No Label? No Problem
Monday, September 15, 2008
How many have heard the Eagles’ album “Long Road Out Of Eden?”
Released late last year exclusively through Wal-Mart stores (Homer’s also has it in stock), the CD has quietly sold a couple million copies. This despite a total lack of radio airplay except for specialty shows like mine.
How is that possible? For more than two decades any music release chalking up those kind of over-the-counter retail sales numbers could be counted on to be all over radio to the point where some listeners would now be sick of hearing it.
Welcome to the new paradigms of the music industry. Build enough brand recognition for your band and you may no longer need the old guard media institutions to achieve ongoing success.
The Wal-Mart deal with the Eagles is not the first of this kind. Some mega-star artists have chosen not to resign new deals with record labels and instead go it alone inking deals with individual retailers like Wal-Mart, Best Buy and Target to distribute their creative output.
Garth Brooks, Journey, Bryan Adams and more have chosen this path while Radiohead sold it online first and then were able to dictate the terms of a deal with Dave Matthews’ ATO label for retail distribution.
Of course, not every artist has this opportunity. New artists certainly lack the clout to pull this off and the participating retailers are not interested in “developing” new artists. This is about generating foot traffic in their stores and Johnny Unknown & the Forgetfuls don’t assist in that department.
The artist wins because they make a great deal more per CD sold than with traditional label deals. The Mega-Low-Mart deals offer artists around $4 per unit sold versus the 75 cents to $2 per unit from the labels. Do the math; the choice seems clear that if you can sell a half-million or more, the take is substantially greater.
Meanwhile because some major label business models are still not right-sized for the current economies of the music industry, established heritage artists like Rush or the Pretenders are being dropped by major labels because sales for these artists album releases average below 250,000 and the majors can’t reap a profit from these “small” sales. So, artists like Jackson Browne and others sign to an indie where a one-fourth of a million in sales for these smaller labels translates into a huge release and big moneymaker for both parties. These boutique labels have the same distribution channels as the big guys and afford these legends an opportunity to keep making albums.
Indie music retailers like Homer’s love these changes because it’s easy to set up a tax-exempt account with these mass merchants to stop in and stock their indie store with these titles. For us, we probably sold more Eagles than we would have if all retailers had it in stock because then we would have been competing with everyone compared to being just one of two music retailers with the CD in stock. Plus, a double CD from a major label would have cost us at wholesale way more than what were paying the Waltons to stock it.
Hell, even the indies go out and do deals directly with artists, usually hot new bands that have yet to sign a label deal, so we can have stock on these tastemaker artists long before any one else has them in stock.
But the caveat here is the artist is always without a label arrangement. That changed recently when Sony/Columbia Records allowed AC/DC to do an exclusive deal with Wal-Mart for their upcoming October release.
This angered many other mass merchant retailers because this set a new precedent. Sony essentially said, “We don’t care if you are our customer, we’re going to give just one of our customers an exclusive release and the rest of you can go screw yourself.”
For the indies, this is no big deal. We’ll just go over there and get it and rack up more airline miles, but Target and Best Buy will be left with nothing and are likely to be very pissed off at Columbia going into the crucial fourth quarter selling season.
At the same time, Metallica is shaking things up by choosing to release their new CD on Sept. 12, a Friday, when all music new releases are traditionally offered up on Tuesdays wreaking havoc within the mass merchant sector. Their systems of distribution are very large and geared toward Tuesday stocking, so getting these monstrous systems to execute this altered date is like turning a speeding meteor.



