This Is A Mistake
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I don’t post as much about music and digital technology as I used to. I have come to the conclusion that most artists and their managers get it these days. And the ones who don’t are a lost cause. So better to move on and start thinking and writing about something else.
But this post by Bob Lefsetz on AC/DC doing an exclusive deal with Wal-Mart was too good to pass up. Here are some choice lines by Bob on the subject:
To limit AC/DC sales exclusively to Wal-Mart is akin to limiting bubblegum sales to Tiffany.
and
AC/DC is the biggest band still alive in the minds of teenagers.
and
But AC/DC cares not a whit about all this, about the new generation.
It’s like they’re having a fire sale, trying to get everybody’s dough
one last time. They don’t understand what they MEAN TO PEOPLE!
and
What kind of crazy fucked up world do we live in where a band won’t let
its fans buy its record? One where the only thing that matters is
money? Where music takes not even a back seat, but rides in the trunk?
and
The closest Wal-Mart to me is almost twenty miles away! Assuming
there’s no traffic, that’s an eight dollar fuel surcharge on the disc.
But at least I’ve got wheels… Kids, home from school, music addicts,
but without their driver’s licenses, are inured to getting their music
online. And if you won’t sell it track by track, they’ll steal it that
way. If you don’t know this, you’re still living in the twentieth
century, still waiting for Napster to come along and blow your mind.
My son Josh loves AC/DC but if it’s not on iTunes, it’s not going to get on his iPod. Clearly AC/DC and/or their manager is in the category of clueless.
Comments (Archived):
watch this space, we are going back to the bards and troubadors, where music was free for the listeners, maybe they gave some food and shelter, some coins, and if the band wanted to get paid again, they had to sing again, implying that they earned less than now. tell me again why rock bands should make multiple millions just because of closed distribution controls? it has totally distorted musical possibility. the internet is going to straighten out the greed and ignorance of the industry … one result, more people making some money
I don’t disagree. The money is coming out of the music business. One wonders why VCs invest in music startups, but that’s another story.On the Walmart angle…I guarantee you that this was pressure from Walmart. Their buyers are just nasty to negotiate with. If you want an endcap from them you’ll pay. Rap acts don’t do clean versions for walmart out of the goodness of their hearts. They still have leverage and they wield it.There’s no Walmart in NYC. In many towns in this country, there’s no retailer BUT walmart.
Not exactly. The touring and performance price isn’t going down (look at concert ticket prices over last 10 years). However, the pressed copy price of music may diminish, an unless it’s a superior format (vinyl or blu-ray), album sales will likely drop off.Take the case of punk band Pennywise. In the first Napster era, they were asking people to buy and not download the album in order to support the band. A few years later they’re on Myspace records and gave the album away for free as a promotion. Lately, the singer has told the crowd he didn’t care if they bought it or downloaded their recent albums (even prior to the MySpace deal) for free, just asked that fans play it for a friend, and bring whoever likes it to the show.Granted, this is not representative of every band, and this is a band with ~3MM in total record sales over several years, but even Vanilla Ice and all the pop “stars” made millions more off touring than record sales. More here: http://www.msnbc.msn.com/id…
I have 2 Walmarts within 3 miles of my house, and I’ve been an AC/DC fan since Highway to Hell was originally released. However, the odds of me going into WalMart to buy the new AC/DC record are zero. The odds of it being worth owning are only slightly better than zero anyway. They’ve been coasting on their reputation since Fly On The Wall.
Shows how out of touch I am. I’m a AC/DC fan, didn’t realize that they were popular with the younger set.
I believe it was one of the interactive games – Guitar Hero or Rock Band – that injected them in with the younger crowd.
Ummm.. you can buy it from walmart.com. You could also download the mp3s from walmart.com. I do not really think most people see that as a big inconvenience.This is a great deal for the artist. I think most musicians who read this blog would kill to have their music distributed by target or walmart. They sell more music than anybody.
Can you really download the mp3s from walmart.com?
