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The recent news that Wal-Mart is demanding a CD price cut from record labels sent ripples throughout the music industry. Wal-Mart is the nation’s largest music retailer, and they are threatening to pull out entirely from selling CD’s to make room for more profitable product lines (such as iPods, video games, DVD’s). The chain’s recent success selling the Eagles CD exclusively (bypassing traditional labels and music distribution) gives them even more leverage in a rapidly changing music retailing landscape.

Other music retailers watching from the sidelines will await the outcome of this latest skirmish and will also demand concessions of their own to remain competitive. With the costs of doing business at the labels (including finding, launching and developing new artists) on the increase the pressures mount on several fronts. Labels and artists are being pressured to perform like never before.

If Wal-Mart decides to stop selling CD’s it will not have a significant impact on their sales, as they maintain music only accounts for about 1% of their sales volume. Unfortunately the labels (especially certain genres like country) rely on Wal-Mart to the tune of about 40% or more of their sales base on every release. Imagine the quantum shift Wal-Mart’s exodus would create for the music industry. Labels are struggling as-is to not only break new artists but maintain sales bases for their established acts at retail.

Digital sales, while on the upswing do not offset the losses on the physical side at retail. Another trend is the consumer’s desire to pick and choose only the hits, or the songs they like and not the entire album. The next generation of music consumers will not be tied to the prior generation’s album-mentality when it comes to their buying habits. Labels and artists have to develop new sales models to maintain revenue streams and incentivize consumers to step up for their product. Many are experimenting with product exclusives, such as bonus tracks and video content. Some are attempting to drive customers to their web sites for bonus material or opportunities for fans to obtain early access to concert tickets.

The emergence of Live Nation (who recently inked several high-profile deals with the likes of Madonna and U2) as a powerhouse in the music industry indicates the savvy artist is taking more control over key aspects of their careers. The labels are seeking new models and partnerships with retail and radio, along with Internet vehicles to expose artists to consumers. The competition for the entertainment dollar is fierce in the marketplace, as today’s buyer has many more choices than their predecessors.

MySpace, Facebook and other web-based environments are finding their foothold as launching pads for new artists to grow and cultivate fan bases. The marketing gurus in this new arena are seeking and finding alternatives to traditional radio and TV outlets to expose their art. Consumer-driven and designed content is the new conduit. The music and entertainment customer wants to make their choices and have their individual stamp on the finished product, whether it’s picking their own songs to burn to CD or designing their blog pages.

Another challenge this creates for the labels is the artist development process. How long can a company stick with a new artist until they see payoff? What costs should be shared by the artist in this plan? Look at the development of classic artists like Bruce Springsteen, Billy Joel, et al (neither of which had early commercial or radio success) and wonder if they would have stood a chance in today’s environment. Where is the next generation, and who is passing the baton? The future of the industry will evolve at its own pace, but hopefully the “gatekeepers” will make the right decisions and there will continue to be viable artists.

Meantime, the retail landscape will continue to be a challenge for the labels and the artists, regardless of who is in charge or picking up the checks…

David Sanders is Nashville Label Manager for Koch Entertainment Distribution

One of the more interesting panel discussions of the Leadership Music Digital Summit yesterday was “Digital Retail: What’s The Future?”

On the issue of the future of CD product, UMG Nashville EVP Sales, Marketing & New Media Ben Kline said, “I can’t imagine CD’s ever going away.  I can’t imagine Wal-Mart and Target not selling hard product.  It’s the ones (retailers) in the middle that will be hurt.  I don’t think you’ll be able to walk into a mall and purchase a CD.”  Kline went on to comment, ”We still can’t afford to be in the singles business” when asked about the current state of selling digital singles and why labels are not being more singles driven.

