I’ve been reading this book about the corporate ski industry entitled "Downhill Slide".\u00c2\u00a0 It delineates how consolidation of the ski industry has not only ruined communities but has contributed to the death of the sport.\u00c2\u00a0 People used to go to the mountains for a rural experience, now the ski towns are urbanized, with all the flaws of the place you came from.\u00c2\u00a0 Worse, corporations are in an arms race, fighting for the same customers.\u00c2\u00a0 Spending to steal market share, which their competitors continually try to steal back.\u00c2\u00a0 And how many people are willing to pay $92 a day to ski anyway?<\/p>\n
But that’s what you’ve got to charge if you’ve invested in high speed lifts, tons of grooming equipment and are publicly owned and must show a return.\u00c2\u00a0 You build villages that ruin the essence of your appeal, all in the name of short term profits.\u00c2\u00a0 Meanwhile, the number of skiers remains flat.<\/p>\n
And then there’s Bogus Basin.\u00c2\u00a0 A second-rate, make that third-rate, ski area outside of Boise with no village, none of the supposedly de rigueur accoutrements.\u00c2\u00a0 And tons of empty chairs on its lifts.\u00c2\u00a0 So what did Mike Shirley, CEO of Bogus Basin, do back in 1998?<\/p>\n
He dropped the price.\u00c2\u00a0 A season pass was a veritable bargain by ski industry standards, a mere $500.\u00c2\u00a0 But Shirley dropped it to $199.\u00c2\u00a0 And the pass came with free season rentals and four free lessons for beginners.\u00c2\u00a0 Kids under twelve skied the whole year for $29.<\/p>\n
End result?<\/p>\n
In 1997, Bogus Basin sold 2,854 season passes at the $500 price.<\/p>\n
In 1998, Bogus Basin sold 25,000 season passes at $199.\u00c2\u00a0 Better still, skier days (defined as one person on the slopes on one day) jumped from 192,000 to 303,000.\u00c2\u00a0 Between the winter of 1997 and 1999 skier revenue at Bogus Basin jumped from $4.7 to $7.7 million.\u00c2\u00a0 Dollar yield per skier day INCREASED 3%, even though the new discount season pass owners had previously had to purchase expensive day tickets.<\/p>\n
Do you get it?\u00c2\u00a0 Skiing was perceived to be too expensive.\u00c2\u00a0 As is music.<\/p>\n
Please don’t argue with me, just accept this.\u00c2\u00a0 Or tell me you think it’s worth ten thousand dollars to fill your iPod.\u00c2\u00a0 And that you have.\u00c2\u00a0 The key is to make everybody a music consumer.\u00c2\u00a0 By lowering the price, by giving a deal.\u00c2\u00a0 Sure, heavy consumers get a break, but so many will partake who didn’t used to.\u00c2\u00a0 Hell, this 99 cents a track formula isn’t working.\u00c2\u00a0 It’s too much per track, so people don’t buy that many.\u00c2\u00a0 The key is to sell a season pass, that’s eye-poppingly cheap.\u00c2\u00a0 So even people who rarely buy music will sign up.<\/p>\n
But costs must be controlled.\u00c2\u00a0 You can’t blow the revenue on hair and makeup and private jets to try and break the new Beyonce.\u00c2\u00a0 You’ve got to be conservative.\u00c2\u00a0 You’ve got to build slowly.\u00c2\u00a0 You’ve got to reinvest.\u00c2\u00a0 Instead of executives cashing out, the money’s got to be left in the corporation’s coffers.<\/p>\n
Not enough people are buying music.\u00c2\u00a0 If they bought some, they’d go to a show, buy some merch.\u00c2\u00a0 Just like those skiers at Bogus Basin bought hamburgers and hot chocolate.\u00c2\u00a0 Furthermore, they had a great time out on the slopes.\u00c2\u00a0 What’s better than a great record?<\/p>\n
We’ve got to stop alienating the customer.\u00c2\u00a0 We’ve got to restructure our business.\u00c2\u00a0 Costs must come down.\u00c2\u00a0 Expenses must be watched.\u00c2\u00a0 Or the music industry will stay stagnant or decrease, just like the ski industry.<\/p>\n
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