Appetite For Disruption

A Trademark is a Powerful Thing

2009-02-19T21:14:46-05:00

Just ask the makers of Hendrix Electric Vodka... or don't. An expensive lesson learned.

2008 U.S. Music Purchasing Data Out - Major Declines Reported

2009-01-01T14:31:48-05:00

The year-end U.S. music sales figures are out. There is a slew of negative data in this report.

But, as any reader of this blog knows, I have long been an advocate of "non-traditional sales," both for physical goods and digital music products. So, after reading through the negative news here comes this "factoid:"

Album sales at Non-Traditional music outlets (digital, internet, mail order, venue, non-traditional retailers) hit an all-time high in 2008 with sales breaking the 100 million mark for the first time.
Non-Traditional is the only strata that experienced album growth over the previous year; with an increase of 15% over 2007. Non-traditional outlets account for nearly 25% of all album sales, compared to 18% in 2007, 12% in 2006, 9% in 2005 and 5% in 2004 (4% in 2003).
Digital services account for 65% of the Non-Traditional album sales.

That's not a silver lining so much as proof that non-trad. could have been a much more powerful force in the market before it was economically necessary to seek out those accounts. Now it just looks like opportunity lost. The labels made their bed with the mass merchants, and now they have to lie in it.

Jon Pareles is wary of music/marketing partnerships - UPDATED

2008-12-28T22:36:00-05:00

Jon Pareles of the New York Times wrote an interesting think piece on the way marketing tie-ins and advertising/TV licensing have changed the music discovery and music listening experience.

On the one hand, Pareles acknowledges the harsh realities of being a professional musician during these trying times:

Musicians have to eat and want to be heard, and if that means accompanying someone else’s sales pitch or videogame, well, it’s a living. Why wait for album royalties to trickle in, if they ever do, when licensing fees arrive upfront as a lump sum? It’s one part of the system of copyright regulations that hasn’t been ravaged by digital distribution, and there’s little resistance from any quarters; Robert Plant and Alison Krauss croon for J. C. Penney and the avant-rockers Battles are heard accompanying an Australian vodka ad.

On the other hand, Pareles wonders how those realities then affect the very creation of music itself:

The question is: What happens to the music itself when the way to build a career shifts from recording songs that ordinary listeners want to buy to making music that marketers can use? That creates pressure, subtle but genuine, for music to recede: to embrace the element of vacancy that makes a good soundtrack so unobtrusive, to edit a lyric to be less specific or private, to leave blanks for the image or message the music now serves. Perhaps the song will still make that essential, head-turning first impression, but it won’t be as memorable or independent.

I agree to this extent - I remember music placed in films more than I remember music placed in ads. When you are watching a film you are (hopefully) engrossed in the film, or at least the particular scene, where a song appears. I personally prefer to hear music in either my car, iPod, or home stereo so I can judge a song purely on its aural impact on me: does a particular lyrical phrase grab me?, is the solo undeniably killer?, do I want to hear the hook over and over again? Basically, I want to make my own determination of the song's worth to me personally.

That being said, when do we get unvarnished experiences with any art form these days? Before you see a film you are bombarded with on-screen advertisements. Radio is filled with endless commercials. TIVO and DVRs have save many of us from having to endure many TV ads placed in our favorite shows, but when we do have to view them how many are remembered? The "not-for profit" arts sector is filled with corporate sponsorships supporting everything from fall seasons to particular art exhibits.

So why should we expect listening to music to be a mystical experience? Isn't that asking a bit too much from the musicians themselves, just trying to be heard? (Period). Pareles admits as such here:

Apparently there’s no going back, structurally, to paying musicians to record music for its own sake.

Advertising, if anything, is moving to formats even shorter than the 30-second spot. Marketers know their messages are being tuned out willfully in a DVR culture. If marketers need music to help their messages stand out, then God bless the musical community able to earn their livings off the back of those marketers' needs to differentiate themselves from competitors. We tend to be selfish, us music listeners. We love the pure listening experience, but how many of us have time to just sit and listen to music in an ideal environment? Not too many of us I'd venture. I'd tell Jon Pareles to take a listen to one of my favorite Joe Jackson songs - "I'm the Man" - to remind him the party doing the selling needs to have a survivor's cuthroat instinct. In the case of music licensing - we know the buyers already have that mentality.

UPDATE: Charles Moran from AdAge.com's Songs for Soap blog also has some thoughts on the Pareles piece - here.

More on the Wal-Mart-AC/DC Exclusive

2008-12-27T21:58:25-05:00

From AdAge.com - another post-mortem on the Wal-Mart way of doing CD exclusives.

But I hate that Wal-Mart logo sitting where the lightning bolt in the AC/DC logo ought to be. Never ever, EVER, compromise the logo.

The exclusive deals have become a "good business model for us," said Jeff Maas, divisional merchandise manager for music and movies at Walmart. "They tend to drive excitement into our stores. They keep our stores new and fresh. And so you'll see us do more."

So, once again, here is the retailer stating there is a VALUE in developing these exclusives which creates a "halo effect" for the retailer's marketing and overall merchandising efforts... and only the big box retailers are stepping up to differentiate themselves in the market. Where are the specialty retailers who are much more lifestyle-focused developing these partnerships? Other than Starbucks and Victoria's Secret - where are the specialty chains who have ever stepped up strong in this arena?

Walmart and the bands win because the retailer can merchandise a wide array of apparel and other related products in major in-store events, helping promote concert tours and move products beyond CDs in ways no other retailer could.

Consumers win because the deals include album prices well below the industry standard for new releases, such as $11.88 (with free shipping when bought online) for AC/DC's "Black Ice." Rivals such as Virgin or Tower Records have had no qualms about selling imports or simply reselling CDs bought from Walmart at $14.99 to $16.99 without topping their usual price points for new releases by much.

Imagine that - sell music for a reasonable price, with solid marketing, and merchandising backing the effort. What a simple concept so many retailers could adopt vis a vis music exclusives.

