The Wireless Music Store Clerk
December 10, 2003
MusiKube is looking to revolutionize the way retailers sell music -- and they're using Wi-Fi to do it.
Marketing technology developer MusiKube has developed a master plan for transforming the ailing music retail industry, and Wi-Fi plays a vital role.
The two-year-old company recently announced its first big deal -- a pilot of its Wi-Fi-enabled Personal Music Guide (PMG) at UK-based music chain Virgin Megastores' San Francisco outlet.
During the pilot, set for a gala launch this month, customers will be able to borrow one of ten Wi-Fi-connected, ruggedized HP iPaq Pocket PCs equipped with a barcode scanner and stereo headphones.
They can use the device to scan bar codes on any CD in the store to get instant access to track samples, liner notes, images and background information -- all delivered wirelessly to the PDA.
They'll also be able to create their own database of favorites and take advantage of a personalized Amazon-style recommendation system based on the customer profile the system will build over multiple sessions.
"It makes browsing in the store much more effective for the customer and much more exciting," , says Sunjay Guleria, MusiKube's vice president of marketing.
More to the point from a business perspective, it will help retailers compete with online music sources like iTunes and the recently relaunched Napster, MusiKube hopes.
"The retail environment is under intense pressure to transform itself," Guleria says. "And Virgin is a leader in this. We will see a whole transformation from the physical side [of stores] to the experience-based environment."
Right now, he says, retailers are spooked by a surprising statistic -- 70% of customers know what they want to buy before they ever come into a music store.
"That's frightening," Guleria says. "They shouldn't always know what they want. It means the CD store becomes just a place to pick up content. They should be able to go on a musical journey when they come to the store and find new things that fit their tastes."
The PMG will help do that, he says. It will also provide music companies -- retailers and labels -- with a one-on-one relationship with customers, something they have not had before.
There will be a bottom-line impact, but the real benefit is the opportunity the PMG provides for applying customer relationship management (CRM) techniques to selling music to individual consumers.
MusiKube says its experience in the UK is proving its ideas are correct. It first launched the PMG a year ago at a London independent CD shop called Carbon Music.
"It's not just that [the PMG] sells more CDs," Guleria says. "Though we do have evidence from the Carbon store that you sell more and it can be attributed to the PMG. It's that it extends the relationship with the customer outside the store for the first time."
Carbon, which has moved into a commercial phase with the MusiKube technology by deploying it in a new London megastore, is one of two other announced customers besides Virgin.
The third, Altitunes, a niche retail chain with just under 30 outlets in U.S. airports, is launching the PMG system in three of its stores before the end of the year.
"We do have commercial deployments," Guleria says. "But the most exciting will be Virgin because they are able to drive such incredible foot traffic."
He says Virgin is committed to using the technology on a broader scale. The primary success criteria for the pilot is simply whether the handheld devices can stand up to the abuse they will likely take from customers. MusiKube is working with a new supplier of ruggedized shells for the devices to ensure that isn't a problem.Security must be another concern, although Guleria says none of the units in the Carbon store in the UK have gone missing -- yet. Customers must hand over a piece of ID to get one of the PDAs and can only hold on to it for 30 minutes.
"There will be leakage," he predicts. "People will lift the devices. But we don't think it will be a serious problem. The membership sign-up process and the whole process of [building the personal profile] hopefully will dampen the likelihood of theft."
Deploying the system in the Virgin store will be relatively easy because all Virgin outlets already have store-wide Wi-Fi networks in place to support back-office applications, Guleria notes.
This is giving MusiKube other ideas about how it can extend the reach of its technology.
For example, Guleria notes that Starbucks -- which, like Virgin, has a large number of stores with Wi-Fi already installed -- is involved in the music industry now through its Hearmusic subsidiary, which provides music in Starbucks stores and sells sampler CDs.
Could Starbucks coffee shops -- or some other chain's stores - be turned into virtual music outlets in partnership with a Hearmusic or one of MusiKube's music retailer partners? That appears to be the idea brewing at MusiKube.
There are all kinds of transformations possible if the PMG concept takes off. One is that stores will no longer have to keep all their stock in racks in the retail space.
They could instead become "big listening walls," Guleria says. Customers use PMGs to scan bar codes on point-of-sale displays and listen and learn about the title. If they want to buy, they place an order using the PDA, and staff pick items off adjacent warehouse shelving -- "something like a shoe store," he suggests.
Customers in the future could also download PMG client software to their own PDA or smart phone and use it in a PMG-activated store.
They'd need some way to read barcodes. MusiKube has technology that will instantly translate a bitmap of a barcode created using a digital camera into barcode data that can be sent over the Wi-Fi network.
The idea is to exploit the increasing penetration of camera phones, but cameras can also be added to Wi-Fi-enabled PDAs.
Interest in MusiKube's ideas is growing, Guleria says. The company is "in active discussions" with another large music chain about deploying the PMG.
"Music retailers are bleeding a lot of red ink," he says. "It's an increasingly competitive market with increasingly smaller margins. They're looking to technology solutions to help them compete with the online world."
The PMG is only part of MusiKube's grand plan. The company is also testing a patent-pending music-recognition system that will help consumers' identify a piece of music they're hearing that they like -- wherever they are.
If they hear a song on the radio, in a store, in an elevator or at the movies, they can dial a toll-free number on their cell phone, hold the phone to the audio source and get an instant identification on their phone's display. The system will then send them a Short Message Service (SMS) message with more detailed information.
If they have a browser-enabled phone, they can then purchase and download a song or song-based ring tone on the spot, or order the CD or related merchandise.
The idea from the music retailer or label's perspective is to more efficiently capture consumer interest in music and then move the consumer to a purchase decision more quickly, Guleria says.
Consumers could also just add the new piece of music to their database of logged favorites, though -- which is stored by MusiKube and becomes part of the profile customers also build when they use a PMG in a music store.
"We are in beta testing now [on the music identification system]," he says. "We expect to launch in the first quarter next year across multiple [phone] carriers."
Will consumers buy more music - and perhaps more music that they actually like -- with MusiKube's Wi-Fi-powered technology? If all the information you're using to make purchase decisions is coming over a wireless network to a PDA, though, who really needs a music store? As Guleria hints, music stores of the future could turn into coffee lounges with a CD warehouse next door.