Jay-Z and Samsung: Will Recent Deal Impact The Music Distribution Channel?

Screen shot 2013-06-19 at 2.40.38 PMJay-Z’s new album titled Magna Carta Holy Grail is scheduled to hit shelves July 4. The announcement was made in a Samsung advertisement that aired June 16 during the NBA finals. Even more surprising, Samsung is subsidizing the album; giving it out  to the first 1 million Samsung Galaxy users who download a special application. We asked Zintro experts from the music industry to discuss this change in the distribution channel and how it could affect record labels.

Andre Walton, an organizational creativity consultant with expertise in generating new markets, maintains that the announcement “is not indicative of any major shift in direction in music distribution. Record labels have more major things to concern themselves with when maintaining traditional revenue streams! I do not think this kind of brand association with popular icons is anything new, it is just the leverage of the new release that attracts attention. If Samsung’s promotion is a success there is little doubt that similar moves will follow: and they may be resisted by the record labels, but they will ultimately be good for the industry as well as for the recording artists.”

Tom Cartwright, a music publishing & catalog administration executive, believes “Jay Z’s stunt will have little change on the labels distribution methods.” Cartwright recalls when “you could walk into any retailer and buy a branded CD compilation – from Pottery Barn to Victoria’s Secret. Ah, but those were mostly compilations of previous hits from mostly ‘B’ artists…It’s not too difficult to imagine new artists clamoring all over themselves to get in on deals like this – look how long it took Psy to do a commercial!”

As far as the typical industry players, “The challenge for the distributors will be to find new retailers to carry CDs. The irony is, the labels fell in bed with Wal Mart and Best Buy, who ran record stores out of business with low ball pricing. Now, having the CD business almost to themselves, they are quickly devoting even less space to the format. There doesn’t appear to be any Towers Records re-openings; so pretty soon CDs will only be available at swap meets and .99 stores. That will mean some real change at the labels.”

“From the artist perspective,” asserts Mike Milton, an electronic music and digital media specialist, “it is all about multiple revenue streams.” He continues: “The artist’s share on revenue from sales of recordings is relatively small and is diminished further by the recovery of costs by the label but there are other ways to generate income. Merchandise is a key one that has been around forever [and] supporting socially responsible causes is a newer -and growing- one.”

By Gabriela Meller

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