November 5, 2008

Dell is offering the pre-loaded music bundles (announced a few weeks ago). Earlier today I browsed around the site and looked at the bundles and how they are integrated into the buying process.

The songs are all taken from Universal Music Group's catalog and have two sizes and price points: $25 for a 50-song bundle or $45 for a 100-song bundle. Each bundle has been created for average music fans and for maximum appeal. Since there are only six bundle themes, consumers aren't going to get bogged down in decisions.

The bundles have themes that describe the type of music and most can be purchased as a 50-song or 100-song set. "Sweatbands & Leotards" has uptempo rock, funk and disco. "Afternoon Delight" has an odd mix of songs that are supposed to "reinvigorate your afternoon." "The Classics" is a collection of classic music. "Blues Masters" has blues tracks ranging from BB King to Junior Parker. "The Freshman" is a 50-song collection from UMG's newer and/or more obscure artists (Nick Drake seems out of place here).

When buying a computer, the music (and video) bundles are offered after the sound card options and before the computer bag add-ons. The few options (six music bundles) is a manageable number that won't slow down the order process.

There are a couple key things to point out. First is the benefit of the bundle -- it's a win for both labels and consumers. Labels get greater incremental revenue, and consumers get a good amount of music for about half the price it would normally cost to download. While there are substitutes out there for $0.99 iTunes pricing that are competitive to the cost of these Dell bundles, the target consumer here -- the more casual, infrequent buyer -- is going to be less aware of them.

Second, these music bundles are part of a greater bundle -- the computer and its added components. Dell is very good at bundling goods and framing prices in order to maximize revenue. An additional $25 or $45 for a music bundle is small relative to the total cost of a computer. Pricing the goods as a bundle could result in greater sales than selling them goods separately. At least that's the goal.

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Posted by Glenn at 3:19 PM | | Universal Music Group

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