i-Tunes
The iTunes Music Store from Apple Computer allows Mac and PC users to legally discover, purchase and download music online. It features more than one million songs from the major music companies and 600 independent record labels, over 9,000 audiobooks, gift certificates and exclusive music not found anywhere else online. Since its inception, Apple customers have purchased and downloaded more than 250 million songs from the iTunes Music Store. iTunes users are now downloading one and a quarter million songs per day, which is an annual run rate of almost half a billion songs per year. The iTunes Music Store is now available in fifteen countries, which together represent more than 70 percent of the global music market. [Source: Apple Computer, Inc., January 2005]

It includes:
· Social networking (publishing a website, staying in touch, sharing photos, exchanging files, groups forming, message boarding, making announcements and calendars)
· Freemiun model (free of charge creating and using of blogs, email boxes and websites)

1. How does the iTunes business model work? How is it different from traditional models for the music industry?

Revenue sources:
· Songs selling - 99¢
· Albums selling - $9.99 per album in most cases
· Providing iTunes Plus songs that feature higher quality, 256 kbps AAC encoding — twice the standard bit rate — and no DRM (digital rights management) - 30¢ more per song
· Advertising (mainly singers)

What is different in iTunes technology from traditional models for the music industry (benefits for the customer):

- Shopping for exactly the music you want
- One song at a time, or by album.
- Unlimited access (24 hours a day, 7 days a week) to more than 250 mln songs
- Thanks to the “Complete My Album” feature, when you buy a single from the iTunes store, you get a 99¢ credit for each previously purchased song from that album.
- Availability to choose iTunes Plus songs that feature higher quality, 256 kbps AAC encoding — twice the standard bit rate — and no DRM (digital rights management). That means you can play it on iPod and other digital music players and an unlimited number of computers
- Availability to listen to a 30-second preview of any song on the iTunes Store before you buy
- Availability to get personalized recommendations according to past song purchases
- Downloading of a new free single every week
- Learning about new releases and exclusives by subscribing to the New Music Tuesdays email and podcast
- Viewing celebrity playlists for a glimpse at your favorite stars’ taste in music
- Posting your own reviews and ratings, or reading what other music fans have to say about songs, albums, and music videos. As part of a worldwide community numbering in the tens of millions, iTunes customers keep you up to speed on everything they download
-Easy to find what you need (useful classification by genre and other criteria)

2. How does the iTunes model compare with other Internet music services, such as Listen.com?

What is Listen.com
Listen.com is a leading online music company that develops and distributes RHAPSODY, a digital music service. Launched in 2001, RHAPSODY gives consumers unlimited access to the world's largest library of music via the PC and network-connected home entertainment components today and on wireless devices in the future. RHAPSODY combines on-demand music, CD burning, customized and professionally programmed Internet radio, and engaging music information and editorial recommendations. In August 2003, Listen.com became a subsidiary of RealNetworks, Inc., the global leader in digital media services and software for consumers and businesses. [Source: Listen.com]

It includes:
· Social networking
· Freemium model (free 14-days trial; if you're not ready for a membership, you can still listen to 25 full-length tracks each month and have access to 25 Rhapsody Channels. It's a great way to see what Rhapsody is all about. You can listen directly via your web broswer or download Rhapsody Software for even more features)

2.1 What is the Listen.com business model(s)?

Revenue sources:
· Membership monthly charge ($12.99 for Rhapsody Unlimited, $14.99 for Rhapsody To Go) – allows to listen to the songs (without owning them)
· Fee for downloading tracks and burning CD with Rhapsody ($; 10% discount for the members)
· Advertising – singers, technique (mobile phones), etc. (http://www.realnetworksadvertising.com/terms.htm)
· Selling of adaptable MP3 players (Sansa Rapsody) ($140-250)
· Related products (headphones, transmitters, etc.) (60-130$)

What is the Sansa Rhapsody? How is it different from other MP3 players?
Will Rhapsody work with iPod?

The Sansa Rhapsody offers the optimum Rhapsody To Go experience. Like other Rhapsody-compatible MP3 players, it allows you to drag and drop tracks from the vast Rhapsody library so you can listen on the go. However, only the Sansa Rhapsody gives you Rhapsody Channels with a non-stop mix of songs based on your taste in music that automatically refreshes every time you connect to your PC. The Sansa Rhapsody plays MP3s, video clips, and photos, features a rechargeable Lithium Ion battery with up to 20 hours battery life, and a digital FM tuner and integrated voice recorder with built in microphone.

iPods are not compatible with the Rhapsody To Go subscription service. You may, however, use the iPod to play tracks purchased on Rhapsody. Or view the MP3 players compatible with Rhapsody To Go

