Tuesday, January 06, 2009
The Speed of Demand and Supply Blog
11

Wal-Mart recently announced that legendary Australian rock band AC/DC will be the latest artists to release their album exclusively through their mega-stores. While many in the industry are moving away from retail altogether, AC/DC will follow other fossilized rockers Garth Brooks, The Eagles and Journey as recent converters to the successful Wal-Mart-only release strategy. Last year, The Eagles’ “Long Road Out of Eden” sold almost three million copies, making it the third highest-selling album of the year (according to the Wall Street Journal).

On the surface, it might seem that Wal-Mart is simply bullying its way around the music industry, forcing major labels to field some of their less edgy contracted artists at the Superstore. And in light of the digitizing of the music supply chain, it might not be a bad idea. But, while that is certainly happening, the more compelling reason for the record companies to sign on is Wal-Mart’s ability to utilize their in-store marketing and product placement to profoundly boost album sales. Given that Wal-Mart is, and has been for some time, the largest seller of non-digital music on the planet, their ability to push albums up the sales charts just by making them visible to the billions that shop there cannot be understated. 

And while this strategy may not work for the next Sigur Rós album, using it to re-vitalize releases from forgotten mega-bands like AC/DC seems to work perfectly. You put a sign on the wall, you place the album in a couple checkout aisles, and suddenly it goes from ‘cast-away bargain bin fodder’ to a ‘convenience purchase by former fans’. How many millions of under-$20 convenience purchases do you think happen at Wal-Marts every day? Can other music retailers make the same case? Likewise, by neglecting the other retail and digital music outlets, these fading rockers probably aren’t really losing that many sales. To put it more bluntly, “if the only people buying your music fit in the Wal-Mart demographic, why not sell only through Wal-Mart?”

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