After the idea of mass customizing worked with jeans, shoes, and especially computers, it made sense that music CDs would be the Next Big Thing for this method of selling individually tailored products to members of a large, diverse audience.
When K-tel announced in April that it was getting into the biz, its stock soared. Online music seller N2K has also said it will get in on this potentially lucrative act.
"CDs are great product to mass customize. Anything you can digitize you can customize, once you enter the realm of 0s and 1s," said Joe Pine, mass customization guru, co-founder of Strategic Horizons, and coauthor of the 1993 book Mass Customization.
Mass customization has been hyped as the next wave in consumer products ever since the term was coined in 1987. But allowing consumers to pick the 12 tunes they want on their customized CD is more complicated than it sounds.
Licensing issues threaten to tank the concept. Presently, no major labels have made their latest hits available, although all custom-CD vendors will tell you that they are "in talks."
A record label's bread and butter are its latest singles. According to analysts, most are unwilling to license their songs until they've squeezed out every last penny in radio play and single sales -- which usually takes about two years.
And even if the labels acquiesced to licensing recent singles, they can place "coupling clause" restrictions that guarantee, for example, that Hanson's "MMMBop" won't ever follow Madonna's latest siren song.
That leaves custom-CD-makers left with piles of oldies, from Ella Fitzgerald and Marvin Gaye to '80s hits, but nothing remotely current aside from the rare indy labels or unsigned artists.
But one company thinks it's found a workable niche.
New York-based CDuctive isn't waiting for the large record labels to readjust their thinking. While the big hits aren't available for custom CDs, CDuctive is leveraging a music genre that moves as fast as the new economy itself.
CDuctive focuses on tunes ranging from ambient to trip hop, straight-up techno, drum 'n' bass and lounge, as well as downloadable samples. The company works mainly with smaller labels, but electronica's hypershort shelf life helps convince labels of any size that another revenue channel is worth signing away some of their recent music.
Club music has a short but intense life, and fans tend to be intensely loyal.
"Our fans buy Ubiquity records just because they are put out by us. But not a lot of our artists can get a lot of press, because we can't afford to advertise in Rolling Stone," said Dave Smith, head of production at the San Francisco-based Ubiquity Recordings, which has licensed some of its catalog to CDuctive.
"So it's good for people to listen to our singles, and they might get the full album later."
Indeed, that's what mass customization proponents like Pine anticipate. "Most music producers don't like the fact that a customer could choose to want only one song off an entire album. But it's a short-sighted view," he said. "I liken it to when movie distributors feared first cable and then rental videos. This will allow the companies to get incremental revenue from people who don't buy whole albums, and who might also buy it later."
Within its narrow slice of the music pie, CDuctive has found the infamous coupling clause has lost much of its bite. "Our genres are more suited toward compilation because we've chosen the most respected labels," said Alan Manuel, co-founder of CDuctive.
And CDuctive's product lends itself well to ecommerce. Most electronica fans are digitally inclined and Net savvy. "It's part of the ethos of that culture -- it's underground, it's digital, and there's a higher percentage of them online," said Pine.
Manuel wouldn't reveal sales figures, but a few bigger labels and artists are beginning to take notice of CDuctive. Ubiquity just did their first MTV video for the Bugs song "About You," and some of their CDs are available from the likes of CDNow. CDuctive recently signed some titles from the London-based Creation Records, of Oasis and Primal Scream fame. They also have Roni Size's label Full Cycle on board.
"We don't necessarily want to be small, we just want to get a good portion of every major's catalog -- the dance and electronic portion," said Manuel. He added that although the major labels are interested, they are waiting in the wings. "The challenge for us is to build up that volume."
"We think it's smarter to provide a convenient, high-quality product at a reasonable price. We think our prices are competitive when compared to the alternatives -- low-quality pirated works, the inconvenience and questionable legality of burning it yourself, or purchasing several full-length CDs just to find new artists," said Manuel.
Pine thinks that piracy will proliferate until custom CDs become a reality. "The black market always develops where needs are not [met]. The big labels will encourage this by not doing this themselves," he said.
