Virgin Entertainment Group finally enters the e-commerce music business with the launch this month of Virginmega.com. The site is part of Virgin's strategy to combine the strengths of its offline and online operations and build an Internet portal for its diverse businesses.
Virginmega.com targets consumers from 25 to 49 years old rather than the 16 to 34 year olds that frequent the brick-and-mortar Virgin stores.
“These are people who have gotten out of the habit of buying music,” said Glen Ward, president of Virgin's Los Angeles-based e-commerce division.
Online music sales were $187 million last year and are projected to be $370 million this year, according to Forrester Research, Cambridge, MA. Forrester projects sales will reach $2.5 billion by 2003, accounting for 20 percent of all music sales.
“Virgin is definitely late to the market in terms of selling music online,” said David Cooperstein, Internet retail analyst at Forrester. Virgin's advantage, he said, is that leading online efforts such as CDNow.com and Bertelsmann-Universal's joint venture don't have brick-and-mortar stores. “By combining the online and offline efforts,” he said. “Virgin goes a long way in appealing to the consumer's multi-channel shopping habits.”
He questioned the choice of Virginmega.com as the Web address. “The URL is not something people are going to easily remember, and Virgin is going to have to do a lot of branding around the Virginmega brand,” he said. “The Virgin brand is a powerful one, but their presence is known only in big cities where it has a can of cola, airline flight or a record store.”
The site stocks 300,000 music and video titles, entertainment-related books and merchandise. Other features include Radio Free Virgin, which broadcasts 12 channels of full-length album tracks, music reviews and a loyalty program.
Virgin plans sister sites for Japan, Britain and other parts of Europe by the end of the year. The company also is considering linking sites and providing cross-marketing of databases with other online marketers. It has yet to decide whether to feature ads from other marketers.
A print and radio ad campaign promoting the site began this month. Created by Los Angeles ad agency Wong Doody, it reflects Virgin's trademark irreverence and hip attitude.