Main differences between iTunes and Rhapsody models:
· Different charging models (iTunes – for separate downloading, Rhapsody – monthly subscription payment)
· Clients (iTunes – more than 15 countries, Rhapsody – for USA only)
· Number of songs available (iTunes - 250 mln, Rhapsody – 3 mln)


3. Can the iTunes model survive in an environment where illegal music downloading runs rampant?

The new technologies in music industry are definitely harmful for the music producers and labels-owning organizations. We can see that less and less people are willing to buy CD any more. First of all, it is more reasonable to buy single song you like rather that the whole album (electronic snacking) and second thing is that a lot of sites even don’t charge for providing the music – clients have access to huge amount of music (without the right to download it), like on the site … , for example. So, why to pay, if you can get it free?! The sites like that make its profit by advertising on the site.
Types of conditions:
Selling music (either single songs or albums) – iTunes,
Monthly subscription to the site – listening music without the right to download it (with or without transferring the property right) – Rhapsody,
Providing the music free of charge (with or without downloading) –

This last category of sites are the most harmful for the music industry.
Now the labels start more and more attacking the sites like that, trying to get them to justice for not respecting the property rights for music. But as the laws are still not very strong in the virtual world, it is rather problematic to struggle with the companies that don’t follow the rules. The majority of sites like that try to run away from justice by establishing the juridical company in the remote countries (often in the Middle-East), where no international or national laws are followed and hence, making it very difficult for the label companies to attack them.

Attitude of the users towards music copirighting

Electronic snacking

Electronic snacking is a new way of consumption by small portions.

Examples of electronic snacking in every-day life:
• Music (death of albums - new era of single tracks. Evolution: cassettes→ CDs→ MP3→ ITunes and phone ringtones)
• Film/TV (episodes, mini montages)
• Biz (retail clinics, Google bait)
• Games (short-lasting games, or levels of the game – for example, a 30-seconds game on Nintendo DS)
• Culture (popularity of post-cards for studying the history of events, mini-art pictures, emblems on T-shirts, Japanese haiku, Abraham Lincoln’s 272-word Gettsyburg Address in a YouTube-friendly two minutes etc.)
• Fashion (switching from the loyalty towards particular brand to mixing brands, mix of luxury brands with fast-fashion ones)

I think that electronic snacking appeared inevitably in our society. In the era of massive informatisation, it is more and more difficult to absorb tons of information in a full format. Instead of consuming one whole cake, people tend to prefer trying different tastes by consuming small peaces of different cakes. Assortment is so huge, that it is just boring to make any particular preferences, choosing something separate.

In the article An Epic History of Snack Culture in an interesting manner the evolution of Snack Culture (as of 15000 B.C.!!) is illustrated. Surprisingly, even inventions like tattoos, electric telegraph, readers digest, etc. made their contribution to this new way of consumption, called Snacking. The most modern ways of Electronic Snacking are: IPod (2001), The ny times goes RSS (2002), IPod Wending machine; Youtube; Current TV (2005), The 1 second film (2007).

An example of Social Shopping site

ZEBO

Type – private
Founded – August 2004
Headquarters – SanFrancisco, CA
Key people – Roy de Souza, Founder/CEO
Industry – Product ratings and reviews
Products – zebo.com and ZEBO Strip desktop applications
Website – www.zebo.com

ZEBO is an internet company based in San Francisco, CA. ZEBO hosts a website database of user reviews and discussions on what people own and what people want to buy. The web site is described as being "For what you own, For what to buy and For Friends". It also describes it as a "Better way to decide what to buy". ZEBO is in a new and yet unproven space that attempts to combine the undoubted success of social networks such as MySpace with consumers desire to buy things on the internet e-commerce. Some call this Social Shopping.

Geographic scope - ZEBO accepts members and discussions on any products by users anywhere in the world (though ZEBO is presently only available in English).

What one can do on ZEBO:
- create a personalized profile about what one owns, wants, and loves to shop for
- check out what other people have and want
- get and give valuable tips and advice
- talk online about one’s shopping needs
- discuss products with one’s friends
- rate products
- make shopping
- create photo albums and share them with the friends
- invite and grow the friends list and rank the friends

Some other features on ZEBO are:
• Celebrity profiles - What the stars own and want, as reported by them!
• ZEBuzz - Realtime conversation board where you can ask for advice, or just chat with other people who are bored, too!
• ZEBOStrip and Graffiti - Post your photos with the ZEBOStrip application, share them with friends and use the Graffiti feature to draw on them and write wacky stuff.
• WIWT (What I Wore Today) blogs.
• ZEBO Groups - Start a group about whatever you want to keep in touch with your friends about.
• Shops on ZEBO - A bunch of cool stores selling almost everything you can think of.

