How Tower Records seized defeat from the jaws of victory by foolishly bundling media

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Ironically, back in 1942 you could buy a single at the original tower records for a dime.

 

Back then it was actually "Tower Drugs" because it was a drug store that also sold records. Factoring in inflation this equates to $1.52 today. For the millennials out there, a single was a physical record with a single song on it. 

 


 

Currently in iTunes, a single track costs $1.29. This is kind of astonishing considering that over 70 years ago $1.52 would get you a physical product that costs money to manufacture, while today it costs almost nothing for Apple to make millions of copies of a song.

 

 

Then in the early 60's a couple artists came on the scene that changed the way we bought and sold music. Specifically the Beach Boys. 

 

 

Their debut album "Surfin' Safari", pictured above, evoked a shift to selling LPs (full albums) rather than singles. Instead of spending pennies on a single, baby boomers were now shelling out $5.99 an album. 

 

And just like that, the first media bundle was born. All the creators and distributors of LPs rode this wave evoked by the Beach Boys straight into a pool of huge profits. 

 

Fast forward 50 years and we all know the final outcome of Tower Records.

 

 

Perhaps the most interesting thing about all this is that even though you can easily download music for free today at a relatively low risk of actually getting caught, iTunes is still generating an astounding 5 billion annually from their music. Even more startling is that they're only selling one song at a time for almost the same price that tower records did back in 1942! 

 

How is this possible?

 

Let's rewind back a few years to 1999. When Napster entered the scene I was 15 years old and still remember it like it was yesterday. Back then the Internet was painfully slow. You may notice in the screenshot below, a handful of the songs are from a 56k modem.

 

 

At that rate, downloading a single song would often take hours. Downloading individual songs rather than entire albums transpired not only out of the desire to only have a particular song, but also out of time constraint. In many ways downloading a song was more inconvenient than going to a store to purchase a CD.

 

An argument could easily be made that the reason Tower Records went out of business is because they were charging upwards of $25 for an entire album, when someone may have only wanted one song on that record. 

 

A majority of us enjoy listening to music while driving, but wiring in your computer into your car was no small task and is an idea probably worthy of a darwin award. It was still much simpler to drive to the store and buy a cd that can conveniently be used in a car's CD player.

 

 


Back in 2002 a 1X CD-R burner was insanely expensive and would still take 90 minutes to burn a CD  that cost $2 per disc. Jump ahead a few years later when burners are much faster and blank cd-r's are  a lot cheaper. Even today you can pay up to $0.99 for a blank CD ($1.88 with shipping).

 

 


A shift occurred at that point where it was worth the risk for people to download music illegally for the reward of putting songs they actually wanted to listen to onto a single CD. 

 

I don't know about you, but for me it still seemed like a lot of work...but I am also lazy. If I had the option to purchase a single song on a CD for 99 cents, I would have chosen it rather than the risky and laborious process of downloading music and burning it onto a CD. 

 

Personally it was the bundling of a bunch of crappy music with one or two great songs that drove me away from tower records. What about you?

 

 

Why hoot doesn't bundle media.

 

If you look at Google from a purely business perspective, it makes money selling ads and does so through a really awesome search engine. Considering hoot in the same manner, we make money publishing and producing media. We just happen to do that by delivering 3D product experiences to a brand's consumers.

 

One of the most valuable lessons I learned from my hockey coaches growing up was to skate to where I thought the puck was going to be rather than where it was actually going. I now have the same perspective  about business, as you may have derived from this article, and I believe bundling media is a bad play.

 

This is why our charges are separated and allow for independent use of our hosting, viewer, and our 3D photography services. We also only bill for what you use, and what we photograph. It not only keeps us honest and you happy, but it requires our 3D photography, hosting, and 3D viewer to always be world class.