It isn’t just AC/DC who’s doing this: Two days ago I found I had no choice but to purchase the new Journey release directly from walmart.com because it can’t be purchased anywhere else – not iTunes, not Amazon. An article in the NY Times this past weekend discussed the practice.Even more annoying is how some artists are releasing special versions of CDs that contain one or two tracks not available in the general release. These ‘special’ versions are then sold at places like Costco. In the end, your copy of a CD purchased at Amazon and my copy of the very same CD purchased from Costco may end up being different, albeit by one or two tracks. What a pain in the ass!
Amazon will become the CD powerhouse. Consumers will be forced to buy it all online, in which case we should demand higher quality track if we buy digital.
I guess that “becom[ing] the CD powerhouse” is a complement, but at this point that sounds a bit like “becoming the cassette powerhouse:” nice, I’m sure, but increasingly irrelevant.At this point I’ll grudgingly buy a CD if I can’t find a DRM-free download to buy, but since CDs as a physical artifact have never held the aesthetic appeal of vinyl albums for me, I immediately rip them and throw the disc on a shelf. It now seems like a waste of resources to produce the disc, package it, and ship it to me when I just want the music.[UPDATE] Funny — just saw that Fred Wilson posted an item on Tumblr this AM, noting that Amazon does (sort of) sell cassettes…maybe they *are* the powerhouse of cassettes after all. 🙂
Call them clueless, but not evil. I want to buy a Mercedez, but they price too high. Are they evil?
I think Fred’s point was that to avoid piracy- or not getting distribution at all- music should be available where consumers want to buy it.By that measure AC/DC’s deal is a mistake for people living in NYC, San Francisco and other places without Wal-Marts, but Wal-Mart is still the biggest music retailer out there (in any format) and the place a lot of people visit every day.I’d like to think the move is a mistake too, but it’s one that will be hard to see. The CD will sell well, it’ll be hard to calculate “lost” sales that would have come from other outlets and the inevitable piracy will prove the labels’ point that consumers can’t be trusted and need to be locked down.
Not a mistake from band/managment’s persepctive — assuming that it’s their call, and not Sony BMG, who has the band on contract. If you’re interested in making money today, you still have to sell CDs, because that’s where the overwhelming majority of dollars are. And Wal-Mart is one of the biggest players. The amount of $ WMT will generate for this deal, either via an advance or sales, is much more than they could get somewhere else.Bad deal for a band trying to create a long-lived career? Sure. But this AC/DC we’re talking about it – they’re well-established, and they don’t need more exposure. This is the same reason that Garth Brooks did this years ago (and no one said boo then).
” Assuming there’s no traffic, that’s an eight dollar fuel surcharge on the disc. “Or, someone might re-route a shopping trip they were already making from Target to Wal-Mart, at which point the opportunity cost of buying the album at Wal-Mart drops by a lot.The value to Wal-Mart might be in things like driving store traffic rather than record sales, and the band’s deal might reflect that. Such a deal definitely does more to leverage an existing fan base rather than build a new one, but AC/DC could well believe they’ve already saturated their target market. It could be a good move for them and a bad one for a band that believes it has room to grow.
The chances of this AC/DC album being worth buying or even receiving for free are not good. It’s not like they’re releasing a 2008 equivalent of Back in Black or Highway to Hell. Josh should be spending his time with High Voltage, T.N.T, Dirty Deeds, even the Razors Edge, he’ll be better for it. Meanwhile AC/DC gets a quick payday, moves about 100,000 units if they’re lucky and goes back on tour selling tickets to the 35 plus crowd. Ditto for Journey.
AgreedHe owns all of those records.Jackson and rod (my two brothers) made sure of that!Fred
Just wondering if there is a certain demographic/socioeconomic group that shops frequently at Walmart, who is more than likely a fan of rock music that this sort of exclusive deal is being targeted at?
Yeah, it is called the mass market. :-)Target and Walmart rule pop music. If you want to make real money selling records in America, you deal with them. I have talked to a couple of music executives around Nashville and they all bow to Target and Walmart.I think most people reading this blog forget the vast majority of customers do not live in the NY, San Fran, or Boston metro areas.We shop at Target and Walmart for most of our household needs.
