Category: Music Industry

The Setup

Jay Z announced during the 2013 NBA Finals in a Samsung commercial that his 12th studio album, “Magna Carta Holy Grail,” would be released on July 4th. The album would be available for free but only to the first one million Samsung Galaxy phone users, via a Jay Z branded app. For the rest of the public, the album would be available three days later at regular retailers. Samsung purchased the albums from Jay-Z for $5 each, making Jay-Z five million dollars before the album’s release as a part of a 20-million dollar marketing partnership.

Execution

The app was made available on magnacartaholygrail.com. Once installed, the app requires access to the user’s email accounts and social media, including an active Twitter or Facebook account for users. For nearly each action taken within the app, a post is made on the user’s accounts documenting the action, such as: “I just unlocked a new lyric ‘Crown’ in the JAY Z Magna Carta app. See them first. http://smsng.us/MCHG2 #MagnaCarta.” Many cried that the apps permissions were invasive, had questionable privacy practices, and required too many steps. One million users did sign up despite these issues, which aided in providing additional exposure and awareness for the company and the album.

The Outcome

Most importantly, this deal caused music industry leaders to address the album, resulting in additional free publicity and a lasting legacy of influencing change. The Recording Industry Association of America (RIAA) did change a long-standing rule that albums could not count towards their Gold & Platinum program until after 30 days from the release date. Now, instead, digital albums can count from day one while physical copies still require 30 days. The RIAA counts albums shipped rather than albums sold, so physical copies that were unsold could be returned. Billboard, in a letter delivered by their editor, deemed that the purchased albums by Samsung would not count towards Jay-Z’s chart rankings because customers did not meet the $3.49 threshold. Therefore, while the RIAA marked “Magna Carta Holy Grail” as Double Platinum, Billboard says Jay-Z sold only 528,000 albums in its first week. Regardless, Jay-Z still hit number 1 on every U.S. Billboard chart.

Why Is It Important?

This deal led to immeasurable brand exposure for Jay-Z and Samsung. While this endeavor most likely did not generate additional sales of Samsung phones initially, it does align Samsung as an innovative company that can promise exclusive and relevant content for its consumers. Marketing tactics serve as yet another “feature,” available to customers, that will not be offered through competitors such as Apple (iPhone). The music industry, as a whole, has obviously been attempting to revitalize and reinvent itself over the past decade to varying success. Billboard and The RIAA addressed the changing landscape with the release of this album. While music sales have been down and streaming sites are struggling to monetize properly, phone providers are eager to get into the music streaming business because fans are eager to have that feature available to them. “Magna Carta Holy Grail” is one step in a larger picture that includes brand integration, exclusive content, streaming media, fan interaction and social media integration. This equates to a music-centric user experience that is completely a product of the 2010s. Even if this is never replicated again (novelty must be taken into account for its success), Samsung and Jay-Z will be known as innovators that were on the forefront of this new user experience where music has to be much more than music to make waves.

Sources

http://www.nytimes.com/2013/07/05/arts/music/jay-z-is-watching-and-he-knows-your-friends.html?_r=0
http://www.billboard.com/articles/news/1568753/riaa-updates-rules-before-jay-zs-magna-carta?utm_source=twitter
http://www.billboard.com/biz/articles/news/5755287/why-t-mobile-and-shakira-might-be-prepping-a-jay-zsamsung-deal
http://blogs.wsj.com/speakeasy/2013/06/16/samsung-to-give-away-1-million-copies-of-jay-zs-new-album/
http://artsbeat.blogs.nytimes.com/2013/07/17/jay-zs-magna-carta-hits-no-1/
http://artsbeat.blogs.nytimes.com/2013/06/21/billboard-will-not-count-jay-zs-sales-from-samsung-deal/
http://www.billboard.com/articles/news/1567899/letter-from-the-editor-what-jay-zs-magna-carta-means-for-the-billboard-200

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Reuters, Courier-Journal & The Washington Post all make points. Some tote the demographic is irrelevant (CBS’s older demo), some say they’re too inclusive with too many categories, while others say, all their categories is what sets them apart (outside of being in a small pool of options anyway).

Are the Grammys only as significant as the live performances, thus pushing the actual winners list to afterthought rather than purpose? A list to be viewed the following day like the fashion lists? According to Nielsen, The 2012 Grammy’s managed to garner more viewers than The Academy Awards for the first time in 28 years. With the countless options are all awards shows becoming obsolete or a the best way to weed out the best of the best?

If you’re watching, why? If you’re not, why? If you would be watching but you have to catch The Walking Dead, that is completely understandable.