Not every musical act means the same to all audiences. Retailers should be combing through label rosters looking for the right act to partner with on such an effort. There's a glut of musical supply out there for retailers to choose from. Retailers are facing enormous bottom line pressures right now, but they need to get noticed, and great music certainly has the power to do just that.

CD Exclusives at Retail - Redux

2008-12-10T13:18:42-05:00

Here's a nice overview of a few recent account-exclusive CD releases at Wal-Mart, Target, and Best Buy from HITS magazine.

I've addressed this issue several times, most notably here, here, and here.

Here's the one passage of the HITS piece which disturbs me (italics mine):

The most recent big box exclusive, Chinese Democracy, sold only 255k in its first week at Best Buy and a deleterious drop off to around 56k in its second, a disappointing total blamed equally on Axl Rose’s lack of promotion and limited cooperation from Interscope Geffen A&M, which lacked the incentive to do much, having pocketed the initial check for $14m, the revenue from the approximately 1.6 million sold one-way at $8.75 a pop. On the other hand, the label’s been complaining about the lack of visible marketing support from the retailer, so let the finger pointing begin. Despite the glitches, most believe Chinese Democracy did better than it would have with a normal release.

Lacked the incentive to do much? How about the incentive to maximize revenues and profits? How about seeking to create a bright spot in an otherwise dismal retail landscape? How about driving catalog sales on GNR and other UMG current and catalog acts at Best Buy with the GNR fan base coming in to buy this record?

If it's all about the paycheck, then why the hell did Axl do this deal? why did he hold onto this record for so long? Why try and claim any artistic high ground as he recorded and re-recorded and mixed and re-mixed this album with various casts of characters in the decade+ he has been working on this album for?

If it's all about the paycheck for the record label, then labels can't expect retail to want to do these exclusives and be enthusiastic about them. Why? Because they are pulling the weight with no label support. The AC/DC example is the complete opposite of the GNR situation, as they were an integral part of the marketing, PR, and radio promotion effort to drive the sales on Black Ice, and continue to do so.

Partnerships don't have to be equal per se, but they ought to be equitable.

Does Your Endorser Really Use Your Product or Service?

2008-12-09T08:38:05-05:00

If the answer is no, then you may not be happy about the way the FTC is interpreting the guidelines for product endorsers.

A star who does claim to use a product must be using it at the time of the endorsement. And the sponsor can run the spot for only that period of time.

What’s more, the commercial arrangement must be disclosed in some situations. For example, a pro tennis player who says on a talk show that her game has improved has to disclose that she is paid by the clinic–provided she names it.

“Consumers would not expect that a celebrity discussing a medical procedure in a television interview to be paid for doing so,” the FTC says.

I wonder how far this goes. If an actress is a paid Chanel endorser and she wears a different perfume for a night out, would she be "guilty?" If Brett Favre endorses Wrangler jeans and is caught wearing Levi Strauss, what's the penalty? If an artist's song is used by a wireless carrier in a TV spot, does that mean that group needs to all have wireless plans with that carrier? And what of race car drivers with cars sponsored by Viagra or Prilosec, for example?

Interesting issue. I'll get back at it later...

All My Friends Say "Great taste. Less Filling."

2008-12-08T08:45:56-05:00

Songs for Soap writes about the new Luke Bryan/Miller Lite tie-in surrounding Luke's #1 Country hit "All My Friends Say." And from the tone of the piece it seems they don't approve of the partnership. Here's the information on the partnership.

"All My Friends Say" is a catchy single with a hooky chorus about getting drunk the night before at a frat party and having to piece together last night's wild events through the stories of one's friends. I don't necessarily agree with how Songs For Soap seeks to ascribe details about Luke's personality based solely on a few of his songs. This passage was the one that irked me:

[Luke Bryan's]"... the guy who slept through astronomy in the back of your lecture hall with his cowboy hat over his head, but he was always willing to tap the keg for you and save you from looking like a wuss in front of your girlfriend."

Say what you will about the song or even Luke's other material. Songs don't always paint the picture of the artist as a person. Luke Bryan's neither the first nor the last (nor the best) artist to address life in a drunken state, but there's no need to hammer the dude for this song.

It's just beer guys. I'll take the "All My Friends Say" tie-in over Clydesales playing football any day.

The legitimate criticism here would be of Miller Lite and its corporate parent Miller Coors. In an age of "drink responsibly" ads, an era where promoting getting drunk off of beer is taboo in advertising (isn't it amazing how with all of the beer advertising done no one is ever the least bit tipsy? I guess beer must possess magical happy qualities that make it necessary to be drunk without ever addressing it's an alcoholic beverage.), Miller Lite ties in to a song that is about nothing except getting blind drunk and blacking out. And this is no criticism of the song itself per se. It's still a fun song that would rock a party. But as a corporate brand steward, how do you let that slip by? How do you leave yourself open to the many critics of the beer industry and how it markets itself?

Yes, this is a limited promotion, but it leaves the parent company open to criticism it did not have to face. I would not be surprised to see the brand get whacked by some regulatory body or have to play PR defense against an advocacy group like MADD.

Why continue EMI as a going concern?

2008-12-05T08:56:54-05:00

So EMI is now in talks with its major label competitors to get its U.S. distribution.

Really? It's that bad? It's that unmanageable? EMI got socked with a disadvantageous CD manufacturing deal a few years back, but come on.

At this point just sell off the assets, even in pieces, to the other three majors, and be done with it. Quit making lame attempts at salvaging a sinking ship while throwing the crew overboard to stay afloat. The artists deserve better. The employees deserve better. The industry desrves better.

Axl Outrage Update

2008-12-02T09:04:12-05:00

As per AdAge.com.

"In this age for Dr Pepper to try to associate themselves with a band with no contract or agreement is not just bad communications, it's bad business," said Robbie Vorhaus, a crisis-management consultant. "The right thing to do is to say 'We were wrong, we were sorry and this is how we are going to make good.'"

Indeed.

