Press M for Music

Chris George, a bike-enthusiast, is aged 25, and has a

passion for music. The last attribute now sees him heading Easybuymusic.com–the

online music distribution site that is making news. And so is George, the eCEO

of the venture, as he has designated himself. At a time when dot-coms are

floundering worldwide, this one is making money.

It was in 1999 that Arun Pai, who had spent seven years in

Arthur Andersen advising such companies as Whirlpool and Samsung on market entry

strategies, conceived a business model that would "capitalize on the

inefficiencies of the music market". He discussed the plan with Rajesh

Ayyar, a director of business consulting in Arthur Andersen. After a thorough

analysis and almost two months of discussions with Arthur Andersen’s partners

worldwide, Easybuymusic.com was born. Pai is an angel investor, and now runs his

own company Passionfund out of Mumbai.

From Leh to Kanyakumari, music is an integral part of the

Indian society, be it the melody of the classical ragas or the foot-thumping

party numbers. But more than often, the distribution of a plethora of titles

across the country is far from smooth. With the distribution chain of the

$500-million Indian music CD and cassette market being rooted in Mumbai, the

costs of supplying music products to retailers in far-flung cities and towns in

north, east and south India becomes phenomenal. And if volumes are not there to

justify the shipment, the costs even become prohibitive for distribution.

Pai was quick to see the opportunity in the prevailing

scenario. After Arthur Andersen’s e-business incubation advisory services

completed the incubation talks, Easybuymusic.com got angel funding, set up its

e-commerce infrastructure, implemented the entire business, designed the

organization structure and hired people. Easybuymusic.com was soon on its way to

be up and running.

The commercial operations didn’t start till November 2000.

Once they did, the venture turned out to be a huge success. The average daily

sales have shot up ten times from a mere 40-50 to over 450 transactions in May

2001. And the target is 1,000 transactions per day in the next nine months, with

profits ensured on delivery of each product.

Leveraging the brick

Easybuymusic’s business model is a mix of click and brick.

So, what’s unique about the model? "We defined our business by the

market, not the medium. What a pure online retailer does is define its business

by the medium, which is the Net," says George.

Online sales on the site make up around 5% of Easybuymusic’s

entire business. Otherwise it’s just another retailer–earning its money by

selling music CDs and cassettes. George adds, "If you say you will sell

only through the Net, you are immediately clipping the market. Just like a store

the size of an airport hangar but with a small, six-foot door." The site

scores over other music-selling sites like Fabmart.com, Takdhinadhin.com,

Promusicfind.com and Themusicmagazine. com, which are purely online sellers.

Providing logistics to other sites is a logical extension of

Easybuymusic’s business model. For example, it has taken over the distribution

channel of Rediff.com’s music section. George feels that such measures will

significantly help increase the company’s online business share from the

present 5%. The company is involved in completing the transaction for all orders

placed on Rediff–it sources the CD or cassette, processes the order, packs it,

ships it and collects the money. George says, "Rediff is only an aggregator

of music–not the source, only a catalog. When an order is placed, our supply

chain gets intimated. We pay Rediff a commission for the transaction."

"We power Rediff’s music section," says a proud George.

Simplifying purchase

Easybuymusic has actually taken steps to do what its name

suggests–making buying music simpler. Ordering a product through the site

doesn’t require registering or using a credit card. The company offers a

nation-wide toll-free number, in addition to ordering via cell-phone. It has

entered into tie-ups with cellular service providers in Mumbai, Bangalore,

Delhi, Kolkata, Hyderabad and Pune for the purpose. Payment, going by the

prevailing trend, is on delivery.

George, a management graduate in marketing and consumer

behavior from New York, has taken lessons well from Internet’s e-tailing

pioneer, Amazon.com. The loss-making billion-dollar revenue site has amply

exhibited that better distribution and a focus on customer service is very

important to attract and retain customers. Currently, Easybuymusic has call

centers in Mumbai, Delhi, Calcutta, Chennai, Hyderabad, Bangalore, Pune and

Chandigarh. Its service is available at store prices, with no delivery fee,

payment being cash on delivery–critical to consumer satisfaction, and

completely in tune with the Indian consumer’s psyche.

Customer service representatives equipped with online systems

to record customers’ preferences and buying habits man the call centers. A CRM

software, partly built in-house, is there to aid the process, while an

integrated supply chain and inventory management system tracks the warehouses of

the music companies. This, in turn, helps the company source products from

multiple locations.

Customer-aided branding

Easybuymusic has spent very little on marketing its brand,

unlike many dot-coms which splurged on marketing gimmicks without realizing that

they were running out of working capital. This led to the failure of many a

dot-com. "On the Web, we have a policy of ‘no-spends’, so the obvious

methodology to use here is viral marketing. And, we work very closely with the

music companies to promote their products, which in turn prompts them to buy

through Easybuymusic.com." George’s strategy here is straight–"if

we have half-a-million customers, the brand is built." George recalls,

"Our worst schemes have been where we worked on just a brand advertisement.

We spent a significant amount of money just promoting what we do and expected

people to call. The result was nowhere close to when we showcased a product and

asked people to call us if they wanted to buy the product showcased. Our phones

didn’t stop ringing."

In future, George is also looking at the possibility of using

the Napster model to supplement its own distribution model, "The P2P

platform is a distribution methodology. I would like to see Easybuymusic.com

evolving wherein I can use P2P technology to distribute music."

Easybuymusic is in alliance with leading music companies like HMV, Magnasound,

BMG, Virgin and Sony, and is also in talks with major international labels for

tie-ups. As part of Easybuymusic’s strategy to offer licensed international

music over the Net, the company has tied up with Listen.com. And it has

ambitious plans to release 300,000 international special release items, which

are not released in the country at all.

Bijesh Kamath in Mumbai