LAST YEAR, while the major labels in the record industry were bemoaning their weak sales and diminished earnings -- and while 9 out of 10 albums were losing money -- a small group of record companies was making a mint.
And they were doing much of it over late-night TV, filling the late-show ad slots with interminable earnest pitches for greatest-hits albums, golden-oldies packages, nostalgia collections, country-western anthologies and compilations of songs arranged in themes like "Together" and "Disco Nights." c
Throught the midnight ad blits -- along with other forms of direct-marketing such as direct-mail, key-retail-outlet sales and record clubs -- these companies walked away with close to $1 billion in sales during 1979, a sum not included in the record industry's total retail-sales figure of $4.35 billion.
They spent $100 million advertising on television alone. TeeVee Records spent $3 million on one record, a "best-of" from middle-of-the road pop singer Roger Whitaker that has reportedly sold over 2 million copies.
They broke sales records. K-Tel -- which specializes in spots drawing customers into 28,000 retail outlets not normally associated with records -- sold 30 million records in 1979, a year that saw their sales figures rise from $125 million to $165 million.
An they launched careers. British country-crooner Slim Whitman, who failed to crack the American market in several attempts during the '70s, saw 2 million of his records sold over the airwaves. He recently signed with and released his first album on a division of CBS, the largest record company in the world; the record company that had leased Whitman's music recently put out its own best-of album. It sold 200,000 copies.
"We are special marketers, an alternative to the retail market," says Richard Huntley, president of Suffolk Marketing, one of the major direct-response companies specializing in single-artist packages. "You reach an extra part of the population that should and can be reached with television, expecially people in rural areas who don't have malls down the block."
Those who respond to all forms of direct-response sales (an $87-billion U.S. market in 1979) are people whose needs are not met by existing markets. u'Some don't go to youth-and hit-oriented record stores. Some are part of the increasing workforce of women who have cut back their leisure shopping time. Some are what one marketer calls the "less sophisticated record buyers." And some simply find it more convenient to let the spread of media service their needs at home, through television, radio and direct mail. Nighttime Is the Right Time
The major companies -- such as Suffolk, Candlelight Records, K-Tel, TeeVee Records and Columbia House -- do not advertise in the late-night slots because of cheaper ad rates. They do it because at that time, the viewer's attention is not so occupied and he is more likely to move to a phone or note pad. "The amount of money we spend on spots is not important," says a spokesman for Candlelight. "It's how many orders you get per advertising dollar." One company ran a spot during the Super Bowel and didn't get a single phone call.
"When you reach you break-even point," says Suffolk's Huntley, "it's time to look for somthing else to sell." Of the approximately 125 new ad campaigns each year, none lasts longer than 12 weeks, though it may be repeated several times over the course of a year. That allows for shipping products around to different regions and developing new marketing attacks.
"In each situation, we're looking for the blockbuster, the great records that have stood the test of time, that are important," says Stan Walker, vice-president of Franklin Mint.
The licensing of the past is an intergral part of the business. "Record companies are interested in getting hits that can be played on the radio," says Candlelight's president Wesley Wood. "They're interested in comtemporary music, whatever that might be. Twenty years later, a record company has a tremendous catalogue and it's impossible to keep current." Deciding on the Product
The choice of what music to market often is surprisingly informal. TeeVee Records put out two Roger Whitaker albums because the president of the company liked him. Suffolk put out a successful Nelson Eddy and Jeannette McDonald compilation because it was "a choice of my parents and seemed like a neat thing to do," says Huntley. "Actually the research is less scientific than one might expect."
"You have people who know a little about music but a whole lot about what will sell on television," says one industry insider. It then takes about three months from concept to conclusion for a compilation album. "We take over where radio falls off." says David Milner, director of creative services for K-Tel, which deals much more with repackaging of current and very recent hits. "By the time we come out, a record's had its run. We select well-known songs that have proven marketing strengths."
With few exceptions, compilations consist of previously released material advertised in key phrases (30 hits, 100 memories, 60 moments). In pop music, it can range from rock of the '50s to hits less than six months old but no longer on the charts or sales ledgers. Most packages are exclusive ("there's not enough room in the market for competing packages," says Suffolk's Huntley).
George Devito, product manager for TeeVee Records, reviews charts as far back as 20 years looking for artists who've had hits (but not recently) to compile packages. "But emotion also comes into it," he says, "and sometimes a success is more of a stroke of luck than anything else."
K-Tel specializes in concept compilations like "Star Flight," "Night Moves," "Hot Nights and City Lights," "Together," and "Disco Nights." The general pattern is for 16 to 24 songs to be contained in a single package or tape equal in price to a 10-selection album on the retail market. Multiple record sets are also common.
"There are so many record products out there, the consumer has so many choices," says David Katlin, general manager for K-Tel's U.S. operations.
(K-Tel, perhaps best-remembered for the Veg-o-matic, Miracle Brush and non-stick Teflon pan, started out with a country-western package sent out of a small Winnipeg store in 1965. Now operating in 19 countries, K-Tel has extensive oil, gas and real-estate holdings and is traded on the New York and Toronto Stock Exchanges.)
"What we offer gives them a little bit of all the good things, which may not be as current, but are not all that outdated." K-Tell has had close to 130 projects; there will be a dozen swinging into operation between now and Christmas, including a joint campaign with Kawasaki called "Mounting Excitement."
