Musicland Bids On Web

The Musicland Group is sold on the auction business.

Inspired by eBay, Minneapolis-based Musicland has launched an auction site for the 2 million members of its Replay customer-loyalty program.

The site, called Showbidz, follows in the footsteps of Universal Music Store, a venture forged last fall by eBay and Universal Music Group (Billboard, Nov. 1, 2003). Both sites allow users to bid on such items as concert tickets, backstage passes, meet-and-greet sessions, autographed guitars and other limited-edition merchandise.

On Showbidz, Replay members can bid on items using Replay Showbidz Bucks, which they earn by purchasing products from Musicland's Sam Goody, Suncoast or Media Play retail or online stores.

Replay director Brian Miller says Showbidz is a means to strengthen Musicland's relationship with Replay members, who visit the retailer's stores twice as often as the average customer.

Mike McGuire, an analyst with Gartner Research, lauds Musicland for linking the online and offline experiences.

"We're still in the middle of the transition to digital music," McGuire says, "and it's important for forward-looking retailers to make a place for themselves in the online world."

This type of program, he adds, will make it easier for retailers to differentiate inventories as online distribution and consumption continue to grow.

UMG is pursuing a similar strategy with its Universal Music Store. A separate eBay category, the store is meant to generate consumer interest in new albums from UMG artists by offering exclusive merchandise. But it also serves as an alternative revenue stream for UMG by tapping into eBay's estimated 45 million-plus active users and 104 million registered users.

Jocelynn Kilbourne, music category manager for eBay, says niche products like CD boxed sets and vinyl LPs are a popular draw for eBay users who visit the Universal Music Store.

In addition to UMG's hand-picked Universal Music Store inventory of 8,000-plus items, eBay lists more than 1.3 million music, film, videogame and memorabilia items on its site each day.

Miller says eBay's success encouraged Musicland to create its own auction site. He sees Showbidz as "a natural extension" of the Replay service, allowing Musicland to "reward customers for something they are already doing with us."

Miller expects the Replay member base to grow substantially in the coming year as Musicland rolls out additional member benefits.

McGuire sees Showbidz as a means of customer retention more than a growth strategy. However, he believes the site can connect with customers in ways eBay cannot, in part because of Musicland's brick-and-mortar presence.

"The world of eBay is getting cluttered, and it's starting to assume some interesting brand properties that may not be positive going forward," McGuire says.

The Showbidz site launched July 1 with such highlighted memorabilia as a Joe Nichols autographed guitar and CD, a guitar signed by members of the Cure, limited-edition "Shrek 2" pictures and a "Love Actually" DVD signed by Hugh Grant.