Ringing Up Big Music Sales
Saturday, May 13, 2006
The first album from punk-pop band Yellowcard became a hit through conventional radio and CD sales. But the group only broke into the big time when it launched songs from its second album exclusively on a new stage: the cellphone.
Pictures of the quintet were blown up into 40-foot Verizon Wireless signs draped off the side of buildings in Manhattan. Their title song, "Lights and Sounds," became the centerpiece soundtrack for 30-second commercials promoting the cellphone company's music download service. In total, Yellowcard benefited from $5 million to $10 million in advertising, something the band's label, Capitol Records, couldn't have afforded, said Deborah Klein, the band's manager.
The cellphone business is retuning the music business. As radio's power to create big stars fades, artists and music labels increasingly look at cellphones as a new way of distributing and promoting music. It's not merely about the 20-second clips called ringtones and ring-back tones, which have blossomed into a huge business generating more than $12 billion globally last year, according to the Yankee Group. The focus now runs to the heart of the music market: full-song downloads, music videos and a host of other music promotions around rock concerts, behind-the-scenes interviews and sneak peaks into future releases.
"Telecommunications and wireless companies are the future's most promising distributors of music-based content," Warner Music Group chief executive Edgar Bronfman Jr. said at a conference this week in Hong Kong. "How we affiliate with artists . . . the deals we strike, the services we provide, all these . . . are being transformed."
This week, T-Mobile USA struck a deal to make Atlantic Records' rap artist Lupe Fiasco's new songs, "Kick Push" and "Just Might Be OK," available for download on the carrier's latest Samsung T509 phone, more than a month before the launch of the album in stores June 27. The same label's multi-platinum rap artist T.I. agreed in March to put songs from his new album, "King," exclusively over Sprint Nextel Corp.'s wireless network before the album sold anywhere else.
Sony Urban Music and Epic Records yesterday released R&B superstar Omarion's new single, "Entourage," but only as a ringtone from BET Mobile.
Madonna's techno-dance song "Hung Up" was heard first on cellphone commercials and as a ringtone before the tune even hit radio, said Michael Nash, a senior vice president for Warner Music Group, prompting some desperate French radio stations to try to play the song off of a cellphone for eager listeners.
Those types of deals mark a sea change in the way music is promoted and sold. Record companies used to release songs to radio stations to popularize the songs before albums would be on sale, and no retailers got special treatment. All stores received their inventory and promotional posters, and the album was for sale on a given date.
Just in the past year or so, music labels have started breaking with that tradition, and looking at music promotion in a different way, Nash said. "There's a buzz-building effect of going to market on mobile," he said. Cellphone carriers also closely monitor content that travels over their networks, which alleviates' record companies' concerns over piracy of early releases, he said.
"The last year has shown how important the cellphone is for the music business," said Thomas Hesse, president of the global digital business for Sony BMG Music Entertainment, which struck marketing deals for international stars such as Shakira, whose song with Wyclef Jean, "Hips Don't Lie," first aired as a Verizon Wireless commercial. Two-thirds of all music downloads in Italy come from cellphones, and in Japan and South Korea, mobile represents a majority of downloads, he said. Some artists, like rap star T-Pain, sell more songs in the form of ringtones than as singles or albums.
A growing number of cellphones now come with speakers, memory, high-speed Internet connections and battery life that make them capable of downloading and playing full songs. Although it may not be as easy to navigate as a retail or online store, the mobile phone is a highly personalized device used by more than 200 million people in the United States. Moreover, the phone is already a communications device, making it an ideal way for people to share favorite ringtones.
Cellphone companies are keenly aware of their growing importance in the music business. A year or two ago, they were in a weaker bargaining position, asking for permission to use songs as ringtones; now they find labels and artists coming to them with new ideas. Some artists are even cutting recordings in the studio designed as ringtones.
"There's much better coordination now than there has been in the past," said David Garver, executive director of marketing for Cingular Wireless, which struck an exclusive deal with "American Idol" allowing fans to download performances as ringtones. Two years ago, when cellphone music was an insignificant market, the major music labels paid little attention to carriers like Cingular, which got access only to a limited library of tunes, he said. "Now they have digital divisions that work with the carriers," and the companies work in tandem to develop products designed exclusively for the carriers, he said.
"I used to go down there to the record store, and there was a social aspect to it," said Michael McGuire, an analyst with research firm Gartner Inc. "You could just hang around and get recommendations."
Now, in place of that, some companies are betting that people will use their phones to share music with their friends.
This year, a Tennessee company, PassAlong Networks, plans to launch a service that allows people to send text messages containing links to online music store selections, where recipients of the message will be able to click, sample, and buy music off their phone, a service the company already offers through e-mail and instant message.
Last week, Verizon Wireless announced the winner of its online battle-of-the-bands contest on MySpace.com, the social site where thousands of homegrown acts have uploaded their songs.
The winner, an unsigned five-man rock band called the Parlour Boys, will produce a music video, and its winning song, "Lovers," is available for download through Verizon Wireless, its first commercial distributor.
"It's a huge opportunity to get our music out," said Clay Kennedy, a guitarist for the band. "If we do well, it's gonna bode well for the technology."