A VC in Vacationland

I never thought that any supply chain or marketing innovators would get a editorial in the New York Sunday Times, but it happened.  The new Eagles album–Long Road out of Eden–was released in early November only in Wal-Mart.  With all the angst about the long-term decline in traditional distribution channels for music–and the propensity of the younger generation to think music is free and that artists do not deserve to be paid, only adored and shared with friends–it is interesting to see The Eagles looking for new distribution deals to reach paying fans. The Eagles released the album without a major record label involved, avoiding all their overhead and baggage, as well as arcane and expensive distribution channels.  Presumably, The Eagles cut the album, outsourced production, agreed on a marketing deal and distribution volumes with Wal Mart and shipped the product directly into the Wal Mart distribution system.  No muss, no fuss, and lots more money in the pockets of the band, if the early buzz on the deal is to be believed.

Let’s be honest here–it’s all about demographics, as the editorial points out.  Wal-Mart’s aging customer base, while not the best news for Wal-Mart or its investors, is good news for the over sixties rockers.  Heck, we may see Mick and the Stones, Paul McCartney and all our other favorite ’60s rock groups following behind, especially with the 710,000 sales of the new Eagles album produced in the first week of release.

Why not have younger music stars cut exclusive deals with other channels, like Amazon, that may fit their demographics?  Nothing is happening so far.  But for all I know, it may have already occurred as Billboard just added music sold only through a single source to their sales charts.  As usual, entrepreneurs like The Eagles felt the need to take control of their destiny and not go down with the sinking ship.

This is no cure for the overall problem of "free music" via file sharing. Radiohead’s recent decision to sell their latest album, In Rainbows, on the web for whatever you are willing to pay, including free, shows that we have a long way to go to reverse the Napster curse.  Initial estimates reveal that over 60% of the "fans" chose to pay nothing for the download. The jury is out as to whether other singers or groups will go down this "innovative" path in the future.  My bet is the the single source deals may pay better in the long run.

Stay tuned.  A lot more innovation is coming in the music distribution channels in the next few years.

UPDATE: In the first week (early January 2008) of release as a physical album, Radiohead sold over 125,000 copies (not counting Internet sales). So I guess a lot of people still want that hard copy for the car, portable CD player or whatever.