One of the major discussions prevailing was how to grow digital sales as CD sales fall.  Each panelist had their own ideas including:

• Better devices
• Ubiquitousness
• Multiple product offerings in one bundle
• Player compatibility and coordination between platforms
• Exceed experience of music ownership with consumers
• Stop narrow focusing on subscription based models

On the subject of future business models within retail, the industry vets responded with:

• Ben Kline:  “Demand price models (where price is equal to the demand of the music).  Not every song should be .99 cents.”
• EMI CMG VP Sales & Marketing Mark Adkinson added, ”Steve Jobs can’t run our business for us or he will run it right into the ground.  He wants to sell devices, not music.”  Mark also stressed the need for pervasive distribution within the music industry.

Many of tomorrow’s popular artists are going to need more than a single and a CD to explode.  To find entry into new media, exposure to potential fans and to sell their music it will be necessary to market and brand themselves with innovative means.  Multi-level partnerships, sponsorships, new media, special events, sports and mobile based marketing are just a few important ways to reach the targets.  Whiskey Falls is already making it happen.  Other radio formats are recognizing the opportunities available to them with acts that are offering value not only in spins, but beyond them.  When will the Country format do the same?

Here is an article from the current issue of Billboard by Ken Tucker:

Whiskey Falls is not just a band—it’s a four-man marketing machine. Made up of Seven Williams, Wally Brandt, Damon Johnson and Buck Johnson (no relation), the quartet has a history of building support for its career through the unlikeliest of partners. Even before the group released its first single, “Last Train Running,” last year on Nashville-based independent Midas Records, it had already built a network of sponsors. AAMCO, the American Tailgater’s Assn., the Laborers’ International Union of North America, the National Hod Rod Assn. and even NBC soap opera “Days of Our Lives” are all in the band’s corner.

 That’s not by chance—it’s by design, lead singer Williams says.“We realized the more we could do for ourselves, the more that we could help our record label, the more we could help our relationship with radio, the more we could give back to our fans,” Williams told Billboard last year.

Country WSSL Greenville, S.C., OM/PD Steve Geoffries says the band “really understands the new avenues of marketing.” The station recruited Whiskey Falls to document life on the road for a Web site feature dubbed “Road to Fame.” “We post the video online and let our audience follow their long day from start to finish,” Geoffries says. The band also checks in with the station’s morning show each week to update listeners.“They’ve been in the market a couple of times for performances and they have developed a following here,” Country WGH Norfolk, Va., PD John Shomby says. “They really have learned what it takes to get known and they are doing it.”

The band’s appearance at No. 1 on Billboard’s Top Mountain Region Heatseekers chart can likely be attributed to a busy week of performances leading up to the Super Bowl in Scottsdale, Ariz., including a gig for thousands of tailgaters outside the University of Phoenix Stadium, where the big game was held.

Geoffries says the band’s new single, “Falling Into You”—No. 46 on Hot Country Songs—is “contagious.” WSSL played the song 16 times during the week ending Feb. 17, according to Nielsen BDS.

Tell Me a Story
By: Daniel Anstandig

Music legend Ray Charles once said that he “was born with music inside” himself. It could be said that the best loved songs in history are the ones that resonate and harmonize with the music inside of us.

Country music is best known for producing these songs that reach into the souls of their listeners. The stories told by many Country songs can make your heart race, put a lump in your throat, and send tears down your face. They’re the songs and stories that have turned country radio stations into empires. 

The world’s most powerful and best loved radio stations aren’t without persuasive stories themselves. Case in point: KLBJ in Austin… not just another radio station. It’s the radio station that was rescued from bankruptcy in 1942 by young entrepreneur, Lady Bird Johnson. KLBJ does a terrific job of summarizing their rich history at www.590klbj.com/History.  WMMS is known in Cleveland (and beyond) as a way of life for Clevelanders more than a music service. Its logo (the Buzzard) and the many bands it made famous have kept it alive in Cleveland pop culture for years. WSM in Nashville catapulted its way into music history with the Grand Ol’ Opry.  Read the rest of this entry »