Download Cards
For traditional retail stores around the world, prepaid cards are generating billions. All of the big players in the music industry are now starting to offer pre-paid download cards to increase gift giving and to increase exposure to new customers.
Itunes has reported that in December and January of this year they sold 8 times the amount of songs that they did the previous Christmas. Anyone looking at this statistic can only draw one conclusion behind the sudden increase in sales: prepaid gift cards for the Christmas season.
These cards can be increasingly profitable for companies because users usually do not use the full value allotted to the card as well as being an amazing promotional tool.
Play It Tonight will probably be making better use of pre-paid cards just as the big names in the industry already have. But is this really where the industry is heading? Are these cards really going to save the music industry? This may be appliccable for the mom that doesn’t know what to buy her son for Christmas and Itunes but are the buying habits of DJs really conducive for this type of a business model?
July 3rd, 2007 at 3:58 pm
Sean,
Firstly, I want to say that online music prepaid cards are really great gifts and they’re probably the easiest thing to buy! I would love to see them available on Play It Tonight!
I think attributing the increase in sales with prepaid gift cards means that more people than not were actually using these cards. This is because the Generally Accepted Accounting Policies (GAAP) say that revenue for gift cards can only be recorded when the user redeems them. And it might be a year or two (or at the expiration date) before sellers can fully record the revenue of an unused gift card.
What has been offered at the iTunes Store for some time now is the ability to gift specific items (i.e. songs, albums, videos, etc.)
This is definitely a prefered method to gift for the seller as they can record the revenue in their books on the spot.
But I also think this would be the prefered method to gift for DJs, or any other hardcore listener. These users not only know exactly what they like, but they are also well aware of their friends tastes.
So I do believe that there is a place for prepaid online gifts not only for the average user, but for the sophisticated as well.
-Tano
July 3rd, 2007 at 11:04 pm
Great ideas about the gift cards.
I don’t know about DJ’s giving each other PlayitTonight gift cards for their Christmas presents, but I think they would make interesting promotional materials.
I was at a web design type conference early this year, and got a freebie from a stock photography website… the next day I redeemed my free pictures and checked out the site. I’ve since frequented this web site and bought more credits, and wouldn’t consider going anywhere else!
Might the same idea apply with the dance industry… a couple free songs to some key buyers of the music via cards or coupons, to get the word out?
Gwyn