If, as pundits proclaimed 12 months ago, “flat is the new up,” then 2010 will have been a pretty good year for country music sales—at least on the surface. Happily, for the week ending 12/5/2010, YTD country sales (down 5.7%) are handily outperforming the all genre average (down 12.7%) compared with the same period in 2009 according to Nielsen SoundScan.
Unfortunately, beneath the calm waters there are many questions about the future. Radio’s role is morphing. Shrinking margin and shelf space are high on the worry list. Leveraging social networking strategies is a constant challenge and the merits of experimental formats and packaging such as CDs with less than 10 tracks, have stirred much discussion.
The consumer march from physical to digital product is also a closely watched metric. Country digital album sales jumped 30.5% so far this year. Overall digital album sales have only increased a modest 12.7%. These numbers highlight country’s digital album growth, but digital adoption of Nashville artists continues to trail the all genre average. Digital country album sales YTD were about 15.7% of total country album sales (11.4% in 2009); the all genre figure was 27.5% up from last year’s 21.3%. Turning the telescope these numbers also show that country consumers still prefer physical CDs by a wide margin. In fact, about 84 of every 100 purchased country albums were made of plastic.
So what developments should we expect in the race to capture consumer’s hearts, minds and pocketbooks for 2011? To find out, MusicRow asked four seasoned marketing/sales execs to share candid concerns, and offer perspective in terms of where we are today, and what we might be facing in the coming year.
The product balance between physical and digital has all our experts concerned. “The adoption of digital music by the country consumer is being outpaced by the decline of floor space at traditional retail,” says Kelly Rich, VP Sales & Marketing for Big Machine Label Group. “There is still demand for physical product and as an industry we have been forced to find new outlets to make it available. We have forged partnerships in the last few years with non-traditional accounts such as Starbucks, Justice, Hot Topic, Scholastic, Radio Shack, Rite Aid and JC Penney. We recently partnered with Target on a strategic marketing initiative surrounding Taylor Swift’s Speak Now release. This unique approach leverages the value of the music and the artist in a synergistic way that benefits both parties.”
“The percentage of digital country CDs hasn’t kept pace with the other formats,” notes veteran Joe Galante. “This is a real concern as we lose physical coverage due to accounts cutting inventory and facings. We haven’t gotten the consumer to buy into digital CD conversion at a replacement level necessary to sustain the genre, so down the road when physical drops it will lead to a revenue gap. Country has a top 10 of artists who do well in the digital format, but the consumer is picking individual songs and not buying everything. And don’t forget the difference between units and revenue. The revenue loss this year is much greater than the small drop in units might suggest.”
Sr. VP Brand Management & Sales, Warner Music Nashville, Peter Strickland sees a possible silver lining for catalog sales in the face of shrinking shelf space. “I imagine we’ll see strong catalog growth,” he says. “That retail space has been taken away from us, but we can sell physical goods through our online partners or digital catalog which is a big focus now. Also, I’ve heard comments about country becoming a digital single-oriented format. Twenty years ago physical single sales lived in a world of album sales.
People bought singles until they were won over by the artist and then bought the album. It’s not really that different today. There is probably room for both formats to survive. We should view the digital single as a way to introduce people to an artist with the goal of getting them to ultimately buy into the artist’s complete works.”
“Social media marketing is really starting to work to drive both physical and digital sales,” says Curb Records VP Sales, Benson Curb. “It looks like country music will wind up being flat or only slightly down this year and out perform overall. Not much of a surprise given the major releases this fourth quarter. Next year we should see some new acts break out.”
“Country being down a point or two compared to the overall market isn’t bad,” agrees Galante. “However when you realize we put out almost every major act we had in the last 90 days it doesn’t look promising for 2011. Also the incredible performance of the Taylor project really masked a bigger problem for country. We won’t have the same line up in 2011 to hold the volume up so it will be telling to watch first quarter drop offs compared to the prior year.”
Perhaps the year’s most headline-grabbing experiment was Warner’s series of Blake Shelton six-paks in digital and physical format. Capitol also released an eight-song Keith Urban disc in the last quarter and Big Machine launched a few digital only EPs. “Overall, the strategy for Blake Shelton was a huge success,” Strickland avows. “And the six-paks played a major role in that. They gave us visibility. For 12 months Blake’s music was everywhere, and the radio hits kept coming. People were consuming Blake Shelton product—his music, t-shirts and tickets. It all increased across the board. When we first decided to try the strategy we knew we would have a lot of eyes on us. But we never did this thinking that it would be a roadmap for every artist. We look at each artist individually and where their career is to make a decision about how to market them and what kind of packages to put out.”
“We have tested the waters with digital-only EPs to help develop our new artists,” says Rich. “It helps sustain the fan’s need for more music, while the fan base is building to a level that can successfully support a full length release.”
“We have found it tough to make the six pak model work from a profit/margin standpoint,” adds Curb. “We haven’t really tried an 8-pack as of yet, but the idea is something that might work for us with the right artist.”
“2011 is going to be a challenging year,” says Strickland. “I hope that as an industry we break more new artists. Some of the artists that have been around a decade or more are starting to move to the back burner and creating that opportunity. Labels wait to release new artist product until there is demand, so if it takes 30-40 weeks to break those new artists, it will be a slow process. Radio will continue to play a major role in reaching our consumer and letting them know what we have to offer. It’s about coordinating your efforts at radio with respect to their websites, Facebook pages and other social networks that change on a daily basis. How do we merge all that to give us triple the audience from the terrestrial format alone? That is going to be key going forward, utilizing radio to reach an even larger audience than what people hear over the air.”
“Overall, there is yet to be another tool as effective as radio in building awareness for our music,” sums Rich. “And as the digital adoption rate continues to increase and radio’s delivery mechanisms morph, so will the effectiveness of their reach. That said, we embrace and utilize every form of media/social media available to us. Our philosophy is the music business is full of amazing opportunities and we refuse to think differently. Great things can still come from a well executed plan.”
A new book, The Idea Writers by Teressa Iezzi, while aimed directly at copywriters offers advice useful to the entertainment industry, especially if you think of artists as brands. “You’re not just making something that will compete with other brands and other messages created by brands,” Iezzi says. “You’re making something to compete with every other piece of content, every other media experience that a person has during her waking hours….So copywriters [read artists] have a gargantuan challenge to be relevant, but also a great opportunity to be original, to interact with an audience, to have people talk about, spread, and engage with the things they create.” Hopefully, Nashville marketers and the artists [brands] they represent will continue to challenge consumers through brand creativity.