Imagine walking
into Tower Records and seeing posters on the wall
for Musicland. Not likely, you say, and you'd be
right. No company would voluntarily promote buying
from a competitor. And yet, that very thing is
going on in thousands of retail establishments at
this very moment.
Don't believe me? Go grab any recent release and
inspect the packaging. Chances are that somewhere
in the packaging there's a URL listed for both the
artist and the band. No big deal - artists have
been promoting fan clubs in the packaging for
years. So this is simply taking advantage of the
promotional opportunities of the Internet,
right?
Next, open up the new Ricky Martin CD. The first
thing you'll see is a blow-in card not for Ricky's
fan club, but for AOL. Sony didn't ask retailers if
they wanted to advertise AOL in their stores, and I
don't think any retailers are getting a promotional
fee for helping AOL get new customers - but I bet
Sony is. Now, pop the Ricky Martin CD into the ROM
drive of your computer. It contains a hyperlink to
Ricky's Web site ( www.rickymartin.com) where in
addition to his bio, photos, interviews, and
videos, there's a "buy now" button which links you
to www.sonymusic.com. (or for those of you who
might like to buy in Europe, www.iMVS.com ). Next
month, if retailers want coop dollars to advertise
the Ricky Martin CD, Sony will make them put these
URL's in their ads too.
Of course, Ricky and Sony aren't the only ones
trying to steal the next sale away from retail. The
new Missy Misdemeanor Elliot connects you to
www.missy-elliot.com which responds to your "if you
want to buy" query by connecting you to
www.Electra.com and the Time Warner store. The new
Biohazard release from Mercury connects you to the
band's web-site, where the "buy" button connects
you to www.getmusic.com (which is the joint venture
of BMG and Universal). The Mirrorball CD by Sarah
McLachlan connects to a variety of places,
including Nettwerk's site, Arista's site, and
BugJuice, the site run by BMG. Sarah gives you a
choice of buying directly from her or from
Getmusic.com. EMD has cut a deal with Amazon for
its online fulfillment
.so you get the
idea.
This isn't the battery business. The retailer who
doesn't like EverReady's policies can switch to
Duracell. The consumer who wants Ricky Martin won't
just substitute something else. Few retailers are
happy about having to stock Ricky Martin CD's with
hyperlinks to Sonymusic.com., but Sony hasn't
provided any alternative. In fact the labels
engaging in these practices haven't even informed
their accounts about the blow-in cards or the
hyperlinks during the solicitation process, so some
retailers may not even be aware that these products
promote their competition from within the store.
Soon hyperlinks won't just be in CD's, but will be
in DVD-Audio and downloads as well. When the buying
choice is just a click away, the implications of
these practices will grow exponentially.
This past week, NARM sent letters to all the major
labels, their distribution arms, and their parent
companies expressing our concern about the growing
practice of forcing retailers to steer their own
customers to competitive sites. We certainly
understand that record labels (and artists) are
free to choose to enter into direct competition
with retailers by selling directly to the consumer.
We also understand the tremendous opportunity
presented by the Internet to cost-effectively
target market to consumers. But building a database
of consumers on the backs of the current retail
base, and then using that database to cut the
retailer out of future sales is highly
anti-competitive and is a strategy that should not
go unchallenged.
The fruitful partnerships between retailers,
labels, and artists have allowed our industry to
grow into a multi-billion a year business, which
serves a diverse array of consumers. The Internet
offers the possibility of growing our business even
more. Promoting the limited offerings of label or
artist-specific sites will not help grow the
Internet business as much as promoting the
offerings of the full service retailer. We should
be looking for ways to work together on using
databases to sell more music so that the next
millennium can be as prosperous as the last.
Note: Originally Appeared In Billboard Magazine
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