e.Digital Corporation (fka EDIG)

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OT Road Test: Taking the Music for a Quick Spin
It’s not easy for brick-and-mortar music retailers these days. More people are downloading free music from the Internet. Online music sellers are slashing prices, eating into profits. Business is particularly difficult for enormous music outlets like the Virgin Megastores that devote tons of floor space to obscure recordings by world musicians. How can Virgin hope to sell enough of these eclectic tunes to turn a decent profit?
Virgin may have found an answer. Jan de Jong, the company’s vice president for information technology, persuaded his bosses to try out electronic kiosks in Virgin’s stores that allow customers to sample 30-second snippets from a database of approximately 250,000 CDs. The experiment began last year in two of the chain’s outlets and was considered a huge success. Virgin executives found that when customers come into a store with a specific album in mind, they’re three times as likely to actually purchase the product if they give it a test drive. “The biggest problem we have as a music retailer is that we sell a product that is shrink-wrapped,” says de Jong. “You can look at it, smell it and see it, but not hear it.” The company now has about 15 of the $5,000 kiosks in each of four stores, and plans to install them in every one of its 22 outlets in the United States and Canada by next year.
The kiosks also help customers help themselves, a big advantage considering the enormous size of Virgin’s music stores, which average about 60,000 square feet. “Retailers can no longer hire enough people to keep the store open, much less to understand all of the different styles, from Celtic to rap,” says Dan Hopping, one of the IBM retail specialists who helped design the technology. “The kiosk is always on and is always an expert.” In addition to track sampling, the kiosks provide reviews from industry magazines like Spin, Vibe, Mix Mag and Rolling Stone, as well as pictures of the artists, track listings and album credits.



The music is streamed into the kiosks via the Internet by a database company called Muze. Some Internet companies allow customers to download songs, but few offer the depth of selection that Virgin boasts. At Amazon.com, for example, you can sample only 15,000 songs, just 6 percent of the total available at a Virgin store kiosk. The process is simple, too. Customers scan a CD’s bar code and tap the touch screen to choose the song snippets they want to hear. Susie Phillips, 31, was wearing out the kiosks recently at the Virgin Megastore in New York’s Times Square. “I was like, ‘Woo-hoo!’ when I saw it. These are artists that I know, but albums that I’m not familiar with, and I don’t want to spend 80 bucks without hearing it,” said Phillips, waving the four CDs she was thinking of buying. “It’s instant gratification.” For Virgin executives, the instant gratification comes when customers like Phillips head to the checkout line.
—Suzanne Smalley

http://www.msnbc.com/news/741058.asp
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