Being mass market means that the selection at Walmart and Target is certainly not going to broad. They will only sell the big name acts because those CDs will move. Walmart is not interested in carrying inventory. It all about high traffic and high turnover. I can’t imagine Walmart stocking alternative/indie bands, so I would never even consider checking what they have to offer.Here are some interesting stats/info I found:- The Eagles sold 700k of their album through Walmart in about a week. This was out of 3 million CDs ordered.- Wal-Mart’s marketing and distribution team was praised for their effortsHey, if you are the band/record label… why not offload some of the marketing onto Walmart! Sure, you might have to compromise, but it sounds worth it.Here is the full article… http://weblogs.variety.com/…And here is another link describing how Virgin and a number of other records stores were reselling the “exclusive to Walmart” Eagles album. So, there are always ways to get around these exclusive deals. Full article: http://www.rollingstone.com…And, another article from the WSJ (dated April 2007) entitled: “Can Music Survive Inside the Big Box?” Here are a few key points:- aggressive pricing and advertising, big-box chains are now responsible in the U.S. for at least 65% of music sales (including online and physical recordings),- a store that depends on CDs for the bulk of its sales needs a profit margin of around 30%, big chains get by making just 14% on music- Despite the growth in online digital music sales, physical CDs still are the core of the recording industry, accounting for about 85% of music sales. (This number has problem shrunk a bit since last year)- The chains tend to emphasize fast-selling hits that move tens of thousands of units a week- A typical Best Buy stocks 8,000 to 20,000 different music CDs titles, By contrast, the biggest of the defunct Tower’s 89 locations carried more than 100,000 titles. (Tower still has some online operations.)- Reduced or are reducing the square footage allotted to CDs- Labels have become more conservative in the kinds of artists they are willing to sign.Here is the link to the full article – – http://is.gd/uCeMore and more of the mainstream consumer will move away from CDs into the online music world where the selection is almost endless. I might buy one or two CDs a year compared to the hundreds of MP3s/albums that I now buy online thanks to Emusic.com, itunes and directly from some of the bands I like.
Thanks for the links.This highlights what I have heard from artists and executives around Nashville.
What about shopping online for music?It’s a digital product, not a physical productWhy should music be marketed exclusively with anyone?
Without expending the energy to see if the numbers are available, I’m going to have to give the band the benefit of the doubt…..I mean, I bet AC/DC makes more money off of this deal than they would otherwise. One has to assume someone did the math and that Wal-Mart is going to push the album hard. Would this be so objectionable if an up-and-coming artist signed an exclusive with Starbucks?Maybe they are taking the approach of letting their music drive traffic to a 24/7 store instead of a limited-seating concert event? Maybe Wal-Mart is going to push concert tickets and merchandise in a way that iTunes cannot? To me, it’s actually a pretty forward-thinking idea and I’m interested to see how it turns out.
I’m thunderstruck.I understand that the band, and the music industry as a whole, wants to get back in black, but I hope that their customers will keep a stiff upper lip and tells the band to go hit the highway to hell. Sure, the band will argue that money talks, but what they will come to find is that this dirty deed done cheap is just going to blow up in their face. It’s like TNT.Hells bells, I have no idea how to work “shook me all night long” into this comment. 🙁
Comment of the day – at least for the AC/DC fans in the communityFTW!
I shoot to thrill.
Brian’s point is relevant…I wonder why we didn’t have such strong reactions when iTunes offered some exclusive distribution for the Beatles, Dashboard Confessional or Smashing Pumpkins? Seems like it’s easy enough to order on walmart.com if you want a hard copy…and at $2 shipping charges aren’t unreasonable.Certainly I’d like to see distribution happen in the medium I want…but I think the issue here is more about the music industry’s failure to adapt than walmart’s heavyhandedness…not that that isn’t a separate issue worth talking about.Perhaps Trent Reznor has it figured out…the money in music is made primarily through touring…so why not give the product away?
What’s noteworthy about these deals is that they all involve dinosaurs who’s best days are long behind them, going to Wal-Mart for their promotional muscle. Now if Wal-Mart cut a deal with any band that wasn’t cranking out albums in the 1960s, ’70s, or ’80s, I might think there was something very interesting afoot. Say, a Radiohead or a Coldplay or Sarah McLachlan.