Categories of products that are available on ZEBO - Apparel & Accessories, Arts, Crafts & Hobbies, Baby & Parenting, Health, Books & Magazines, Electronics, Garden & Patio, Gifts & Collectibles, Home, Jewelry & Watches, Pet Care, & Sports & Fitness, Food & Beverages, Music, Office &Business, etc.

Revenue streams:
- ZEBO seller’s fees (all Individual Sellers pay a fixed fee of 5% of the item CPS (Cost Per Sale); the Merchant Sellers decide how much they would like to pay ZEBO. They can pay 10%, 15% or 20% of the CPS) – this is the main revenue stream for the company
-
Possible additional revenue in the future:
- Currently, there is no setup fee charge to become a ZEBO Shop Seller. However, this policy is subject to change at any time without notice
- The Seller can place his/her product in as many as three categories. Currently, the company doesnt set up to charge for additional placement, but may be in the future
- Organization of marketing surveys on the site (regarding different products or purchasing habits of the users)
- advertising on the site

Adding value for the users, how :
- ZEBO offers the most Seller-friendly pricing model. Most sites work on Cost Per Click (CPC), a web-site advertising method which means that the Seller pays for every click, which can include more browsers and surfers than genuine buyers. ZEBO works on a Cost Per Sale (CPS) model wherein the Seller is obliged to pay only when he has a confirmed sale

Unique characteristics of the site – the majority of Social Shopping sites don’t sell anything, but just provide the information about the products, whereas on ZEBO users can do both: studying about the products recommended by community and sell/buy the stuff.

Benefits for the user (seller):
- making money on selling the stuff the one doesn’t need
- low cost of selling
- no charge until one sells an item
- zero Risk (there is no deposit that the seller makes or minimum sales guarantee that the seller gives)
- establishing the cost per sale by the seller
- ZEDO is an experienced advertising based company and can sell significant volumes for the seller

Because the company’s business model is based mainly on the revenue from the selling/buying operations on the site (by its users), the main way to increase profit is increasing traffic on the sites (attracting more and more new visitors). This is achieved by:
• ZEBO gets its traffic primarily through leading search engines like Google and Yahoo. The ZEBO team has optimized the product pages so that the users’ products get top of the line display on search result pages of leading search engines.
• The site also uses its expertise in online advertising to get maximum returns from cross promotions it undertakes with other sites.
• Customers know that they can find the right product and right price they're looking for at ZEBO Shop. When they visit ZEBO Shop they get a combination of a variety of brands in every product category, great service, and competitive prices.

What is Social Shopping?

Social Shopping is a method of e-commerce in which consumers shop in a social networking environment similar to MySpace.
Social Shopping is based on the principles outlined in the wisdom of crowds where a large group of users can recommend products to each other and between them work out what to buy and which ones have the most buzz. Some of the leading companies in this field include StyleFeeder, Kaboodle, ZEBO and Chitika.

The useful links:

The Social Shopping Faceoff

Sharing With Others

Praized-Worthy today: Social Shopping Sites, Revenue-Sharing for User-Generated Content

Social Shopping: the current big thing?

New business model in social media - ki-work

Web 2.0 and luxury brands

LUXURY E-TAIL: WHO IS BUYING THIS STUFF?

Source: www.ecommercetimes.com
By Lesley Hensell
E-Commerce Times
11/18/03 4:02 AM PT

In terms of demographics, online customers who buy luxury brands are primarily women ages 25 to 42. A high percentage of luxury e-tail customers also graduated from college and have income of more than $60,000 per year, Ashford.com vice president Michael Dell'Arciprete told the E-Commerce Times.


A US$75 box of truffles. A $550 designer handbag. A $10,000 diamond ring. While these may not sound like the kinds of products consumers would rush to buy over the Internet, e-tailers are claiming growing success in selling to the wealthy -- or at least to those with expensive tastes.

"During the last big boom, from 1998 through about 2000, people bought more luxury items and got used to it," Ken Kellerhals, CEO of gourmet chocolatier Bissinger's, told the E-Commerce Times. "We've always thought that once a customer got used to our chocolate and saw how superior it was, it would be hard to go back. So we've been able to hold on to the customers we gained in the last boom. We really believe it's a push toward quality."


The Santa Boom
Like other e-tailers this year, Bissinger's is counting on hot holiday sales fueled by an improving economy. The forecast is bright: While most retail analysts predict overall holiday sales will increase by between 4 and 7 percent from last year's levels, they expect online sales to rise between 22 and 29 percent.
That is one reason why Bissinger's recently launched two new Web sites. Although the company's chocolate store has been online since 1999, last month it opened Bissinger's Marketplace, which sells gourmet foods. The firm also has begun offering corporate gift sales on its company Web site.
"We've tripled our presence on the Web this year and are very glad we did," Kellerhals said. "Sales have been growing at a pace of about 12 percent a year since we first launched online. And our Web site now represents 22 percent of total sales."
In the past, Bissinger's relied almost solely on catalog sales. The Web now helps the company reach younger customers, who often find the Bissinger's site via search engines, according to Kellerhals. Online sales also reap higher margins because the company does not have to mail expensive paper catalogs to e-shoppers.

