Successful Online Marketing Series - Installment #3: Karaoke.com

Posted By Hollis Thomases on Nov 29th, 2001

EDITOR’S NOTE: Recently, it’s been brought to our attention that many of you tip subscribers may not know or realize that in addition to publishing this weekly newsletter, WebAdvantage.net is also a full-service emarketing agency. With service offerings ranging from strategizing and Internet consulting to online media buying, email marketing campaign management, and search engine optimization, in the past four years WebAdvantage.net has helped some pretty significant businesses plan and execute their online initiatives.

We here at WebAdvantage.net are on a mission to disprove the naysayers. There still ARE successes happening on the ‘Net, and this week, we resume our Success Series with Karaoke.com. An interesting success story indeed, Karaoke.com’s roots actually lead back to a pre-Internet business that started as a sideline business for a disc jockey who kept his inventory in a closet in his home. This week, we’ve interviewed David Nolte, Karaoke.com’s COO & CFO.

Background

Evolving throughout the early 1990’s from home-based business to storefront business to retail & catalog business, Karaoke.com officially launched in 1995 when its founder Greg Lazzaroni registered the domain name and set up a simple web site. The site was not e-commerce enabled, so orders had to be faxed or called in, but one thing was clear from the start: having the ability to reach their audience on such a broad scale, as they could with the Web, was good for business. In 1996, the company changed its official name from Karaoke Direct to Karaoke.com.

In 1997 the site instituted its first online shopping cart, and by January 2000, the company closed down its retail store altogether because it no longer made fiscal sense to keep it in operation — catalog and online sales were far outstripping retail sales. By December 2000, the company had stopped printing its catalog and dedicated itself entirely to growing its business online. Karaoke.com now generates 100% of its business off the Web, either through direct online orders or by those who call their orders in.

Although Karaoke.com sells all things Karaoke, they focus primarily on CDGs (CDs with graphics). These are what allow Karaoke machines to have such extensive playlists and what provide the visual sing-along lyrics that go with a song.

The Interview

Hollis:

Did you experience any of the dot com backlash since this past Winter’s fallout, and did you ever contemplate changing your company name?

David:

Not in earnest. We actually have two strikes against us when it comes to our name: 1) we’re in the business of karaoke; and 2) we’re a dot com. Our name is at first perceived as a liability when it comes to commercial entities like banks and real estate companies, but once they hear our story, it supersedes everything. Besides, for a niche market like ours, we’ve got the ultimate killer domain name.

Hollis:	How have you positioned Karaoke.com, and what is it about this positioning do you think has helped make you successful?
David:	We like to think of ourselves as THE one-stop place for all things Karaoke, and that our shoppers can participate in an environment that’s safe and secure from which they get value for their dollar. We say we’re “America’s Largest Karaoke Retailer,” not “America’s Cheapest…”

Hollis:

What are some of the online goals you’ve set for yourselves?

David:

We want to continue to be America’s Largest Karaoke Retailer, particularly as the music industry continues to evolve digitally. It’s never been our goal to be the first to use new technology — we like to observe and learn to see what catches on and what doesn’t so we can avoid similar mistakes. We’re “intermediate adopters.”

We’re also working to forge relationships with content partners so we have the most direct access to the latest music. We try very hard to stay on top of consumers’ tastes and to have the most preferred CDGs in stock at all times.

Hollis:	And how well are you achieving your goals?
David:	If our growth is any indication, we’re doing phenomenally! We’ll end this year up 15-20% over last year, growing sales by nearly $1 million.

Hollis:	Can you give me some other figures regarding your growth?
David:	Interesting, our average order size has gone from about $100/order last year to about $90/order this year, but the number of orders are up 25%, which to us means that people are order less but more often, which is good. We also see strong repeat customer figures in our ordering: about 72% of our orders come from repeat customers.

Hollis:	Do you know the sources of your new customers?
David:	Yes. 50-60% of our new customers come directly from the Internet. Of those, about 50% just type in our URL and the rest come from search engines, and of those about 50% from Yahoo alone. 30% of our new customers come to us by word-of-mouth, and the remaining percent come through suppliers, music stores, etc.

Hollis:

What has been your online marketing strategy?

David:

Well, our biggest market historically has been the “KJs,” karaoke jocks. It was for them that we introduced JOLT, now the industry’s leading discussion forum for karaoke. With the home user business growing every year, we see KJs as community influencers and JOLT is a way for us to stay in front of these influencers all the time.

Also tremendously successful has been our e-saver emails, in which we send out weekly emails to opt-in customers who want to know about sale specials and new items.

We’re in negotiations for product placement and other cross-marketing deals with big box stores that carry home karaoke players.

This past year we introduced Search Engine Optimization into our marketing mix because our biggest challenge has been reaching such a geographically dispersed market. It has helped out a lot.

Hollis:	So what has been your biggest technical challenge?
David:	Down time (but we’re working to cure that) and outgrowing our existing systems.

Hollis:	How much of what you do is done in-house vs. out-of-house?
David:	For marketing, we do it all in-house with the exception of Search Engine Optimization. Our Web systems are built out-of-house, but an in-house team manages the day-to-day content changes. Overall, it’s about 25:75 in-house:out-of-house for the technical stuff.

Hollis:	What is your 2-3 year forecast for the Internet?
David:	That the digital transmission of music is only going to continue to grow. Currently, we’re only streaming 5% of our CDG library online, and we plan to get to 100%.

Hollis:	What’s the achievement you’re most proud of?
David:	That we’ve taken this business from literally a closet in someone’s house and grown it into the profitable, successful business that it is today. We’re proud to be a dot com because it’s a brand we can take worldwide, and we want to grow internationally as music continues to move digitally.

If you’d like to read earlier installments of our Success Series:

Did you like this interview? Did it provide helpful insight? Are you a success story or know of someone who is? Send us your feedback!

Bookmark this:

« Previous Article | Next Article »

Web Ad.vantage is a full-service online marketing company with core competencies in search engine optimization, PPC Campaign Management and online media buying. Visit our Internet Marketing Services section to learn more about our full range of services.

WebAdvantage.net encourages the reprinting of our marketing tips and articles. Before doing so, however, please contact us at for permission to do so. The company bio located above is required to accompany any reprint. Thank you in advance for your professional courtesy.