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Editor's Notes

1. “ Hello! We are going to talk about the company Soundbuzz, the first digital music retailer in the Asia-Pacific region in 2000. Unfortunately, this company doesn’t exist anymore since 2009 and during the presentation we will realize why it is so.”
2. “ Moreover, we will answer some questions dealing with Soundbuzz’s business strategy and the critical elements of an online music service.”
3. “ First of all let’s consider the Porter’s competitive forces model and discuss Soundbuzz’s strategies for dealing with them.”
4. “ New market entrants. The main barrier for entering the market legally is licensing deals with music publishers and record companies, which are always not so easy to do. The next step is launching an online music store. However this is not a big problem nowadays. Soundbuzz applied the following strategies for better performance in comparison with possible new market entrants: In 2000 Soundbuzz signed a digital music deal with the Internet portal Lycos Asia to distribute music on its networks They signed many licensing agreements with famous record companies (we will see them on the following slides) In 2001 it launched a Business To Business model. “
5. “ Substitute products. These include: Music files provided illegally Freely shared files in local networks Digital music based on a monthly fee Music compact disks Television and music channels, radio For competing with these substitutes Soundbuzz was maintaining and updating a big mediabase and creating partnerships with mp3 player manufacturers for delivering music to customers through their devices. “
6. “ The customers of the company are individuals, mp3 player manufactures and from 2001 other music portals such as Hewlett-Packard’s digital music service. The strategies for attracting and retaining customers were: The Business To Customer model: selling the music directly to the customers through their own website Diversification in the range of products (including digital services for mobile devices, video music etc.) Partnerships with payment provider Trivnet and Internet Service Providers (ISPs) for convenient multiple billing channels Partnerships with mp3 player manufacturer, such as Creative Technology and Reigncom.”
7. “ The suppliers of Soundbuzz are record companies, independent record labels and unsigned artist as well. Soundbuzz created partnerships with all major labels – Sony, BMG, Warner Music, EMI and Universal – provided Digital rights management technology and even an Artist-upload interface for new unknown musicians.“
8. “ Soundbuzz made some important steps to become a strong competitor in the digital music market. As we ’ ve already told there were partnerships with Lycos Asia, major record companies, mp3 player manufacturers, maintenance of big data and mediabase, implementing both B2C and B2B models and more. But still such strong competitors as Nokia and Sony Ericsson music stores threatened the success of Soundbuzz which was comparatively smaller and was only accessible via the Internet Explorer browser. “
9. “ So, as we can see Soundbuzz applied three main strategies: product differentiation, focus on market niche and customer and supplier intimacy.”
10. The online music market is still growing. In the past few years however, there were great changes in the business models and type of distribution, new market entrances are usual and a lot of services are shut down as fast as the are coming. So let us have a look at the critical elements for an online music service. Due to the growing mobile platform, the music must be in a universal format for different devices, there should be a large database and different payment models. Especially the last point is open for discussion because some people don’t want to pay so much for music. Streaming is becoming more popular.
11. Soundbuzz made an effort to meet the critical elements of an online music service. We can see that in the value chain model. Their primary activies were: Building a large database with major record labels and independent artist Process and distribute music and ringtones on different devices Making partnerships and offering different payment systems To do these supporting activities they operated web and media servers and secured the files via DRM. By selling the music to their customers they generated their revenue.
12. It complemented the objectives of the Soundbuzz in expansion of music offerings.”
13. “ In 2008 Motorola signed the agreement to acquire Soundbuzz. The main aim was to to expand thei music service Motomusic beyond China into India, Southeast Asia, Australia and New Zealand. ”
14. Although Soundbuzz made such an effort to stay on top of the market, the competitors eventually became too successful. Even Motorola could not rescue them. This was because of different reasons. Illegal shared files are still popular. Their business model was old - Customers wanted more than just music. The competitors attracted their customers with a broader offering. Moreover Motorola also struggled because of the smartphone market, especially the big competition of Apples iPhone.
15. Soundbuzz could or should have made some improvements. Especially iTunes is a good example. There you can get more media, like videos, tv shows, ITunesU, books, apps, podacasts. There is one ID for purchasing everything and the platform can be used to organize and play the media as well. It works perfectly with all iDevices and even Windows. With the new iCloud service, music is accessible from everywhere. Also streaming services becomes more and more popular. Listening to music for a monthly or (quarterly fee) Online playlists and social media sharing options.
16. Thank you for listening. Any questions?