Exclusives aim to pull
music fans into stores
By Brian Mansfield, Special for USA TODAY
The world of music distribution faces turbulent times.
Tower Records is gone. Hard-copy music sales continue to drop
year to year, and double-digit hikes in digital sales haven't
offset the losses. Meanwhile, brick-and-mortar retailers search
for new ways to lure music-buying customers, particularly
adults, who still buy CDs but no longer have the time or the
inclination to go to music stores — assuming they can
As national music chains dwindle, big-box retailers such
as Target and Wal-Mart are taking cues from Starbucks and
iTunes by adding more exclusive music to their shelves. Target's
new Spotlight Music Series offers 15 discs, including new
adult-contemporary music, genre compilations and mixes handpicked
by Avril Lavigne, Jason Mraz, Dave Matthews and others.
"We know our guests don't have a lot of time to browse
for their favorite music," says Target's Paula Thornton-Greear.
"So the Spotlight Music Series makes it easy to discover,
or rediscover, their favorite music."
"People are buying music differently, especially adults,"
says Jim Brandmeier of 180 Music, which developed the series
with Target. "They're likely to buy music while looking
for something else."
Retailers typically take a couple of approaches for exclusives.
First, they work with labels or individual artists to create
special packages. That could be as simple as Josh Groban's
Valentine's Day compilation, With You, for Hallmark, which
included two new songs. Or it could be as massive as Wal-Mart's
exclusive deals with Garth Brooks (a multiyear pact) and The
Eagles: The group's upcoming Long Road Out of Eden album will
be available only at the chain for the first year.
Second, retailers extract exclusive content from labels.
Buyers of John Mellencamp's Freedom's Road, for instance,
had several bonus options, including a four-song CD at Best
Buy, a DVD at Wal-Mart, downloads at Walmart.com and Circuit
City, and a video and two rough mixes at iTunes. The permutations
amounted to eight tracks and five videos. Jerry Lee Lewis'
Last Man Standing album gave digital exclusives to Wal-Mart,
Best Buy, Target, CMT.com, iTunes, Rhapsody, Urge and Napster.
Such extras leave smaller stores in the cold.
"The profit margins of music retail aren't very good
to begin with," says Clark Benson, CEO for The Almighty
Institute of Music Retail, a California-based market research
firm. "The big-box retailers don't need the margins from
CDs. The exclusives are a draw, then customers buy appliances
"I find the Wal-Mart/Garth Brooks deal to be less objectionable
than having an extra track to a Bruce Springsteen album,"
says Mike Dreese, co-owner of the 27-store Newbury Comics
chain in New England. Brooks "is a clean deal. If you
want that, go to Wal-Mart. With the other, we're in the position
of selling an inferior product. It has a corrosive effect."
Billboard senior correspondent Ed Christman says Target's
new line is a variation of the licensing lure.
"What's unusual, as it was billed to me, is that it's
much more marketing-heavy," he says. "It will be
featured in circulars and possibly a television spot. Usually,
the retailer doesn't spend so much money to promote these
types of things."
In addition to generating incremental sales, Target's line
appeals to its demographic while helping to distinguish it
as a source for music in a chaotic, changing market. Starbucks
has successfully implemented a similar approach with its combination
of new music and licensed compilations. The coffee chain has
turned its 12,000 stores and 44 million weekly customers into
a powerful purchasing force, particularly for new artists
like Antigone Rising and Sonya Kitchell.
"Music has been part of the coffee experience for quite
some time," says Starbucks Entertainment president Ken
Lombard. "We definitely know that Starbucks customers
are totally hungry for the discovery of new artists. We knew
that we had a unique opportunity and the perfect format for
artists and labels to break new artists."
Starbucks recently released the debut CD by rock band Low
Stars, featuring former Tonic guitarist Jeff Russo. Upcoming
exclusives include a covers album with tracks by R.E.M. and
Robert Plant and Off the Clock, a compilation by Starbucks
baristas and shift supervisors.
As music's commercial paradigms shift, other stores find
ways to create packages geared toward their clientele. Cracker
Barrel Old Country Store now offers compilations from country
artists, plus vintage Grand Ole Opry shows.
"It's private branding," says Christman. "How
many companies make their own cereal for a supermarket chain?
How many companies make their own detergents for a discount
retailer? That's a set retail strategy."
Labels see the big-box trend as a potential bottom-line booster.
"You have to ask yourself who can grow the pie, not
just shift the shares," says Jim Saliby, SonyBMG Nashville's
vice president of sales.