Chapter 2

“AMZN: CustomFlix and Amazon.com Launch CD on Demand Service” Sept.19/06
[http://technology-news-earnings.blogspot.com/2006/09/amzn-customflix-and-amazoncom-launch.html]

CustomFlix is a subsidiary owned by Amazon.com, Inc. It’s just like their DVD on Demand service but instead of movies they offer music from independent musicians, artists, and labels. Their goal is to cater to the needs of the independent musician community as well as specific labels that want them to distribute their music. This is a relatively new way to share this type of music to millions of worldwide Amazon.com customers. It is actually quite a clever system because it benefits the suppliers as well. They use a manufacture-on-demand approach that permits the musicians and labels to have a distribution method that’s less expensive and still keep the same flexibility over their content. CustomFlix also provides a Future-Proof Archive service that supports more advanced formats. Even support for HD-DVD and Blu-ray have already been announced. All in all, it really is a win-win situation.

Relationship to Ch.2

As long as there is some kind of demand for a product or service, it’s almost certain that there will be supply. In this case, Amazon.com believes that there is sufficient demand to provide a service. Although the market might not be very big, it is still possible to make a profit. However, I think the intentions of the independent musicians are more to have people just listening to them rather than being paid a specific amount of money.

If demand ever goes up, and at this point it’s still hard to say, I don’t think the system of how the CDs are supplied would change because it would be counter-productive to the aim of the service. If the suppliers were anything other than independent musicians, prices would increase along with demand in a heartbeat. Corporations wouldn’t let something silly like ideals and individuality get in the way of their sales. And as far as elasticity goes, CustomFlix is without a doubt inelastic. Sure, it’s cheap, but it’s also completely unnecessary and there are more than a few substitutes. The best way to go about it is probably to try all of them and stick with the one you like the most.