Candlelight Records spends "millions of dollars on mail and phone bills," says president Wood. "People who frequent record stores are younger to begin with. We appeal to middle America, 35 and up, married, a couple of kids. They would not frequent a record store. We appeal to women for whom shopping is a very valuable commodity. We appeal to the people directly in their homes with a product that is really pre-sold. We don't break acts, we sell known commodities to a much older audience." The continuing appeal of oldies, country-western and middle-of-the-road rock packages bear out his point. The eight-year old company sees 50 percent of its sales in country music. Years ago they started advertising in Country Music Magazine. Last year, they bought it.
But classics can also sell, if packaged right. Columbia House's specially marketed "120 Musical Masterpieces" has sold 3 million copies since 1971. As a five-record set, it's the most successful television package of all time. aColumbia House, a 25-year old division of CBS Records that sells top albums from all record companies through its Columbia Record and Tape Club, is the largest mail-order music marketer in the world. Their major advertising is done in print; television only supports their space buys.
The Franklin Mint is best known for its continuity series (albums that keep coming monthly unless the customer concels). Three series represent a total of 230 records: "The Ormandy Era" (30 records); "100 Greatest Recordings of All Time"; and the 100-volume "Greatest Recordings of the Big Band Era." The cost per album is $9.75 (price guaranteed for the duration of the series). The company has also released four two-record packages (Duke Ellington, a Big Band Special, Beverly Sills and Julie Andrews). Rolling 'Em Out
Once the material has been licensed, most companies follow a proven three-part pattern: the dry test, wet test and rollout.
The dry test is market research without a product. One system is to make up a mock radio commercial, play it over the telephone to various age groups and assess their reactions. The wet test is a limited pressing, with material licensed for a run of 5,000 or 10,000, which is then tested in one or several markets. The rollout coes when the decision is made to go ahead with national campaign. The tests are crucial: Sales of less than 500,000 on a key retail-outlet campaign would be considered a failure because of all the marketing and advertising costs.
K-Tell's "Classical Rock," consisting of well-known rock standards played by the Longon Symphony Orchestra, sold 750,000 copies in England and was the No. 1 album in a number of European countries. It was test-marketed here and dropped. "Classical music is respected in Europe," says K-Tel's Milner. "Everybody grew up with it. It's just a different situation here." m
"There have been a lot of losers who've fallen by the road," says one experienced marketeer.
There have also been some shady tricks and scruffy TV ad campaigns on television that have given the business a bad name it feels it doesn't deserve. tFor instance, the "sound-alikes." That's when you got 30 current hits, but until the record came, you didn't notice that they were sung by sound-alikes who really didn't sount that much like anything you remembered. That particularly since the Federal Trade Commission banned the practice unless there was a very visible and audible disclaimer. Late-night record spots on television have lent themsleves to parody, but there is art, science and a lot of money involved. The art comes in the structure of the spots themselves. They're generally two minutes long in what one television ad salesman calls "a 30-second economy." Because of their length, they do better in fringe, late-night periods. They looked packed with information, and they are. The object is to play as many snatches of songs as possible in 120 seconds while all of the titles crawl across the screen. a"The more you can make them aware of what's in the package, the more comfortable they are with purchasing it through the mail," says Candlelight's Wood. "And some people will buy a record just for one song."
After that, it's a race to the phones to call in the order: Oddly enough, the marketers say, most Americans would rather pay the C.O.D charge on direct-response ads than write the address down and mail in a check or money order. The demand can be brutal: Shortly after Elvis Presley died, the telephone rush on a TV package featuring his music caused the Bell System's special 800 lines to shut down temporarily.
They may rush to buy, but they don't always rush to pay. "The country-western and older audience is a much more stable and steady audience than the teen market," says one veteran. "They're not as mobile. When you mail out records, they tend to be at that address, they're more sure of what they want. Younger and minority audiences tend to be more fickle, impulse buyers. Kids order at night, and then go to school, and the parents refuse the records during the day. You get used to it and even figure that into your campaigns." All This and More
The future, as usual in the record industry, is rooted in the recent past.For instance, Disney's "Mickey Mouse Disco" album sold half a million units off its television campaign. The album eventually went platinum in combination with store sales. In England and Germany, K-Tel albums are regularly listed in the sales charts, a practice not done in America.
Some major record companies are slowly getting into the act. The recently released Kenny Rogers "best-of" album on United Artists will be the subject of a $2-million direct-/response TV campaign in January. Capitol has already had success marketing commercially available albums by Merle Haggard and Linda Ronstadt. "You're going to see a lot more material being promoted on television," predicts Milner of K-Tel, which recently put together an Abba package for Warner Special Products.
Companies that were previously into leasing are now into packaging. RCA recently had New York radio persoanlity Frankie Crocker put together a disco/dance album called "Winners." It was. Companies like Ronco and Adam VIII are geared to the teen market. Says one marketing executive, "It's the wave of the future, working with proven hits from a number of sources."
There will probably be an increasing partnership between companies involved in direct marketing of records and their sources. And K-Tel has alreday moved into live entertainment and video production. One can also expect spinoffs: A market for sheet music is expected to be in full bloom next year.
All of the companies contacted have experienced substantial growth in the last two years during the same period that the "legitimate" record industry claimed it was suffering a recession. And all claim thay they are a bridge between music and what's often referred to as the silent majority.
"That's what direct mail and television are all about," says Wesley Wood. "They bring what is otherwise unavailable back into the main flow."