Published: February 2nd, 2008

Reprise, Not Requiem
By ED CHRISTMAN

While most music stores have learned not to be overly dependent on CDs, one says the format is still its bread and butter. That store, of course, is an online outlet serving the niche genre of classical.

Arkivmusic.com, which generated $8 million in sales last year, will go digital some day, according to Arkivmusic president Eric Feidner, who co-founded the store.

"But the fact of the matter is that to date our customers really want to buy CDs," Feidner says. "Classical is not the same as other genres. The customers buy full works, not tracks; they want uncompressed music, full liner notes and the actual disc."

Since it began six years ago, Arkivmusic, which now employs 15 staffers, has enjoyed steady growth, including a 30% pop last year, according to Feidner. Its goal is to carry every classical album in print and then some. Currently, the store offers 82,000 titles on CD, DVD, Super Audio CD and DVD Audio.

"It's all about the niche," Feidner says. "If we had built just another online music store that sold all genres, I am guessing we would not be around today."

Helping to keep costs down, consumer fulfillment is handled directly from the warehouse of distributors and classical labels like Allegro, Koch Entertainment, Naxos and Qualiton.

One element that is driving sales is its own ArkivCD operations, which produces CDs on demand with original artwork of out-of-print titles licensed from all four majors and about two dozen independent labels, but even that aspect of the operation is done in others' warehouses.

"We ship ArkivCDs from two locations," Feidner says. "Our own production equipment and servers are housed at one of our distribution partners, and another segment of the catalog is produced and fulfulfilled by a third party that specializes in just-in-time manufacturing."

Last year, the Arkiv CD operation accounted for 10% of sales, he reports. The company has reissued some 5,000 titles, which can take 24-48 hours to manufacture. "We produce booklets that are 50-100 pages or 200 pages, all in high-glossy material," Feidner says. "It looks like the regular CD packaging."

While the titles are designated as ArkivCDs on the Web site - so customers will understand why fulfillment will take longer - all albums are issued using the original record labels and catalog numbers. In addition to its growing reputation among classical music lovers, other traffic drivers include affiliated partnerships with top classical radio stations, which link their playlists to the store.

Last year's best sellers include "Christmas Tradition" from Canadian Brass; "The Berlin Concert: Live From the WaldbOhne" from Placido Domingo, Anna Netrebko and Rolando Villaz6n; "Works of Igor Stravinsky"; "Deutsche Grammophon's Essential Beethoven Box"; "Music for Compline" from Stile Antico; "Welcome to Vienna" from Beverly Sills, Julius Rudel and the London Philharmonic; and "Pavarotti's Greatest Hits."

In building the Arkivmusic store Feidner and his partners' backgrounds have served them well. Feidner and his brother Jon came from Tower Records. Jon, who now serves as GM, was previously VP of online operations at Tower.

Also, Eric Feidner and his two other partners worked at early online CD retailer Music Boulevard -COO Brian O'Connor was head of operations at Music Boulevard, and chief technology officer Mike Heckler was senior software developer at Music Boulevard.

Their experience in classical and online shopping led them to address in the store's design the peculiarities of searching classical music. Arkivmusic allows customers to browse by composers, conductors, performers, ensembles, operas and labels.

Also, titles can be searched by format, on-sale and clearance sale, new releases and iTunes. Since the company has been built on a bootstrap, "we don't bother putting extra features on the site until we find a demand for it," Feidner adds. "For example, we didn't start allowing sampling until this past year. So while we are a little bit behind, we didn't see a demand for it."

After all, a lot of the store's business comes down to "recordings that people knew they wanted but just couldn't find," he says.

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