December 29, 2003

More on Exclusive Music Deals and Mega-Retailers [2:32 pm]

Big Stores Make Exclusive Deals to Bring in Music Buyers (See also the article in The Music Biz — Then and Now from November — see the PDF, the Globe link has expired)

The exclusive deals are being offered as mass marketers are seeing their share of the music business grow. Discount stores like Wal-Mart accounted for only 13.5 percent of music sales in 1994, said Clark Benson, the chief executive of the Almighty Institute of Music Retail, a Los Angeles-based company that sells data about retailers to record labels. This year the figure is 34.8 percent. Billboard and its corporate sibling Nielsen SoundScan lump electronics chains like Best Buy and Circuit City with traditional music stores. Adding their sales to the other mass marketers would probably raise that group’s total to more than 50 percent, said Geoff Mayfield, the director for charts and senior analyst at Billboard.

For the retailers, the deals are as much about using the artists’ appeal to lure customers as they are about selling CD’s and DVD’s. For the musicians, the deals are less about sales than about promotional campaigns well beyond anything offered by record companies even in their glory days.

For example, Target promoted its exclusive seven-song Bon Jovi CD with an extensive television campaign. In the 30-second spot - which cost $1 million to produce, the band’s management said - snippets from a studio performance of a song on Bon Jovi’s new full-priced CD were intercut with footage of band members chatting about the meaning of the song. Best Buy started a similarly ambitious television campaign for its Rolling Stones DVD set last month.

“If you look at the Target commercial, that’s an ad for Bon Jovi and they just stuck their little circle on at the end,” said Bruce Kirkland, one of the two principals at Bon Jovi Management.

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