Not sure I would say clueless. I don’t like this arrangement either, but I think I understand why it would happen. It’s quite possibly more revenue with extremely facilitated (read: free) distribution and marketing. WalMart’s ready to promote the album for free because it gets people in the store. This is promotion that the artist would otherwise pay for through a label or touring (and even worse, radio and circuit touring, not even performance touring). As for access, if your kid wants the album, they can pay $1.97 for shipping, wait a few days, and the cd will arrive at his door. Assuming he had a credit card to set up an itunes account, he can order a CD online. He can still rip it using itunes.* The issue is that WalMart is bigger in distribution times profit per song than itunes will be. Artists look at a less than $1 per album royalty from itunes (more likely 10-50 cents as people download individual songs) versus a $4-5 royalty from Wal-Mart, and go with Wal-Mart. I’d look at the NYT article “wal-mart or no one else” (http://www.nytimes.com/2008… and chalk this one up to older acts looking for maximized profits on historic cred. Just like itunes exclusives, if there’s only on way to legally get it, at least some will go that route. The file sharing part may come later, as people may not want a physical copy.* likely scenario: a few kids in the entire school will order the album, and they’ll use SharePod, Senuti, or an online program to share it with friends.
Or is this just another step in the ongoing effort of media companies to re-establish a centralized distribution scheme. I commented on this last night as wellhttp://tuckerstuesday.typep…//yeah, I might just be in line to be a guest on the Art Bell program – or will I ?
sure you can get the CD at walmart and you can even get the mp3’s at walmart.com but that’s not where people are. So what will happen is that someone will rip one CD and put it on the file sharing networks and then it will appear on blogs. If the songs are good at all people will search for it and they will find it online and it WON’T be at walmart.com. I will guess that 99% of people who get the mp3’s will get it illegally.People wonder why the industry is down – it’s down b/c it’s easier to go to Hype Machine or Project Playlist and find the mp3’s for free than it is to pay. If it’s easier and free one way, you can bet that that will win.
BingoThe web is about leveraging ubiquity not exclusivity
while we may want to foster the idea of the web being about Ubiquity over exclusivity, the record companies see this all as akin to Philippe Bradley’s free virus.
I’m not sure whether i would do this deal if was AC/DC but – wow, what’s with all the vitriol?Don’t artists have the right to go their own way?Bob Lefsetz comes off as a bit wacky and narcissistic when he cries, “They don’t understand what they MEAN TO PEOPLE!”Why should they?Bob, how does you feel about artists like Bob Dylan? Guess he should never have plugged in his guitar at Newport?And I guess John Lennon was a jerk to stop making music for five years – cause he doesn’t understand what he MEANS TO PEOPLE?Etc…Did anyone but me read the recent NY Times piece on Trent Reznor? The digital era is what it is, but artists like Reznor are feeling pretty hopeless about the opportunities to get wealth from their music. And Reznor made a bunch of dough already and can afford to record independently (in his own studio).We all want wealth from our output; I don’t blame Reznor and AC/DC and anyone from wanting the same.And in any case, don’t they have the right to do deals – even ones that turn out poorly?Reznor piece: http://tinyurl.com/6zz94t
I’m about to cry. Why, Angus? Why?On the other hand, I haven’t bought a new AC/DC record since Back In Black so…….
I think I’m just pissed that they signed with Wal Mart in general, how “rock n roll” can you be when you’re signing with them? I may be wrong, but this move STINKS.http://www.evolvor.com/2008…PS I made a huge stink when Garth did it way back in the day – and no one’s given a shit about him since those days!
30 years or touring, drugs, and alcohol, shoot, I’m surprised they even know what a Walmart is.
Maybe you should buy a more fuel efficient vehicle. You’re a vc and you are driving a car that only gets 20 mpg?That’s a disgrace. You should be ashamed.
Well we drive about 2000 miles per year because we rarely use our car. I think the carbon impact of producing a new car for us is probably greater than the carbon we produce with the 100 gallons of gas we burn in our car
well then i take some of what i said back. but josh will not find it at walmart.com. itunes is in front of him every day. it’s where he goes for music. i am not sure he’s ever heard of walmart.
Yeah, I mentioned this on Charlie’s post too. It sucks that it’s a Walmart exclusive, but they do have good distribution channels and it’s certainly not limited to in-store purchases (which especially sucks in NYC where there ARE no Wal-marts).