Tuesday, November 27, 2007

Making money on the internet

I was reading about Youtube on wikipedia (the article) and found an interesting section about how they make money on YouTube (advertising, which I was talking about on some earlier post). Apparently there is a book about this written in Dec 2006 entitled Wikinomics by Tapscott and Williams that talks about this exact thing. I thought it was cool and really want to read the book now.

Another page I found, said that sales for Classical music was actually up (as seen from the Nielsen SoundScan report comparing 2006 sales to 2005 sales which they make available in the article) due to internet sales (this they did not provide a source for). The article basically espoused Chris Anderson's view from his book The Long Tail: Why the Future of Business is Selling Less of More. It basically says that physical record stores cannot keep a huge stock of classical CDs because they won't sell well and have to make room for popular CDs that sell well. With the internet, it is much much cheaper to keep a large inventory so people who are looking for a specific CD will be able to find it online. Though they won't be able to sell very many of each CD or song, since the inventory is so large, they will make pretty good money.

And a note about the Nielsen SoundScan sales report - it is the source for Billboard ratings, and the RIAA actually uses an independent sale-tracking system. The Nielsen report tracks sales from retail sales (like when a barcode is scanned), mass retail, and online sales, only exculding some independent retailers and online outlets. The RIAA report tracks shipments, according to the wikipedia article, which is sourceless for this point. Makes me wonder... how could they say they have lost 300 million due to piracy?

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