Lowered Expectations (w/UPDATE)

2008-11-27T12:02:19-05:00

"It's been a long time I shouldn't have left you / Without a strong rhyme to step to..." - Rakim

First off, it's been three months since I posted here. I've been crazy jumping into my gig at COBY Electronics. It's been non-stop as I have been learning an entirely new industry and traveling across the country getting to know our customers. I am enjoying it.

But enough about me...

Remember when Dr. Pepper promised all of us a free Dr. Pepper if Guns N' Roses ever released Chinese Democracy? Oh, what fun that was! What a fanciful way to promote the brand. Tie it in to an album release that has been eagerly awaited since the early 90s! An album never destined to see the light of day because W. Axl Rose would never ever ever release Chinese Democracy... until he did.

Well now! But, give Dr. Pepper credit. They readied themselves to give away free a Dr. Pepper to all that wanted to take them up on their offer... with some conditions. And then, due to overwhelming response, they pushed back the deadline to accommodate the crushing demand!

And then... Axl's lawyer threw Dr. Pepper under the bus. OUCH! So much for irreverence and being fanciful. And what a great time for any brand to be redeeming millions of free products to consumers who don't have to do ANYTHING (relatively) to get it! What a great time to have the threat of a lawsuit by a completely insane, multi-millionaire recluse! When the economy is completely tanking! UPDATE: And now even the New York Times is reporting on it! the killer quote from one of Axl's many lawyers:

“We had made an effort to turn this into a win-win-win — for the American public, Dr Pepper and Axl,” said Laurie Soriano, one of Mr. Rose’s lawyers. “But Dr Pepper’s view was just that Dr Pepper would win.”

Maybe Dr. Pepper should have stuck to aligning its brand with something a bit more predictable, but no less exciting: like football.

I give thanks for SNAFUs like this; they practically write my blog themselves.

Complete and Utter Lunacy

2008-08-17T22:41:59-04:00

A friend of mine (who shall remain nameless) had lunch recently with some friends (who also shall remain nameless) who work at a major label (which shall also remain nameless for the purpose of this post).

So my friend is having lunch, and his former colleagues are dishing the inside dirt about one of the divisions at this particular label. Apparently, one SVP and the EVP of a major division is touting the following completely insane, high on crack idea as a major future revenue earner from a licensing perspective.

Many labels and music publishers make some nice revenue licensing master recordings to greeting card makers such as Hallmark to be used in musical greeting cards. The synergy between the emotional content of music and the emotional content of the greeting card is one of the true win-wins you can find from a licensing perspective. And sound chips are also used in many toys and novelty items.

So what's the new game changer being touted by this particular label on the sound chip front? From what I hear the idea is to embed a chip in a bank checkbook. Yes, that's right. You read correctly: a bank checkbook. So let me dissect the myriad reasons why this is the most asinine music licensing idea I've ever heard of, and why anyone touting this idea as any type of serious revenue opportunity should be laughed out the door.

Whose mood can be lifted by music... while in the act of writing a check? Think about this; are you ever in a good mood writing a check? Can music, even really good music, take away from the fact you are watching your money fly into the hands of a despised debtor?
Don't you throw checkbooks away when they are used up?
Considering the world of bill payment is so easily done online these days - who writes checks anymore? You don't even see people using checks in stores anymore, thanks to Debit/Checking Cards. It's chasing after a dying market. Consumer habits are changing and using new technologies. Even if you're on board with the underlying belief this is a proper licensing tool for labels and publishers - and I am wholeheartedly NOT on that bandwagon - this idea seeks to grow a revenue stream off a declining method of payment.
What is the magic, mellifluous tune one would choose to have as their "checkbook tune?" "Taxman?" "Big Spender?" "Can't Buy Me Love?" "Sympathy for the Devil?" I could go on here, but you get the point. No artist worth their salt is going to risk their rep on a licensing opportunity on this product... Okay - except Gene Simmons.
Won't people witnessing a check writer with a musical checkbook give weird looks to that person? Not just weird looks - "Your checkbook is playing music and it's freaking me out" looks. Do we need to further socially stigmatize the check writer?

Like I said - I heard about this third-hand, but I know the tellers of this tale and have no reason to doubt their veracity. They see how insane and desperate the major labels have become. I am begging all of you - if you hear tangible evidence of this idea coming to fruition - please give it the public flogging it deserves.

Cool Report on "State of the CD" Out Now

2008-08-03T23:18:22-04:00

Check out Coolfer's new report, out now, entitled "The State of the Compact Disc." Glenn at Coolfer expounds on many of the themes I've written about here at Appetite for Disruption over the past couple of years: the growth of the non-trad. sector, the overhyped demise of the compact disc, and more.

Trying to Purchase Authenticity

2008-07-28T23:24:56-04:00

How many of you are working for brands which have been deemed stodgy or irrelevant by newer generations and have sought to reawaken the brand with younger consumers? Maybe your brand is just experiencing a decline in sales that needs to be stemmed.

For those seeking to involve music in your marketing solutions to revive your brand - be cautious.

I remember every conversation I would have with people at McDonald's and their agencies pre-"I'm Lovin' It" how they didn't just want to jump into music with a big splash (because they definitely had, and still have, the muscle to do just that), that they wanted to be seen as authentic when they developed music-related strategies and promotions.

Wm. Wrigley, Jr. Co. is about to unveil a major music-centric branding campaign (Wall Street Journal - subscription required) featuring musical artists Chris Brown, Ne-Yo, and Julianne Hough. Brown and Ne-Yo are platinum R&B superstars, while Hough is a budding country music artist more well-known for her moves on "Dancing With the Stars."

The tactic used in the campaign - updating classic brand jingles or piggybacking off of well-known brand tag lines - has been used numerous times by different brands through the years. But is blatantly paying these artists to do so the right tactic to enable Wrigley to begin to claim authenticity with the audiences it is seeking to drive back to the brand?

A few months back I detailed two music promotions I felt lacked authenticity because they were so blatantly crass. My initial reaction in reading of the Wrigley effort was similar - that it had the possibility to either reap major benefits or cause major ridicule - for the company's gum brands.

