BMG Starts One-Price Music Site

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German media giant Bertelsmann's BMG Direct arm is expected tomorrow to launch onepricecds.com, a site that will offer CDs for a $9.99 flat price, including shipping and handling.


Based on Bertelsmann's preferred membership model, but without the negative option of regular automatic shipment of CDs after the first purchase, the site is BMG Direct's first venture developed purely for the Internet.


The only trade-off is that registered consumers have to consent to receiving two to four e-mails a month from OnePriceCDs about new CD titles, offers and promotions.


"We know the best way to develop a relationship with consumers is to have an ongoing dialogue," said Elizabeth Rose, vice president of strategic planning and e-commerce at BMG Direct, New York. "It's something very important to us from a business perspective, and it's how BMG Direct does business with consumers and record labels."


BMG Direct's latest foray follows a Sept. 26 an-nouncement by CD Warehouse Inc., Oklahoma City, that it was suspending operations of its e-commerce site, cdwarehouse.com, in order to restore the retailer's profitability. The company franchises and operates stores in the United States and overseas.


BMG Direct's site at oneprice-cds.com will stock more than 12,000 titles in 70-plus genres, including rock, classical, pop, country, jazz and R&B.


As it stands, the new service is part of a BMG plan to use different business models to attract online buyers of music. One-PriceCDs is a hybrid that combines the membership model with online retailing in what BMG calls "membership e-tailing."


This way, it avoids imposing on consumers the long-term buying commitment required of membership clubs. At the same time, it maintains steady communications via e-mails to customers who have registered with their initial purchase.


"We look at the Internet as the opportunity to create new business models, to expand the audiences for BMG Direct and membership services," Rose said.


So, while OnePriceCDs is about price and a streamlined checkout process without hidden costs, its membership-based BMGMusicService.com targets a younger, college-age crowd with promotions and deals. Also available through a paper-based catalog, BMG Music Service has more than 10 million members.


GetMusic.com, however, is a partnership with Universal Music Group that is more about community and content. CDNow.com - recently purchased for $116 million - and Bertelsmann's 40 percent-owned BarnesandNoble.com are serious Internet-only players in the music market.


According to August numbers from Media Metrix, New York, BarnesandNoble.com attracted 5.8 million unique visitors that month; CDNow.com attracted 4.43 million; and BMGMusicService.com pulled in 2.98 million. The sites respectively were ranked first, second and third in the retail music category in sheer traffic numbers.


The creation of OnePriceCDs won't cannibalize sales at existing BMG outlets, although the possibility of some switched loyalties may occur in the short term, Rose said.


"We know that BMGMusicService.com members buy over half of their CDs from other [bricks-and-mortar] stores and Web sites," she said. "We would rather capture that business for onepricecds.com than lose it to other players.


"We think that in the long term, there will be multiple different ways of buying music online and we would rather have more of them."
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