The Intangibility of Music in the Internet Age

As music consumption increasingly moves to the Internet, music as a product becomes even more intangible and service‐like. This tends to create a number of marketing problems. Through a review of services marketing literature and illustrative observations of online music services, this paper explores the intangibility aspect of online music and assesses how online music providers deal with the intangibility of their offer. The paper concludes that providers of online music largely utilize services marketing strategies to manage the intangibility of their products, although difficult issues such as pricing and consumer valuation of tangibility remain to be solved. Notes 1. The manufacturing cost of a new‐release CD album (sold at a retail price of $12–$16) is about $1 (May and Singer). The major part of the costs involved in music products is attributed to royalties and advances as well as marketing, distribution, and overhead costs (ibid.). 2. The study indicated the acceptable price range for a digitally distributed, full‐length album download is between $5.00 and $9.99, while a new, full‐length physical CD release had an acceptable price range of $9.99–$14.99 ). 3. This service was closed 31 July 2006. The following statement was issued on mycokemusic.com: "In 2004, the digital music scene was just developing and the only way for Coke to offer access to music downloads was to open our own store. That's not true today and there is no need for Coke to continue to run a store" (quote from 〈http://www.mycokemusic.com〉 accessed 18 October 2006). 4. Consumer views have been studied in reports (e.g. Ipsos‐), online forums, and news articles (at, e.g., 〈http://di.se〉, 〈http://www.idg.se〉, 〈http://www.svd.se〉, 〈http://diskutera.aftonbladet.se〉, 〈http://news.bbc.co.uk〉).