Process
The Processelement of the marketing mix refers to the methods and procedures compa-
nies use to achieve all marketing functions such as new product development,
promotion, sales and customer service (as described in the previous section). The restruc-
turing of the organisation and channel structures to accommodate online marketing
which were described in the previous chapter are part of Process.Physical evidence
The Physical evidenceelement of the marketing mix refers to the tangible expression of
a product and how it is purchased and used. In an online context, ‘physical evidence’
refers to the customers’ experience of the company through the web site. It includes
issues such as site ease of use or navigation, availability and performance, which are dis-
cussed further in Chapter 7.CHAPTER 5· THE INTERNET AND THE MARKETING MIX
Process variable
The element of the
marketing mix that
involves the methods
and procedures
companies use to
achieve all marketing
functions.
Physical evidence
variable
The element of the
marketing mix that
involves the tangible
expression of a product
and how it is purchased
and used.
The re-launched Napster changes the music
marketing mixCase Study 5
This case about online music subscription service Napster
illustrates how different elements of the mix can be varied
online. It also highlights success factors for developing an
online marketing strategy since Napster’s proposition,
objectives, competitors and risk factors are all reviewed.
The Napster brand has had a varied history. Its initial
incarnation was as the first widely used service for ‘free’
peer-to-peer (P2P) music sharing. The record companies
mounted a legal challenge to Napster due to lost revenues
on music sales which eventually forced it to close. But the
Napster brand was purchased and its second incarnation
offers a legal music download service in direct competi-
tion with Apple’s iTunes.
The original Napster
Napster was initially created between 1998 and 1999 by a
19-year-old called Shawn Fanning while he attended
Boston’s Northeastern University. He wrote the program
initially as a way of solving a problem for a friend who
wanted to find music downloads more easily online. The
name ‘Napster’ came from Fanning’s nickname.
The system was known as peer-to-peer since it
enabled music tracks stored on other Internet user’s hard
disks in MP3 format to be searched and shared with other
Internet users. Strictly speaking, the service was not a
pure P2P since central services indexed the tracks avail-
able and their locations in a similar way to which instant
messaging (IM) works.
The capability to try a range of tracks proved irre-
sistible and Napster use peaked with 26.4 million users
worldwide in February 2001.
It was not long before several major recording compa-
nies backed by the RIAA (Recording Industry Association of
America) launched a lawsuit. Of course, such an action also
gave Napster tremendous PR and more users trialled the
service. Some individual bands also responded with law-
suits. Rock band Metallica found that a demo of their song
‘I disappear’ began circulating on the Napster network and
was eventually played on the radio. Other well-known
artists who vented their ire on Napster included Madonna
and Eminem by posting false ‘cuckoo egg’ files instead of
music; Madonna asked the downloader: ‘What the fuck do
you think you’re doing?’! However, not all artists felt the
service was negative for them. UK band Radiohead pre-
released some tracks of their album Kid Aon to Napster
and subsequently became Number 1 in the US despite fail-
ing to achieve this previously.
Eventually as a result of legal action an injunction was
issued on 5 March 2001 ordering Napster to cease trading
of copyrighted material. Napster complied with this
injunction, but tried to make a deal with the record com-
panies to pay past copyright fees and to turn the service
into a legal subscription service.
In the following year, a deal was agreed with German
media company Bertelsmann AG to purchase Napster’s
assets for $8 million as part of an agreement when Napster
filed for Chapter 11 bankruptcy in the United States. This
sale was blocked and the web site closed. Eventually, the
Napster brand was purchased by Roxio, Inc which used
the brand to rebrand their PressPlay service.
Since this time, other P2P services such as Gnutella,
Grokster and Kazaa have prospered which have been
more difficult for the copyright owners to pursue in court;