I am interested in hearing about the results the brand sees out of this effort, because, even though Wrigley isn't saying how much the company paid these artists to be involved with this campaign - I'm guessing it was a nice chunk of change. Add to that the major press the brand is trying to garner just surrounding the campaign launch alone, and you get a set of very high expectations which need to be met.

Sometimes it takes decades for a brand to reach a spot where it is as cool as the musical artists it wishes to associate with - like Converse.

I know I'm the guy always pushing for music and marketers to come together, but I am continually intrigued by what musical solutions different brands feel will move the needle for their individual businesses.

Music Licensing Revenue Drops in 2007

2008-06-11T22:44:14-04:00

I saw this story and wanted to highlight the relevant passage for my readers:

"Music fell by the largest margin (5.5%) to $125 million from $132 million in 2006..."

I've highlighted this before, but let me address this issue again. This is no time for any artist, songwriter, label, or music publisher to be turning down revenue-enhancing opportunities. This is no time to rest on one's laurels when a licensing request comes in and sit on it until the requestor is forced to go to another party to get what they need. There is a glut of quality music supply, so the licensee, the buyer, holds the upper hand, not the licensor.

But licensees, as George Costanza might say - you've got hand.

Wal-Mart Exclusives Redux

2008-06-09T14:16:07-04:00

The NY Times chimes in with more on the general trend at Wal-Mart for their artist-specific exclusive.

Some further thoughts - from an artist's perspective. With all due apologies to the Coalition of Independent Music Stores (CIMS) - who are doing a fantasic job waving the banner of the traditional music retailer - has music retail been so eviscerated that we no longer care where we buy our music from? If that is the case - and I believe that it is - then labels and artists need to strategize whether releases need to be marketed to a wide swath of retailers, or just to a single retailer, to garner the proper sales impact.

In the world of "alternative distribution" labels are seeking to place their commercial product into so-called "non-traditional retail." They seek to get chains to buy a few hundred or a few thousand copies of CD releases which are also marketed to traditional record retail brands. But hasn't the recent history of Wal-Mart, Best Buy, and Target shown us the key to getting the most out of a retail partner is to get that partner to double down and commit to an exclusive that retailer needs to provide marketing for?

There is a downside to all these exclusives. Some people just don't wish to go to Wal-Mart to shop for music because they want a more memorable music shopping experience. They want to be able to browse through many more CD titles than Wal-Marts stock. But artists are saying to the consumer: "I appreciate that you may cherish a different kind of music purchasing experience, but I just want to get my record out to a mass audience with as much marketing and as cheaply to you, the fan, as possible. I care less about your music-buying experience than in your 'buying MY music experience.' Wal-Mart delivers the best value to you on that front."

We all know the "long tail" can't be replicated at brick-and-mortar retail. The question is now: are retailers (figuratively) cutting off most of the body and selling just the head, the top tier of marketable artists? Is this the trend which will leave most music shoppers left with no physical place left to shop for even basic CD product selection? Will Amazon win with these music fans just due to competitive atrition?

Wal-Mart Strikes Again - AC/DC Exclusive

2008-06-08T23:10:28-04:00

Retailers everywhere - those who merchandise music and those who don't - take note - if you want to include among the ranks of your customers fans of The Eagles, AC/DC, Journey, Genesis, and Bryan Adams - kiss that thought goodbye. Because Wal-Mart, long rumored to be reducing their footprint in physical CD sales, has wrapped up all of these artists to sell their current or future CD releases exclusively at Wal-Mart.

First up, and the biggest coup for Wal-Mart was The Eagles, one of the best-selling groups of all-time, a group who had not released an album in close to 30 years. Wal-Mart secured an exclusive on their new album and has sold (according to reports) over 3 million copies of Long Road Out of Eden.

Bryan Adams followed with a U.S. territory exclusive in May.

Journey just released their new album via Wal-Mart this week.

This week Wal-Mart partners with Genesis for an exclusive release of a 3-DVD set. I love this quote from genesis keyboardist Tony Banks:

"Wal-Mart puts 100,000 of this DVD out there and feels like it can sell that many, which I think will be an awful lot better than the last few things we've done," Banks said. "You have to look at it that way."

And now, another superstar joins the Wal-Mart exclusive ranks, none other than hard rock powerhouse AC/DC (subscription required - link to Reuters/Yahoo here).

So, while record retail is tanking, and Wal-Mart itself, as well as retailing giants Best Buy and Target shrink music floor space... while Borders closes stores and puts itself up for sale... while Transworld continues to shrink shelf space devoted to music... while Handleman gets out of the music merchandising and fulfillment game altogether... Wal-Mart is still cleaning everyone's clock by locking up the TALENT people spend money on in the CD category. I know Target has done a few exclusives too, but their profile is much smaller. Best Buy - with their previous Rolling Stones and Elton John DVD exclusives - has also stepped up to the plate before. Starbucks Coffee Company's Starbucks entertainment division signed record deals with Paul McCartney, Joni Mitchell, James Taylor, and others, but those releases were also released through normal record retail channels. But Wal-Mart is very savvily locking up the acts that will make customers drool with anticipation over - will a Guns 'N' Roses deal for Chinese Democracy be next... if Axl ever delivers the record?

So my blunt question to all the retail chains out there, whether you be a mass merchant, supermarket chain, specialty retail chain, or regional or national department store is this: WHEN ARE YOU GOING TO STEP UP AND LEARN THE LESSON WAL-MART IS TEACHING? That lesson is simply this: you need not reinvent the wheel by offering up an innovative product to help drive people into your stores. You do not need to invest in the "next big thing" when there are major known quantities with brand equity and customer/fan loyalty you can tap into - who have specific relevance for your retail brand. But you do have to be bold and act! You have to get in the game. You have to realize physical music product - CDs - can still boost traffic and get new customers into your stores.

How many Eagles and AC/DC fans do you think there are? MILLIONS! How many times have people walked into other stores merchandising music and asked for the Eagles CD, only to be told that it is available exclusively at Wal-Mart? How many people who don't frequent Wal-Mart often - or EVER! - were compelled to purchase that Eagles CD at a Wal-Mart location or from Walmart.com? How many Wal-Mart shoppers who frequent the store often feel that much more loyal to the Wal-Mart brand?

