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Target to distribute exclusive series of music

Thu Feb 1, 2007 5:00pm ET
Market View

By Sue Zeidler

LOS ANGELES, Feb 2 (Reuters) - Target Corp (TGT.N: Quote, Profile , Research) on Thursday said it will release exclusive CDs by artists like Kenny Loggins and David Cassidy in the latest example of stars "of a certain age" bypassing music labels to partner directly with retailers.

Target on Thursday said it partnered with an independent start-up music label, 180 Music, to release 15 adult contemporary CDs in all 1,449 stores on Feb. 27 for $9.99 each. Similar releases are set to follow, according to 180 Music founder and chief executive officer Jim Brandmeier.

Other store operators like Starbucks Corp (SBUX.O: Quote, Profile , Research) have made a splash in the music business by releasing exclusive content under its Hear Music venture, while Wal-Mart Stores Inc. (WMT.N: Quote, Profile , Research) recently reached exclusive distribution deals with music icons like The Eagles and Garth Brooks.

Rock duo Hall & Oates also recently moved to release an independently-produced holiday CD exclusive to music retailer Trans World Entertainment Corp (TWMC.O: Quote, Profile , Research), which controls chains like Sam Goody and Strawberries Music.

"A lot of legendary adult artists have been ignored and the adult audience has been ignored as well, so we're going to put those two things together for artists to express themselves," Brandmeier said, adding that Target plans only to release the series in physical form and not make it available digitally.

Included in the first 15 CDs to be released at Target are new albums by Loggins and Cassidy as well as a Phil Ramone-produced CD with new songs by legends like Carole King, Brian Wilson, Burt Bacharach, Kris Kristofferson, Willie Nelson, Richard Marx and others.

"Through 180 Music we are offering our guests Target exclusive one-of-a-kind albums that are sure to have something for everyone," said Darrell Tucker, vice president, Target.

Many of the major record labels have been struggling with an industrywide CD sales decline, forcing them to contract and slash many jobs in marketing and promotion. Various artists have also been dropped by labels as their sales have slowed to where the labels can no longer support them profitably.

While the growth of digital music sales on services like Apple Inc's (AAPL.O: Quote, Profile , Research) iTunes has been the one industry bright spot, it still is not enough to offset the drop in physical CD sales. What's more, the Internet in certain ways has shifted the focus away from major labels, by making it easier for artists to sell directly to their fans without any middlemen.

For example, various artists have broken records on social networking sites like News Corp's (NWSa.N: Quote, Profile , Research) MySpace.com.

Going with an independent label or a nontraditional distribution deal with a retailer can sometimes be more lucrative for an artist than a record deal, offering a chance to reap a bigger share of record sales than the standard $1 to $2 per album, industry experts said.

Brandmeier of 180 would not disclose terms of the artist deals, but said they were more flexible than standard label deals, which often require multiple album commitments.

"Artists get more freedom. It's a change from the regular business model. We don't want to tie people down," he said.

To be sure, many of the major labels are reexamining the way they do business to address changes in the marketplace, their relationship with artists and brands and retailers.

"For our survival and success, we need to get familiar with all the ancillary revenue streams," said David Ring, senior vice president business affairs and development for Vivendi's (VIV.PA: Quote, Profile , Research) Universal Music Group, the No. 1 music company.