The Hot Seat: Dan Pelson, Executive VP, Sony Music Entertainment

Published in The Music Network

 

The reports of the CD format’s death are greatly exaggerated. In decline, yes. But Dan Pelson would argue it’s not on the way out. An Internet and media entrepreneur with a mind for data analysis, Pelson oversees Sony’s global “Direct to Consumer” operations, which include the Popmarket sales platform. At Popmarket, CDs are very much the life of its business.

Formerly Senior VP of Global Consumer Marketing at Warner Music Group, Pelson served with a handful of Internet start-ups including Bolt, and he founded the music-focused social network uPlayMe. Pelson graduated from Colgate University with a BA in political science and economics, and started his career at Sun Microsystems.

What is Popmarket and why is it relevant to the Australian market?
It’s a “deal-of-the-day” online music store that offers products from the world’s most iconic artists in extraordinary, premium packaging at fantastic prices. Many of these products had very limited production runs or are available at such special prices that we can only enable fans to purchase certain offers within a 24-hour period, and even then, we often sell out of the available inventory. We also provide collectible music bundles that are specially curated for the Popmarket audience. We’ve seen great traction in the Australian market over the past year.

In an increasingly digital world, a business which focuses on physical product seems counter-intuitive? Why go with a CD-focused business model?

In a digital world, it’s not unusual that there’s a growing fan base that is seeking something more tangible, something that they can literally feel. We’re offering fans access to the kinds of products that in many cases will become permanent objects in their homes. We also find that our customers use Popmarket repeatedly as a source for gifts.

Is Popmarket really just “preaching to the converted” or is it realistically grabbing young, new music fans?

We do believe that Popmarket will continue to grab new music fans. There’s clearly a huge and growing need for the utility that digital downloads bring to young fans, but the passion for artists and their music runs just as deep for teens as it does for older consumers. We’re tapping into that passion.

So who is Popmarket’s audience?

Our customers are definitely “super-fans”, but not necessarily of “another generation.” The range of products offered definitely provides a musical wonderland for the over-30 set, but there are plenty of younger consumers who are seeking special packaging, vinyl, and other hard-to-find offers for current artists. I believe there’s an untapped market that wants a premium, high-touch experience. Today’s retail environments are typically about mass, cold efficiency. But we feel we’re making the process of buying music fun and exciting once again.

According to ARIA’s latest trade figures, CD albums accounted for about 60% of the entire Australian record market in 2011. Looking ahead, say 10 years, what size chunk of the market do you think CD albums will hold?
CDs remain the dominant format for music, but clearly the world has changed and continues to evolve. While it’s hard to predict the market share that formats will hold in 10 years – or 5 years – the only certainty is that things will continue to change. Popmarket addresses the physical market, which we believe will survive. The definition of “physical” will evolve as well, and fans, labels, and artists themselves will help define what they want the physical music experience to be over time.


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