THE ART OF BUSINESS: IN THE FOOTSTEPS OF GIANTS

Small family-owned business Musicmatch is racking up sales that are music to its ears. Competing against media giants Apple, Microsoft, and RealNetwork, Musicmatch has found a way to leverage its competitors to its advantage.

It all started when Napster made downloadable digitized music the rage amongst music fans everywhere. While Napster’s free-for-all model didn’t survive the influx of legal complications that struck, it did pave the way for companies like Musicmatch that offer digital jukebox software, which acts as a conduit between the record industry and music lovers.

Musicmatch offers a free software program and a monthly subscription program that allows users to listen to any of up to 600,000 songs online while their subscription is active. They can also send their playlists to friends, who can listen to each song up to 3 full times, even without a subscription, before the songs time out. After that, people can either buy the song outright via download, or subscribe to the monthly program. Users can also buy single tracks or whole albums outright.

What makes Musicmatch’s offerings so unique, and how did they leverage their competitors to create more subscribers and business for themselves?

• Ride an Existing Trend: Napster’s free model created a frenzied hunger for instant access to downloadable music tracks. Musicmatch jumped on the bandwagon as quickly as competitors RealNetworks, Apple, and Microsoft. 
   
• Create a Win-Win Situation: While record industry executives long viewed the Internet as a possible channel for distributing songs, their experience with Napster’s free-for-all model made them downright cautious. Musicmatch’s trial listening program offered a legal way for music lovers to share music while ensuring that the artists were still paid. Industry execs have jumped on the opportunity. Musicmatch now has over 600,000 songs in its library. 
   
• Pick Big Partners: Musicmatch’s model is so good (with high approval ratings from the music industry) that computer giants Dell and Gateway are shipping copies of the software with every computer, creating a massive distribution channel. 
   
• Stay Focused: Musicmatch CEO Dennis Mudd is quoted in USA Today (August 3, 2004) as saying of his company’s rivals, “All those companies are spending their time and energies working on lots of products. We’re the only company totally focused on music. And we have the matching technology.” 
   
• Take Action Fast: When the company’s product managers spotted the opportunity to create a legal way for music lovers to share music, Mudd jumped on it. It took only 4 months for him to convince major industry execs to jump onboard.

MusicMatch is delighted to play David to rival Goliath’s. Nimble and agile, the company is running circles around the competition by co-opting their strengths for its own. They have followed Sun Tzu’s ancient wisdom about leveraging the enemy on the battlefield, as described in the recent business book The Art of Business:

• Locate the resource you want (customers, sales, recognition, etc.) and where it exists in the greatest concentration (even if it’s in the enemy camp). 
   
• Decide who controls those resources, and what predictable patterns exist within and around those resources. 
   
• Find a way to channel those resources to your benefit.

Musicmatch decided it wanted not only users to subscribe to its system, but also licenses to distribute digital tracks from the record industry. They found six ways to leverage their competitors, partners, vendors, and potential customers to create a tidal wave of market leverage. The result? Mudd predicts that his company will sell $50 million worth of products and services this year. That’s music to anyone’s ears!