Further Reading:
Are The Grammys still relevant? – Innerviews.org
Are The Grammys still relevant? – a’tris

“Total album sales in this past chart week (ending Sept. 12, 2010) totaled 4.8 million unit—the lowest weekly sales figure since SoundScan began tracking sales in 1991.” 

Let’s put things into perspective:

It’s also only the second time the weekly album sales total has dipped below 5 million. Back in the record label hay day, the highest one-week album tally recorded during the Soundscan era was 900% higher at 45.4 million albums, in late December 2000.

Though album sales are in decline, general music sales are substantially higher than their past. Music sales exceeded 65 million in the final week of 2008, representing the biggest sales week in the history of Nielsen Soundscan. Therefore, it’s not that people aren’t buying music, people simply aren’t buying albums. Digital sales, ringtones, and singles continue to increase. Even vinyl sales are at a high from the inception of Soundscan in 1991, selling about 2 million copies in 2009.

Album sales at Non-Traditional music outlets (digital, internet, mail order, venue, non-traditional retailers) hit an all-time high in 2009 with sales reaching 110 million. Non-Traditional is the only strata that experienced album growth over the previous year; with an increase of 11% over 2008, and accounting for nearly 10% of overall music sales in 2009. The increase here can be attributed to a disconnect from major labels. More artists and independent companies are finding ways to bypass major label guidelines.

When you look at it from that perspective, things don’t sound that bleak until you consider this:

• In the year 2000, 88 albums sold 1,000,000 units or more, and 202 albums sold 500,000 units or more.
• Of the 97,751 albums released in 2009, only twelve of them sold more than one million units.

Going Diamond

In 1999, The RIAA added a Diamond Award Sales Certification for 10 million sales. Back in 1999, albums were actually selling 10 million copies. One of the  latest albums to be certified Diamond is Outkast’s Speakerboxxx/The Love Below, however; because the album was a double disc, each album was counted twice, thus only 5.5 million copies of the full album were actually sold.

Is a major label necessary to have an album chart? Vampire Weekend and Arcade Fire both were number one on the Billboard charts in 2010, both are signed to Independent Labels. VW’s Contra (released on XL Recordings home of MIA, The xx, The Cool Kids, and Sigur Ros) sold 124,000 copies in its first week. It must be noted that it was the only new release of the week in the Top 10.

When it comes to independent, there’s also the other side of the spectrum. Only 2,050 (or 2.1%) of 2009’s 97,751 new albums Sold Over 5,000 Units. With the internet, bands can cater to a much smaller niche audience, and may have other outlets to which they sell music that is not registered on Soundscan. In addition to those options, an artist may choose to release a record free of charge or sell the album through their own website and DIY shows. If you think about it, many bands have sold well over 5000 copies of their album during a summer stretch following Warped Tour, however; those numbers were never scanned.

Perhaps we should take a step back and understand how Soundscan works:

Sales data from cash registers is collected from 14,000 retail, mass merchant, and non-traditional (on-line stores, venues, digital music services, etc.) outlets in the United States and Canada. The requirements for reporting sales to Nielsen Soundscan are that your store has Internet access and a Point Of Sales (POS) Inventory System (a way to scan the bar codes of the products you sell). A simple text file, consisting of all the UPC’s sold and the quantities per UPC on a weekly basis is all that is required for submitting sales to Nielson. Because some retailers choose not to use Soundscan, sales from certain participating outlets are “weighted,” thus a single CD bought may be worth three on the charts.

Sales that occurred at churches, libraries, YMCAs, malls, campgrounds, public and private schools, offices, lawn and house concerts are all ineligible venue sites, thus will not be processed by Nielson. Purchases made by one individual in bulk for redistribution or gifts are also ineligible venue sales and therefore will not be processed. With these stringent guidelines, even if a band sells albums at many of their shows, most of the venues will not be eligible for Soundscans, unless the band is signed to a label that is registered. When bands do play at eligible venues, the sale numbers are often inflated because nothing needs to be “scanned” at the venues.

With all these issues, guidelines, and possible methods of fraud, a far more important question is, how relevant are Soundscans to the independent music world? On one hand, it may be difficult to get your album scanned, but it’s becoming easier and easier for bands to chart on everything from the Top 200 to the Heatseekers charts. A few thousand sales can put a band into public spotlight (if they’re the lucky 2.1%). What seems to be much more important now, though, are iTunes and other digital format figures. Digital seems to almost level the playing field for nearly every artist. Will these sales charts become more relevant to the major label than the physical charts?

Sources:

Business Wire The Nielsen Company Year-End Music Industry Report
Billboard.Biz
Nielsen.com