"Glee" brings joy to beleaguered music industry

By Jill Serjeant

LOS ANGELES (Reuters) - Its characters may feel like a bunch of unloved high-school misfits, but the quirky musical TV comedy "Glee" is putting smiles on the faces of music industry executives searching for new revenue in an era of plunging album sales.

Two months into the 2009-10 TV season, "Glee" is drawing a weekly audience of 8.6 million viewers to the Fox television network. Fans have bought more than two million tunes sung by the show's cast on iTunes, and soundtracks are being compiled and sold in traditional stores.

Revenues are being split among Fox and the record company, and artists and music publishers are being paid licensing fees for songs "Glee" uses in musical numbers in each episode.

"Record labels have been desperate for new revenue," said Steve Knopper, contributing editor for Rolling Stone magazine. "They are trying to figure out any way to make money and one pretty reliable way is to sync up with a hot TV show."

That's exactly what Sony Music Entertainment's Columbia Records did last January when the Fox network shopped a pilot of "Glee" to record labels months before it aired.

Columbia won the deal to partner with News Corp's Fox on the release of all "Glee" music on Apple Corp's iTunes, as well as on traditional soundtrack albums.

Columbia also has broad "360" deals -- all-encompassing agreements -- with the previously unknown actors playing the "Glee" kids. The deals cover first rights to recording contracts, and a percentage of earnings from concert revenue, endorsements, merchandising and ringtones.

TV SHOW TO POP CULTURE ICON

The first "Glee" soundtrack was released last week, a second is due out on December 8, and discussions are underway for a national cast tour and several more albums.

Neither Fox nor Columbia would give disclose financial details. But Glen Brunman, soundtrack consultant at Columbia, said: "We are hopefully going to make history together."

"We felt (in January) that it wasn't just a TV show but that it had the potential to be a pop culture icon," Brunman told Reuters. "It is unique and it is an approach with a TV show that hasn't existed in the past."

Digital downloads are released each week of "Glee" cover versions before the show is broadcast, allowing Columbia to capitalize on the appetite of fans to buy immediately.

In a sign of just how popular some of the tunes have become, the "Glee" cast's rendition of the 1981 Journey song "Don't Stop Believin'" was certified gold last week after more than 500,000 digital sales.

Rihanna's "Take a Bow" single saw a 189 pct sales increase after it was covered on "Glee". Now Madonna, eager to get in on the act, has offered her catalog for an upcoming episode.

Knopper said industry economics are such that the revenue from TV partnerships "is pretty much a drop in the bucket" in the multi-billion dollar record business.