The Wireless Music Store Clerk

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.

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