IQ News: Rhapsody In BMG: Music Service Expands Online

BMG Direct, one of the biggest direct mailers in the country, has begun shifting more of its music club business online.
The evolution to using the Internet as a more central distribution mechanism comes after two years of the net being used as an alternative to the direct mail distribution of BMG Music Service, a consumer music club. The service initially sells 12 CDs for the price of one to enrollees, and then offers new selections on a continuing basis.
“For the foreseeable future direct mail will still be powerful,” said Elizabeth Rose, senior director, strategic development, BMG Direct. “But I think there will be an interesting shift in how much business is direct mail verses the Internet.”
The Music Service club has about eight million members now; 400,000 of those are online. Since relaunched last January, the site has been adding about 100,000 members a month, according to Rose.
The music club “is one of the most important divisions of BMG,” Rose added.
Conducting club business on the Internet has many advantages. The online club includes 12,000 titles from BMG-owned labels such as Arista and RCA Records as well as other major labels and several independents. The entire music catalog is too long to send out regularly through direct mail, but can be presented on the Web site. The site also offers an advantage for BMG because users can buy music more often. Direct mail, which is usually sent out every three weeks, only offers club members the chance to buy music when the mail comes. Online club members have been buying more CDs than club members participating through direct mail.
Rose anticipates that an online club would be more economical to operate than direct mail, and says the company will slowly expand its online staff as the number of online music club members grows. “We are still a small piece of the music service,” Rose said. “We’re seeing great results, but we can’t get a disproportionate share of people or resources. It’s almost a pay as we go sort of thing. As we prove it adds to the business, we’ll add people.”