Friday, December 12, 2008

Walmart Revitalizes the Eagles, Journey, AC/DC

In this photo from Walmart, AC/DC fans Bill Voccia, left, and Andrew Lawrence, right, try their skills playing the new Rock Band 2 video game as part of Walmart's pre-release event of the new AC/DC album Black Ice, in New York's Union Square, Thursday, Oct. 16, 2008.

Huh. This is very interesting.

Walmart is looking at its catalog, to see which artists with big hits from the 70's and 80's, still sell well at Walmart. Then the company is pursuing those bands, who many consider as past their prime, to see if the bands will agree to launch new albums as Walmart exclusives. The first deal was with Garth Brooks in 2005, and has expanded to include the Eagles, Journey, and AC/DC.

"These are bands that have lots of loyalty with our customers," said Greg Hall, Walmart's VP-entertainment, said. "And even though they maybe hadn't done a new studio album for a few years, we look at: How does their catalog business sell in our stores? How does the brand translate to other merchandise like apparel? And all of these acts that we've done [deals with] have a real day-to-day strength in our stores."

"We've been in conversations with lots of acts and are still in conversations with lots of acts," said Mr. Hall. Walmart won't say how many, or which bands.

Interestingly, the revival deals have been "more of a coincidence than a strategy to be honest with you," Mr. Hall said. Jeff Maas, divisional merchandise manager for music and movies at Walmart, said those bands happened to be the ones easiest to work with and the most open to the direct model.

Plus, Mr. Mass admits that the exclusive deals have become a "good business model for us." "They tend to drive excitement into our stores. They keep our stores new and fresh. And so you'll see us do more."

Walmart has the stats to prove it. The latest results include a chart-topping 784,000 opening-week sales of AC/DC's "Black Ice" in October and more than 3 million sales overall for the Eagles' 2006 release of "Long Road Out of Eden," according to Nielsen Soundscan.

Additionally, the exclusive deals are boosting electronics sales - iPods, MP3-capable mobile phones ... and even video games 'Guitar Hero' and 'Rock Band.'

Walmart says that the bands, win, too. Walmart can merchandise a wide array of apparel and other related products in major in-store events, helping promote concert tours and move products beyond CDs in ways no other retailer could. Also, the in-store displays are viewed by 130 million shoppers each week. Plus, Walmart offers the bands good marketing support. For example, for the AC/DC launch in October, Walmart threw in a deal with Clear Channel - to run a Walmart ad for "Black Ice" after each time one of the songs was played on a radio station, as well as a mobile tour featuring "Black Ice" ice-cream trucks in markets such as New York, where Walmart doesn't have a presence.

Walmart says consumers also win - album prices are well below the industry standard for new releases, such as $11.88 (with free shipping when bought online) for AC/DC's "Black Ice."

Why does this work? According to Mr. Hall, despite music industry troubles, "consumers have never loved music more nor wanted to interact with music more." "It's one of the most emotional products in our store. ... I think because customers are so passionate about music and consuming it differently than in the past that both artists, artist-management labels and distribution companies are looking at retailers to try to help them figure out what are some ways we can do things differently."

He's willing to concede that some bands might be better suited to one of Walmart's competitors as an exclusive. But as long as retailer exclusives are a way of life in music, he said, "we'll be in the thick of it."

source: Walmart's Revivals of AC/DC, Others Are Reviving Music Industry: Exclusive Deals With Bands Have Created Successful New Business Modelby Jack Neff. Advertising Age. Published: December 11, 2008

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