Now ask this question: when is YOUR RETAIL BRAND going to use the power of music to elicit that kind of a reaction in consumers? Being daring doesn't mean being stupid. Even Wal-Mart didn't commit to more than 100,000 copies on the Genesis DVD. Decisions about merchandising an exclusive album of new material from an artist require a solid grounding in the landscape of the music business, but, more importantly, a clear picture of one's own retail business, specifically:

Who is the brand's core consumer? What can offering an album exclusive bring to these core consumers - and what NEW consumers will this exclusive seek bring into the chain's stores?
What is a reasonable minimum "guarantee" of units your chain would commit to on a one-way, non-returnable basis to get an album exclusive?
What types of marketing efforts can your brand provide to support such an album exclusive effort? Can you market the product via the following channels: brand web site, CRM efforts, print and/or broadcast advertising, mobile marketing, PR, in-store marketing and merchandising, store-level mangerial and associate support, operations and logistics, and direct marketing?
What can the artist's marketing offer your brand as you embark together on a mutually beneficial relationship? Does the artist tour regularly? What is their online/mobile marketing strategy? How can the artist incorporate their partnership with your retail brand into their radio promotion efforts? Are there other touchpoints where there are synergies (i.e. Does the artist shop for themselves or for their family at your chain?) that can be addressed?
Who is your brand talking to to initiate these deals with artists? More than ever - veteran artists with strong followings are cutting their ties to major labels and launching their own, independent labels. Younger artists trying to work outside the major label system are also hungry to be given a chance at these types of deals - and would probably accept much lower unit guarantees and retail brand financial commitment to do so. Each retail brand needs to decide what their goals are in approaching an artist for a deal like this. Is it to prove that the brand is a relevant lifestyle choice for a particular demographic? Is it to purely drive in increased foot traffic?

But these questions, and their answers, are brand-specific. Do your brand a favor and start asking some of them. Or just sit back and watch Wal-Mart continue to eat your lunch. There is no reason for a retail brand of 100+ stores to think "doing a music exclusive is out of our company's reach or scope." Latch on to the incredible passion found in your consumers. Discover what they are passionate about and deliver that. It doesn't matter if you're a specialty fashion retailer or a quick serve restaurant - the right music can drive traffic and profits and get your brand closer to "top of mind" in the consumer's brain and emotions.

360 Deals: The Missing Ingredient - Expertise

2008-05-29T11:07:12-04:00

These days you can't get through a music blog or magazine without encountering the term "360 deal." The term refers to record labels, who normally manage the recording (and sometimes the music publishing) careers of their artists, seeking to expand their influence into artist management, concert/event booking, merchandising, etc...

There have been stories pointing out success stories (from the label perspective) and warnings to acts to not sign these types of deals. Why the warnings? Because the labels lack the infrastructure and expertise in the areas of business they wish to expand into. The ticket companies and concert promoters such as TicketMaster and LiveNation have been steadily acquiring the top merchandising companies. Management firms like Irving Azoff's FrontLine Management have been snapping up key artist management talent - the star makers behind the stars. The legal eagles representing the artists have not jumped ship to sign up with the labels. And, lastly, most of the big booking agencies like ICM, CAA, and William Morris have retained their talent as well.

So labels are asking for a bigger share of the pie, but not proving they can deliver the services required for the artist to feel they would be getting more bang for their buck in a 360 deal. Nor are they addressing the inequities and lack of royalty accounting transparency within their traditional sphere of influence, where artist managers and lawyers usually have to fight against the label hierarchy to achieve a just outcome for the acts they represent.

So imagine my shock when I read today in the New York Times that Universal Classics and Jazz would be opening up a full-service management practice for label artists, and that the entity would actually be run by someone with expertise in that arena, Jeffrey Vanderveen, formerly of IMG Artists management firm. This entity still needs to learn how to fly (and with IMG suing UMG and Venderveen - it may not), but if it does, then it may prove to be a working model for how the rest of the industry on how to properly create an environment where the artist feels taken care of via a 360 deal.

Will the industry begin to win over the managers and agents, bringing them on board the label mothership? Chances are they won't. But this shows some level of understanding; acts want to be with people they trust.

Starbucks Downsizes its Entertainment Ambitions (With Update)

2008-04-25T22:33:50-04:00

It was just a few months earlier I was predicting how Starbucks Coffee Company's Starbucks Entertainment unit was overreaching.

In the midst of CEO Howard Schultz's revamping of the company Starbucks has decided to hand over the music operations for its Hear Music label venture to partner Concord Records.

But I think it should be emphasized that Starbucks's music initiative lost steam because they lost touch with what made their music effort cool to begin with.

Starbucks concentrated on music that gave its stores a cool vibe: jazz, blues, classic R&B, classical, singer-songwriters.
The Starbucks customer spends a lot of time in the store: ordering, waiting on line for their order, and, if they choose, drinking their order in the location (or just working on their laptops).
Starbucks, while they have some teen customers, is clearly more focused on the adult market. This is a demographic that is not as active a music consumer as teens and college-age students. They want the commuter, the office worker, the business traveler. Starbucks, when they practiced a more honed musical aesthetic, found an easy audience in these demographics.

When any brand seeks to make themselves an arbiter of cultural taste the focus needs to be tight. It can't be all things into all people. When Starbucks Entertainment was launched in the wake of the Genius Loves Company Grammy-winning triumph it undid much of the good work the Hear Music team had accomplished in building to that particular moment. It chose more mainstream material and allowed themselves to get involved with labels trying to market new acts which did not fit within that previous core aesthetic.

It's a cautionary tale. A strong focus on music to help drive profits and branding initiatives has to take into account the brand's customer base and how that customer interacts with the brand.

UPDATE: Great minds think alike; Charlie Moran from AdAge.com's Songs For Soap Blog is also thinking the Hear Music division of Strabucks suffered more from lack of focus.

