Changes at Pandora

March 28, 2006

The music player of Pandora has undergone some changes, which van be read on their blog. Pandora has updated their playlist engine to play a greater variety of music on the personalized stations. They mention the following on the blog:

"For some time we've known that we weren't playing the full breadth of songs in the Music Genome Project collection. This was a problem with our approach to playlist generation; it really didn't have anything to do with the size of the collection itself. We've been hard at work on this, and tonight we're rolling out a significant upgrade to the playlist generator. Don't expect to notice a big change right away, in fact it might take a few hours of listening before you notice at all, but it's there. Your stations really will be playing all kinds of music that they wouldn't have before. Hope you enjoy the new music."

This is relevant information regarding my research, where variety is a major subject.

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Mercora

March 16, 2006

Another company which offers online content is Mercora. What is Mercora exactly? This is what they mention on their FAQ page:

Mercora is an Internet software system that has several major functions, including a universal Internet radio tuner, a individual webcasting module and personal interaction capabilities including instant messaging, group chat and forums. Mercora's software conforms to copyright law to enable the legal webcasting of music. Read more about it on our product pages. Mercora is pronounced Mer-co-ra and rhymes with "flora".

According to Mercora, they give access to the largest catalog of legally accessible music anywhere, the unlimited discovery of CD quality music from people around the world, and a large and fast growing community of music lovers. To be continued…


‘la la’ Returns Variety to Music

March 15, 2006

The Most Extensive Music Catalog Available for Trading and Purchase Goes Live.

According to the Recording Industry Association of America (RIAA) nearly 30,000 album titles are released each year. With nearly 3 million available titles, the largest reseller, Wal-Mart, stocks only about 5,000 titles per store or less than 1% of available music. With choice quickly disappearing, 'la la' opens the largest, most diverse music store on earth with 1.8 million album titles available for trade at $1 each – same price as a song download except the extra penny buys the rest of the album.

'lala.com' works like an online music co-op where members trade-in CDs they have for CDs they want from other members. CDs are sent through the mail in pre-paid envelopes provided by 'la la'. "Trading CDs is an affordable way to experiment and try new music," said Bill Nguyen, 'la la' co-founder.

If an album is not immediately available for trade, members will be able to buy the CD new or as a digital download at retail prices. Nguyen continued, "When you find that album you can't wait to enjoy, 'la la' will offer it as a new CD or a download."

Source: Lala.com.

This idea seems very interesting for my research. I will keep track of their progress on a regular basis.


Working definition pure customization

March 13, 2006

Mass customization is a term which is often used in literature, basically referred to as mass production of customized goods. It seems there is no commonly accepted definition for the term. This gap was also identified by Kaplan and Haenlein (2006), and they try to close it by presenting a definition of traditional mass customization, and use that definition to define mass customization for electronic mass customization. Because during this research customization is supposed to be measured, the definition of electronic mass customization can be used to express what is being measured without any misconceptions.

Based on three findings, a definition of traditional mass customization was defined (Kaplan and Haenlein, 2006). First, mass customization should be applied to products only, second, mass customization should only be used to describe company–customer interaction at the operations level of the value chain and finally, mass-customized products should have production cost and monetary price similar or only slightly higher than those of mass-produced goods. Earlier, Tseng and Piller (2003) used somewhat comparable levels of mass customization by defining a differentiation level for customized products or services, a cost level like mass production efficiency and a relationship level to increase customer loyalty. Kaplan and Haenlein (2006) argue that customization can only be practiced at the product and not the service. Their definition is as follows: “Mass customization is a strategy that creates value by some form of company–customer interaction at the fabrication/assembly stage of the operations level to create customized products with production cost and monetary price similar to those of mass-produced products.? Kaplan and Haenlein (2006) use the dimensions product, player and process which can all be physical or digital identified by Choi et al. (1997) to define pure electronic mass customization.

Loebbecke (1999) argued however that the dimensions of Choi et al. (1997) cannot be used for a pure intangible product which is the case for this research. Loebbecke (1999) proposes just as Choi et al. (1997) that a product can be either physical or digital, but the player or the consumer is always physical. Loebbecke (1999) instead uses a characteristic of information products as a new dimension, and introduces bundled or unbundled value. The process dimension is kept but reformulated as off-line and on-line. The definition of pure customization in this research is based on the definition of Kaplan and Haenlein (2006) and uses the dimensions of Loebbecke (1999) because this research focuses on pure intangible products. The above results in the following definition: “Pure customization is a strategy that creates value by some form of supplier–consumer interaction at the fabrication/assembly stage of the operations level to create customized products with production cost and monetary price similar to those of mass-produced products, where the product is digital, the process is online and unbundled content?. Pure customization within these dimensions is shown in the image below.
Pure customization

Figure: Dimensions of Electronic Mass Customization (Kaplan and Haenlein, 2006) adapted from Choi et al. (1997) and adjusted according to Loebbecke (1999).


Amazon Considering Downloads

March 10, 2006

From New York Times: "Amazon.com is in talks with three Hollywood studios about starting a service that would allow consumers to download movies and TV shows for a fee and burn them onto DVD's, according to three people briefed on the discussions."

Amazon now becomes interesting for my research. They already understand customization and personalization, but now they plan to offer pure digital content, they are a perfect example for a case study.

Earlier Amazon.com announced to compete with iTunes. Read more.


Goal of this research

March 8, 2006

The goal of this research is to make an addition to existing theory about consumer surplus in the Internet economy, and in particular the contribution of customization. As became clear in the literature, not much research is being done about customization for pure digital products and services in the Internet economy. The majority of the available research is about e-commerce where tangible products are being sold or delivered through intangible services, while other research focuses on mass customization. Also existing literature mainly focuses on supplier surplus. This research will address pure intangible products, in other words on-line delivered content where both product and channel are digital, and instead of the supplier surplus, this research focuses more on consumer surplus.

The goal of this research is to identify characteristics to support customization for suppliers in such a way that it can decrease search costs for consumers dramatically, so variety or increased choice can be maximized. Variety, or increased choice, is positively related to consumer surplus (Brynjolfsson et al., 2003). I would make an addition to their findings by relating increased variety with customization and personalization, which can amplify each other in the Internet economy. The consumer should benefit from this increase in variety and customization, while search costs are being lowered dramatically.