Selling by the Numbers
In terms of demographics, online customers who buy luxury brands are primarily women ages 25 to 42. A high percentage of luxury e-tail customers also graduated from college and have income of more than $60,000 per year, Michael Dell'Arciprete, vice president of marketing for Diamond.com and Ashford.com, told the E-Commerce Times.
Sales at luxury e-tail sites have risen considerably in recent months, beating projected revenue in both September and October, Dell'Arciprete said, noting that he expects holiday sales to increase 30 to 40 percent year over year. Like Bissinger's, he considers his company's online sales to be somewhat recession-proof, since its upscale customer base is less sensitive to shifts in the economy.

Golden Rules
Dell'Arciprete cited three keys to selling luxury goods online. First and foremost, the e-tailer must sell authentic, branded items. "It seems basic, but there are a lot of people out there selling knock-offs," he said.
Also, at Ashford.com and Diamond.com, buyers can purchase the current year's styles rather than close-out merchandise and can take advantage of a 30-day, no-hassle money-back guarantee.
"If you spend $600 on a Gucci handbag, you'd like to know that your final decision on whether to keep it doesn't occur until after you've seen it and had it in your hands," Dell'Arciprete said.
Finally, the sites offer free shipping on orders of more than $150. With an average handbag price of more than $200, buyers do not want to be nickel-and-dimed with shipping charges, Dell'Arciprete noted. Plus, they can avoid sales tax by buying online, at least for now.

Information = Sales
In fact, Dell'Arciprete argued that buying a diamond online actually can be a safer and easier process than going to retail jewelry stores in person. Since all of his company's diamonds are GIA certified, the buying process is standardized, and consumers can easily compare prices between diamonds listed on various sites.
Scott Todaro, product marketing manager for commerce at ATG (Nasdaq: ARTG), agreed that large-ticket items can be more convenient to buy online. One of ATG's customers, Best Buy (NYSE: BBY), sells plasma television sets online for up to $10,000, Todaro told the E-Commerce Times.
"Best Buy estimates that 20 percent of all sales they make are influenced through the online channel," he said. "Over 50 percent of the people shopping in their stores are shopping them online as well."
This synergy enables consumers to educate themselves about large-ticket items online before making purchase decisions, he added.

Getting Personal
Another ATG customer, luxury retailer Neiman Marcus, has invested in online technology to try to create the same personalized shopping experience over the Internet as in its stores.
Last Christmas, Todaro said, Neiman Marcus targeted male shoppers, who tend to wait until the last minute to purchase gifts and are therefore less price-sensitive.
"They tried to create a sense of urgency for male customers," he noted. "And they had a tremendous success ratio getting these customers to act."
The personalized online shopping experience includes push e-mail based on past purchases and browsing activity, loyalty programs and ongoing communications.
"For a high-end item, customers want the greatest level of service possible and the greatest amount of information possible," Todaro said. "It's our goal to make this happen online, just as it does in the stores and catalogs."
If luxury e-tailers can succeed in expanding their customer base while maintaining their existing core of recession-proof shoppers, they could secure their position as one of the linchpins of e-commerce.

Class work 10.03.2007

ANALIZING THE THREE COMPANIES' CONCEPTS (Innocentive, YourEncore, NineSigma).

Key differences

1. Different data collection:
-Innocentive posts to their recruited network of scientists
-YourEncore posts projects to retired corporate technical personnel
-NineSigma posts Requests for Proposals (RFPs) globally to an open network of inventors, universities, and small/medium/large companies

2. Different fee systems:
- Innocentive charges fee from the Innovation Seekers, who seek for the “best” solutions only
-YourEncore charges fee from
-NineSigma charges fee from all the Innovation Seekers who seek for info (the company connects the Seekers to the results)

3. Different approaches to treat the Solution Providers:
-Innocentive rewards the providers of the “best” solutions only
-YourEncore pays to each employee at a rate that is based on their base salary upon retirement. YourEncore adjusts each salary for inflation and adds a 20% premium to cover bonuses and other related non-salary components of their compensation. With these adjustments and premiums along with the fact that YourEncore pays the employer portion of payroll taxes, carries worker’s compensation insurance, and handles the time consuming tasks of marketing, placement and billing associated with assignments, the retired expert enjoys an attractive compensation for their services
-NineSigma doesn’t reward the Solution Providers


Shared concept
All three companies provide services in scientific research field by intermediating between Solution Seekers and Solution Providers.