And, as large as their ambitions were, I'm also now thinking that Hear Music got mis-directed. All of that early emphasis on jazz, classical, folk, blues, and singer-songwriters; think how much influence the company could have wielded (and may yet still wield) in introducing and/or touting artists of significance in those more eclectic genres. Their customers are yearning for something great, something special, out of their music. And even with the instant familiarity of the artists in recent projects you just can't create a cultural phenomenon out of a normal Paul McCartney album release, nor out of a live James Taylor greatest hits record. And, sadly, lest we forget, a lot of the buzz behind Genius Loves Company started happening in the culture only once Ray Charles passed away. That ain't gonna happen twice.

Whither the Car Stereo

2008-04-25T18:39:31-04:00

I caught an article today in today's USA Today on how consumer electronics companies are now offering CD-player-free car stereos. These are not OEM-installed systems, and automakers would be wise to continue having in-dash CD players as standard features on new vehicles. Their customers have invested heavily in CDs over the past 25 years, despite the sharp downturn in CD sales this decade. Even rampant downloaders do a lot of burning music to CD.

Car makers should definitely look to add on options which allow MP3 player owners to use their players in conjunction with car stereos.

As it is, there are still plenty of cars with cassette/CD players, and there are plenty of peripherals one can buy to stick an MP3 adapter into the cassette deck.

The transition to an all-digital music economy is moving rapidly, but those who stick with physical product aren't necessarily Luddites to be shunned, just as people who want to shop at brick-and-mortar stores for certain items they can buy on the web aren't technologically backward. They just have preferences which are ingrained, preferences which shouldn't be ignored by marketers.

Paradise City is Filled With Dr. Pepper

2008-03-27T22:27:55-04:00

A few months back I ripped Dr. Pepper for running one of the most contrived music tie-in promotions I've ever seen.

This week the brand revealed a new music promotion that is so patently absurd it might be genius.

Just about any music fan or industry employee knows that the world has been waiting for 17 years for the massive rock band Guns N' Roses to release their $13 million+ new recording "Chinese Democracy." Whether or not GNR will actually ever release this money pit of a record has been an industry parlor game for years. The band has launched intermittent, controversial tours, and even performed on the MTV Music Video Awards show - all leading to speculation about album release dates and final album track listings.

Dr. Pepper decided to take that parlor game to new heights by pledging to give everyone in America a free Dr. Pepper if GNR releases "Chinese Democracy" in 2008. I find the effort to be laugh out loud funny. It's a promotion run solely to give the brand some free PR - and it's working incredibly well. The effort got coverage in the NY Post and W. Axl Rose himself has responded to the "Dr. Pepper challenge."

Here's the Dr. Pepper/GNR blog link. I give Dr. Pepper kudos for having the cojones to actually execute this effort when so many brands are plain timid. While every brand measures results based on ROI it's nice to see a fun idea with very little "I" just be allowed to have its own life

When you can even get a recluse like Axl to play along with the gag, then you know the brand struck the right tone.

What is "Selling Out?"

2008-03-19T20:16:24-04:00

NOTE: Sorry - I started this post last week and just had the time to get it out today.

A discussion I've heard far too often, both among music industry personnel and those in the media and in the corporate marketing world, is that of trying to define what "selling out" is in terms of a musical act's relationship with a corporate brand. On the one hand, it is an accepted fact that many acts need some kind of corporate involvement at certain times during their careers to help them financially or with major exposure boosts. On the other hand, the artists themselves are rightfully wary of aligning themselves with brands in ways which leave them open to criticism from fans and press alike. An article by Charles Moran in this week's Advertising Age explores this topic again. Charles also co-writes the great Songs for Soap blog for AdAge.com with Mike Tunnicliffe, which explores the many different brand/artist interactions taking place these days.

One thing rarely discussed is this: artists - ALL artists - need to "sell out" to corporate interests at some stage in their career, and often this involves the corporations they align with the closest and with the highest stakes for their longevity - namely their own record labels and the radio stations/video outlets (and the conglomerates which own them). Even in this digital, DIY age the large majority of artists seek to be signed by a record label so the label can provide marketing, PR, radio promotion, and distribution of their recordings. Once the act has music to be released, then they need to go out and promote their single across the radio stations and video channels/outlets which they depend upon to drive their music up the charts, thereby driving album sales and the revenue they might receive based on that airplay. Yet the major labels (and those indies which are divisions of major corporations) and the big radio conglomerates use music to their own ends just as any corporate brand seeking to license the content from those acts.

How many artists feel their careers were mismanaged by their labels, both when they were current artists, and with their catalogs after leaving a particular label? Too many to count. Those corporations keep cutting staff and roster acts as the industry's physical sales woes increase. They also have lousy reputations for being dishonest in their accounting to the artists they rely on to develop the content the companies are based on. But those labels are still the key engines for allowing artists to create and distribute their art as efficiently as possible across a wide range of media. Even the band Birdmonster, once touted as a completely DIY outfit in Chris Anderson's classic business book "The Long Tail," has signed to a label.

How many artists decry how radio airplay decisions have been centralized by corporate behemoths, leaving virtually no local station autonomy and relying almost solely on audience research to make programming decisions? How many fans hate when radio conglomerates change station formats in their local markets, thereby leaving music fans deprived of easy access to certain kinds of music? Radio conglomerates especially just use music to sell advertising time and advertising programs to marketers. So, in essence, while artists use radio to air their songs, the stations use the music to draw in audiences attractive to advertisers, and the artists have ZERO SAY in what advertising those stations play around their music.

Even the venue owners, ticket sellers, and concert promoters are large corporate entities which must be dealt with: Live Nation, AEG, Ticketmaster, etc... and these companies all have divisions which deal with artist fan clubs, merchandising, and other key parts of the artist's live performance and ancillary revenue streams.

Many artists who would refuse any proactive alignment with a particular brand nevertheless do not complain when particular retailers, hotels, restaurants, banks, health clubs, etc... have in-store music systems which include playlists featuring their own music.

