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Should Music Labels Be Offering Retail As Part of the 360 Degree Deal? Part 1
By Julian Huntly
JH is a Music and Home Entertainment digital marketing specialist with many years of international
experience with global market leaders such as Universal Music, EMI, Virgin and UIP. Living between Madrid
and London JH is consulting for NBC/Universal on their Playback D2C Website and a new online shop for Myspace Spain.
JH is is a specialist in multi-revenue digital marketing and sales solutions for the Music and Home Entertainment sector.
JH is particularly skilled in the optimization of music and TV catalogue assets.
In the world of 360 deals, should Music Labels also be offering the bands they are signing retail as well as all their other services.
I have worked in the Music Industry for over 20 years, that's right I remember when Vinyl was our key format and we sold up to 25% of albums on Cassette, or as they were referred to in Spain, K7 (Ka Siete).
In all that time our key partner, or adversary in many cases, was Retail with a capital R. We had to work hard to get our releases racked out in sufficient numbers to be seen in store, we have to give discounts to get any kind of help from them to get our catalogue out there, all sorts of campaigns had and have to be cobbled together to maximise sales. Our only route to market was bricks and mortar retail, and also at the time the only way consumers could buy our product was through these same retailers.
As we all know, things have changed. Firstly a huge amount of physical sales go through what are known as multiples, stores such as Carrefour, Tescos, Walmart. These retailers quite rightly want to provide their shoppers with the most popular products at the most competitive prices. This has led to a lack of in store space for less commercially viable catalogue and new artists, both of which are fundamental to the survival of the Music Labels.
But what about the specialist stores I hear you ask, Fnac, HMV etc... well first of all they are going out of business, Virgin, Zavvi,Tower Records have all disappeared. Secondly their focus has moved away from Music to Games DVD, BluRay T-Shirts and everything else they can think of. There is some hope though, the rise of Amazon and in the UK Play.com offers the opportunity to make just about every physical product available, any shape, size, price and quantity. But even these mega online stores have their limits.
I believe firmly the time has come for Music Labels to create their own retail route to market, the advantages to this are numerous, they all have expensive distribution warehouses or deals with same, most of these distribution operations are willing and able to do customer fulfilment. The all important margins can be increased by taking out the retailer from the price equation, and the extra work involved and cost of distribution can be easily be recovered from the more efficient stock control and lack of returns.
The process has in fact begun, Universal has Hippo and Warner Music Rhino in the US, in the UK Universal have created a fantastic digital store called Lost Tunes (www.losttunes.com) and Warners have Rhino UK (www.rhino.co.uk). These are just some examples. What these retail operations are not doing is taking advantage of the real strength of the internet and for this reason Commercial Directors sitting in the Major Record companies are not yet convinced they should be in this business.
What can be done? How can sales be improved, I will cover in my next article.
Digital & Online Music Marketing & Sales Consultant
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