service was buoyed by a whopping $40 Million advertising campaign [3], that was topped off with commercials airing during the Simpsons in primetime. Adverts were also heavily heard in over 100 different radio markets across the U.S. All that advertising most certainly increased the visibility of the service, but the real question is whether customers actually called and purchased music.
Reception
In the beginning, it was difficult for the market to perceive whether MUSIC NOW was a success or failure, but it did show some promise. Within the first four months of launch, the firm tapped to run the service, Diamond Creative Partners, announced that they were receiving over 400k calls per day to the 800 number. DCP also indicated that those callers who turned into customers purchased 2.28 units per order on average [4].
Typically in e-commerce, conversion rates (from casually browsing to actually purchasing) can be anywhere from below 1–15%, with a large percentage of those sites reporting less than 1% [5]. And at 1%, given the average purchase amount per customer, you could be looking at over 3 million albums in the first full year of operation. So, if even a fraction of those customers could be turned into purchasers, you can imagine the high hopes that MCI would have for the service just a few years down the line.
In June, MCI was still touting the service as something with real promise. They reported that MUSIC NOW had received over 10 million phone calls, and that brand awareness levels had surpassed 75% amongst their targeted audience [6]. Of course, neither of these figures painted any real image of how the service was doing, and perhaps that was telling at the time.
By the time November rolled around, expectations began to taper severely. Billboard published a piece on the service, with music industry executives stating that it would be lucky to generate $5 Million in revenue for the year. Rumor had it that MCI was trying to get out of selling music, and was looking to offload the business. The Album Network, which had been an independent publishing and consulting firm before they were purchased by SFX entertainment, was considered a suitor [7].
A sale unfortunately never happened, and in December, MCI shut down both the phone and internet service. Post-mortem reports pegged the highest selling album on the service moving a meager 400 units, showing that the venture was a very costly one for the company. For such a sizable investment by a telecom giant, what the hell happened? Was it just a really bad idea?
What Happened?
First off, many consumers probably realized how inefficient the buying process was. Previews were instantaneous, but did customers really want to wait for their CD to be shipped via snail mail? Outside of living in a remote area, most consumers could listen to previews over the phone and head to Target to make a purchase. A distribution exec told Billboard in their November piece, “people want the product right away. Who wants to wait three extra days and then pay $3 for an album?”.
Observers also speculated that one of the biggest reasons for the services’ failure, or at least for the failure of the website, was that customers were afraid to give up their credit card information online [8]. In fact, a survey taken in Oct of ‘96 by the Music Marketing Network indicated that around 40% of online users who hadn’t made a purchase online chose not to based on security concerns [9].
Perhaps if the service offered digital downloads online, there would’ve been more interest, at least within the web component. Broadband hadn’t yet punctured the mainstream yet, so who knows how many people would’ve been captivated by the idea. It wasn’t until a few years later that an online music store offering purchasable downloads would emerge (and much longer before anyone would have real success with the model).
As strange as it seems, an idea like 1–800-MUSIC NOW may have just been ahead of its time.
Works Cited
[1] ‘1–800-MUSIC-NOW: The ultimate sound buy; MCI rocks the nation; rolls out easier way to purchase music — You call. You listen. You like. You buy.’, The Free Library, 08-Nov-1995. [Online]. Available: http://www.thefreelibrary.com/1-800-MUSIC-NOW%3A+The+ultimate+sound+buy%3B+MCI+rocks+the+nation%3B+rolls...-a017581928.
[2] ‘1–800 MUSIC NOW SPONSORS WORLD’S FIRST TRIPLE-CAST CONCERT VIA TV, RADIO & INTERNET’, The Free Library, 17-Nov-1995. [Online]. Available: http://www.thefreelibrary.com/1-800+MUSIC+NOW+SPONSORS+WORLD’S+FIRST+TRIPLE-CAST+CONCERT+VIA+TV,...-a017621536.
[3] ‘Tremble, everyone’, The Economist, 08-May-1997. [Online]. Available: http://www.economist.com/node/596309/Story_ID=596309.
[4] ‘EARLY DAYS YET FOR MCI 1–800 MUSIC NOW SERVICE’,Telecompaper, 21-Feb-1996. [Online]. Available: http://www.telecompaper.com/news/early-days-yet-for-mci-1800-music-now-service--75526.
[5] MarketingSherpa, ‘E-Commerce Benchmark Study.’
[6] K. Cleland, ‘THE MARKETING 100;1–800 MUSICNOW TERRY MACKO’, Advertising Age, 24-Jun-1996. [Online]. Available: http://adage.com/article/news/marketing-100-1-800-musicnow-terry-macko/78716/.
[7] ‘Steve Smith to be Honored at California United Bank’s 7th Annual Charity Golf Tournament’, Business Wire, 30-Apr-2013. [Online]. Available: http://www.businesswire.com/news/home/20130430005355/en/Steve-Smith-Honored-California-United-Bank’s-7th#.Vf4-QZ1Viko.
[8] ‘MCI Is Shutting Down Music-by-Phone Service’, The Wall Street Journal, wsj.com, 12-Dec-1996.
[9] B. Atwood, ‘Survey: Older Demos Crucial to Online Retail’,Billboard, 01-Feb-1997.
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