So, let me use a rather crude analogy. Much as Mademoiselle Rimbaud, the busty French girl pleading to Mel Brooks's King Louis in "History of the World, Part I" pleads she simply does not "do it," I reply to those artists who think they aren't already neck deep in corporate involvement with the King's blunt response: "Come on. You know you do it. We all do it. We love to do it." There is always a price to pay for releasing one's art and striving to have it make an impact on as mass a scale as possible. There is always a beast which needs to be fed. And if you want to achieve mass success, then there is always a game to be played to fire up the engine of that success and keep it running smoothly... which doesn't mean there aren't conscious choices artists shouldn't exercise, just that any claims of artistic purity are proven false on prima facie evidence alone.

Noted music supervisor Josh Rabinowitz of The Grey Group writes a bi-weekly column for Billboard magazine entitled "With the Brand." In last week's column (no link available through all my search efforts) he espoused the virtues of artists "selling in" to the world of music licensing and doing music promotions with brands. Why? The answers are obvious. In an interconnected world where one is more likely to hear about a video via YouTube than MTV, or hear a new band or song on MySpace or "Grey's Anatomy" than on commercial radio, then the choice to be anything but completely channel agnostic is short-sighted thinking. Yael Naim and her song "New Soul" are part of the cultural zeitgeist due to an Apple TV ad. And both the artist and the brand can measure their success together. Since her song was featured in the ad her download sales have been significant, and Apple can actually, in some fashion, track how much consumers are paying attention to its advertising by watching that immediate reaction. Similarly, the company can also check out how many YouTube views of its commercial have been seen by consumers, and, as Yael Naim's record is released, how many albums she sells and her success in the digital and mobile arenas - in great part to her association with the brand.

Haven't those been the great questions marketers consistently seek to answer: "How can I quantify the effectiveness of the advertising my company and/or marketing agencies is producing? How can I tell, in this TIVO/DVR world, if people are just skipping through my company's ads and ignoring them?" The measurements above are imperfect to be sure, but they are still measurements one can gauge effectiveness by. Was there any shot "New Soul" would have received any consumer attention in today's oversaturated media marketplace without a major ad or television licensing opportunity such as the Apple ad? Did she stand any chance at garnering radio airplay of any significance? No way.

The quotient may be different for some older tracks or artists whose music is used in such a way, but not by much. 90s dance star Haddaway had his once-ubiquitous hit "What is Love?" licensed for a diet Pepsi Max ad aired on this year's Super Bowl. He had a tremendous increase in download sales after the ad was aired. Was it an increase the Diet Pepsi Max brand manager thought was significant given his multi-million dollar media buy for the Super Bowl? Who knows? But it at least gave him some quantifiable evidence to suggest the ad was the sole reason for that sales increase.

Production music companies are more than happy to be to taking corporations' easy money and leaving the moralizing to the artists with egos who find these opportunities to be analogous to selling one's soul. There is a market to be served and they are glad to serve it as efficiently and cheaply as possible.

So every artist needs to take a step back and truly ask themselves this: if they are willing to give up their masters to one company - the record label, or if they are willing to go and provide programming to radio conglomerates who don't have any vested interest in music per se, then why are other types of brand partnerships taboo? They shouldn't be, and if you don't think fans realize this, then you're selling yourself... short.

Another Ray of Hope for Record Companies & Artists

2008-02-16T19:40:05-05:00

What we know about the record business is this: the legal digital download market, while growing, is not growing fast enough to negate or offset either the downward turn in CD sales or the illegal downloading market. Labels are in deep trouble.

And while the labels are now busy making all their tracks DRM-free for certain online retail partners such as Amazon, it's ironic that two of the industry's new cash cows relies on closed systems: the popular video games Rock Star and Guitar Hero. Both games offer the user the abvility to upload additional tracks to the game... and the results are phenomenal:

In the two months since MTV Networks and Harmonix released the music-based videogame "Rock Band," players have purchased and downloaded more than 2.5 million additional songs made available after the game's initial distribution.

Activision, meanwhile, said it has sold more than 5 million new songs via download for "Guitar Hero III: Legends of Rock" since it began adding downloadable content in early November.

Now Aerosmith has upped the ante for artist involvement amidst this robust environment for interactive music video games. My question is why every other major guitar-centric rock band of the past 4 decades isn't doing the exact same thing? Led Zeppelin. Lynyrd Skynyrd. Black Sabbath. KISS. Bon Jovi. Ozzy Osbourne. Etc...

It's so typical that a band which specializes in resurrecting its career over and over again gets the big picture - an artist's masters and copyrights are assets, and those assets need to provide continuous income or lose value. And why have one's tracks appear on Guitar Hero via generic game characters when they could appear with the band's own iconic images and patented stage moves? THIS is how a band introduces new generations of fans to its music while not alienating core, older fans. And THIS is how to initiate and execute a brand extension properly. This partnership doesn't mess with the soul of the band or the brand. It enhances both (as opposed to, licensing "Dream On" for a Buick TV commercial after doing a killer automotive deal with Dodge just a few years earlier).

These games are important to the industry not only because of the obvious licensing revenue and digital track upload potential, but because the downloads take place via a closed system; the tracks work on the games, not your mobile device or digital library/service of choice. No free downloads here. This is mostly good news, but it also means the labels are going to look at this and say: "Instead of releasing new music or licensing our catalogs via the Internet, we will now seek to also develop solid revenue streams via closed systems where we have more control, and consumers need to buy music to obtain it."

E-commerce Sales of Physical Product - Revisited

2008-01-24T11:50:32-05:00

As I mentioned in my last post - sales of physical CDs were up 2.4% at E-commerce sites last year. E-commerce sites can offer up wider selection of product, allow customers to listen to audio clips of tracks, and peruse editorial and customer reviews of the album. What the E-commerce experience lacks in immediate customer gratification it gains in terms of ease of shopping experience.

Yet sales of albums at E-commerce sites represent just 6% of overall album sales. For labels with huge catalogs facing further consolidation of record retail floor space E-commerce sites represent the last best hope for the compact disc. So where is the great marketing effort on the part of the major labels, the RIAA, and independent labels to drive customers online to purchase physical product. This does not mean shunning label retail partners. So many major music retailers have online sites which sell music as well.

