Putumayo World Music Company
During a period that represented a significant shift in consumer preferences towards digital music and away fromtraditional records, several of the major, traditional record label’s sales were adversely affected. Despite the shifttowards digital music, the Putumayo World Music record label experienced significant growth throughout thissame period. Putumayo was able to increase sales from $350,000 in 1993 to $24 million in 2006. Their competitiveadvantage comes from two important factors. First, they service a niche market of cultural enthusiasts that arewilling to spend money to support international artists, and second because of a very unique retail sales strategy.Putumayo albums are sold in cafes, museums, clothing shops, grocery stores such as Whole Foods, and otherspecialty retail locations where their target customer is likely to shop. In fact, 65% of Putumayo’s U.S. sales comefrom nontraditional music retailers. As Company co-founder Daniel Storper was quoted saying, “the market ismoving away from purely going to the record store to buy music.” Putumayo also pays significant attention to theamount of albums they release per year. The company typically only releases 14 albums per year to allow for timeto focus on the quality of their albums as well as advertising.Putumayo currently has album sales in over 100 countries, and has 21 office locations in 15 countries. They alsorecently launched Putumayo Kids, which was created to introduce children to culture from around the worldthrough music.
INNOVATION TO BUSINESS MODEL
Putumayo’s current value chain is a push system because the company will package albums for the end customer.The interaction and value is added between artists and Putumayo teams that package the albums, but thecustomer does not participate in the product creation process.
International artistsPutumayotalent teamsRetail Stores Target Customer