But it also broadens the number of accounts the distribution companies ought to be targeting to sell physical product (and digital music as well). So many "non-traditional" retailers operate E-commerce operations. Why not get these accounts to test the viability of music sales via their web site? How can the labels get these retailers to give them visbility on their site?

The point is this: in this area where the labels have a growth story to sell we hear little from the industry touting this success. Now is not the time to play possum. Now is the time to flaunt your plumage like a peacock and go out and convert the non-believers. CDs, especially catalog and deep catalog in this current market, need to be championed. Get out there and grind it out!

The Case for Record Retail Shelf Space Takes Another Hit, But Online... Another Story

2008-01-10T23:20:37-05:00

Barnes & Noble reported weaker than expected fourth-quarter projections based on weak CD sales at the chain. There have already been numerous rumblings about further decreases in shelf space for CDs at major chains like Wal-Mart and Best Buy. Virgin Megastores is closing some locations.

This, on the heels of a 15% decrease in demand for album sales at record retail as a whole in 2007 - it doesn't paint a pretty picture... although sales of physical CDs via e-commerce sites experienced a 2.4% increase. To me, that points to: A) how decreased selection at physical retail is forcing consumers to look online for titles which, until recently, could be found at major chains, and B) how the online record retail experience has just become more consumer-firendly than the physical record retail experience. If you are starved for time - and who isn't - then going online first makes a ton of sense. This development also illustrates "long tail" economics to a tee.

Starbucks Entertainment Officially Jumps the Shark

2007-12-21T22:26:19-05:00

Kenny G. No artist's name makes the hair on my neck stand up straighter. As someone who got involved with the music business in the 90s from a love of jazz and during the "jazz renaissance" of that decade Kenny was, in my opinion, the epitome of everything wrong with music. The saccharine sounds. The Michael Bolton connection. The complete lack of soul. Sure, the guy had chops up the ying-yang, but to what end? The coup de grace was when he paired himself with the disembodied voice of the deceased scion of jazz music: Louis Armstrong, for a "duet" on "What a Wonderful World."

I'm a pretty inclusive music consumer and listener. I listen to all kinds of music, even the occassional smooth jazz record. But I draw the line with Kenny G. Today, Starbucks Entertainment announced an exclusive release with the above-mentioned Mr. G.

When I worked at Universal Music Special Markets I really wanted to work on the Starbucks account. They had always approached music with a very sure-handed and opinionated curatorial sensibility. Certain music worked for their brand. Certain music didn't. I distnctly remember one of the first meetings I attended with someone from Starbucks in 1999. We had someone from Verve Music Group in on the meeting. That person tried to pitch Starbucks on doing a smooth jazz CD as part of the company's branded CD compilations for the coming year. They Starbucks employee looked at our Verve guy like he had two heads.

Smooth jazz was not what Starbucks was about. They emphasized artistic quality and warmth, intimacy and collaboration. They did instrumental jazz compilations, singer-songwriter collections, blues, Brazilian music, world music, even some classical and opera. The music for the brand had a point of view.

Starbucks never did too much advertising. Their advertising was their product and their stores, and the environment created in those stores. The couches and the ability to sit and enjoy your latte were part of that environment, but the music playing in the in-store bed was what you felt, what made you feel like sitting and staying at Starbucks, that being there was worth the price of that latte. And the music on the Starbucks CDs and the music being piped in were synched up. When you bought one of those CDs you could take a little piece of the Starbucks brand experience home with you.

Even as Starbucks purchased Hear Music and became more ambitious, the artistic specificity remained in their brand point of view. They launched the "Artist's Choice" series of CDs, where musicians would create compilations based on their artistic taste. And they chose artists that furthered the Starbucks brand's image as tastemaker: Lucinda Williams, Willie Nelson, Yo-Yo Ma, Elvis Costello, Diana Krall, Norah Jones, and many others (not all the titles are in print anymore). Even on their "Opus collection" single-artist greatest hits packages they were able to delve into some very significant artist catalogs that were normally difficult to license: John Lennon, Bob Marley & the Wailers, Jimi Hendrix, Frank Sinatra, and The Doors, to name a few. For this they should be recognized and applauded.

Starbucks also became a more significant account for selling frontline records, records which not many other accounts were carrying. They championed artists who were releasing good records rather than just carrying the latest record the labels wanted them to flog.

After the groundbreaking partnership with Concord Records which was responsible for the Ray Charles mega-hit Genius Loves Company the company was sitting even prettier. But, after the massive, Grammy-winning triumph of Ray Charles that curator's sense of knowing what was right for the brand diminished.

Starbucks is a huge brand, with a massive retail footprint. At some point earlier this decade the company decided that the exclusiveness of the type of music Hear Music was producing and buying needed to diversify to account for a wider, more diverse customer base that crossed many different age cohorts.

So there is no longer a "Starbucks sound" per se. Starbucks can't do deals with Kenny G AND Joni Mitchell and expect there to be continued trust in the brand's musical taste or sensibility among its customers. Similarly, on the frontline side the Starbucks Entertainment team is now stocking more big hits and well-known artists: Led Zeppelin, Alicia Keys, Wyclef Jean are current highlighted titles. And the titles released by Starbucks by Paul McCartney, Joni Mitchell, and James Taylor haven't excited customers as much as they've generated PR buzz.

Starbucks has always aimed to be the "third place" in people's lives, other than home and work. But, more so than they realize, Starbucks' music initiative, from its beginnings, has helped give the brand the respect it needs to keep people trusting in their brand experience. I mean, even the baristas can't be excited at the prospect of having to have Kenny G music piped into the stores.

Starbucks needs to reclaim their musical mojo - not just take on projects because they can. If the gentleman from Starbucks I know who delivered that "no smooth jazz" edict to Verve back in 1999 is still working at the company I can hardly imagine how disappointed he is in this choice by the company he's worked at for so long and done so much for in developing their music business.