Brick-and-mortar stores eye new music formats

NEW YORK (Billboard) - The music industry continues to build bridges between the digital and physical world.

A picture of the Apple iPod Touch with the "Starbucks button" highlighted is seen during the introduction in San Francisco, California September 5, 2007. On October 2, iTunes digital album cards for KT Tunstall's "Drastic Fantastic" and Eddie Vedder's soundtrack to "Into the Wild," debuted at Starbucks.

In the latest attempts, iTunes digital download album cards highlighting specific titles are getting high marks in the early part of the rollout.

Meanwhile, merchants await the introduction of the “ringle” -- which aims to revive the CD single in the physical world and allow brick-and-mortar merchants to participate in the ringtone phenomenon.


On October 2 the iTunes digital album cards for KT Tunstall’s “Drastic Fantastic” and Eddie Vedder’s soundtrack to “Into the Wild,” priced at $14.99 and $11.99, respectively, debuted at Starbucks. And a few weeks earlier, the Safeway grocery chain -- which represents a new frontier for music merchants -- began merchandising eight other titles: single-artist albums from Maroon 5, Norah Jones and Kelly Clarkson, priced at $14.99 each; plus five compilations, priced at $19.99 each: “Best of Comedy Central Stand-Up” and four greatest-hits collections themed by decade from the ‘60s through the ‘90s. Safeway is testing the cards in 1,000 of its 1,800 stores.

The glossy plastic cards measure 4.5 inches by 6.25 inches and display the album cover on the front under a black strip, which contains an iTunes logo and a description of the album. The backs of cards list the albums’ songs and bonus material -- in the case of Tunstall, six music videos, a digitally accessed CD booklet and a behind-the-scenes video -- as well as a scratch-off that reveals the code to be used in redeeming the card at the iTunes store.

Retailers pay nothing for the cards, which are not activated until paid for at the register. So far, “people are pleasantly surprised by the results,” Sony BMG Music Entertainment senior vice president and general manager of U.S. digital sales Adam Mirabella said. The Vedder card comprises 6 percent of overall scans for “Into the Wild,” which has scanned 95,000 units, according to Nielsen SoundScan -- including 36,000 in digital downloads, 5,720 of those from the digital cards.

“This is a new product, and the customers are just learning about it,” EMI Music Marketing senior VP of sales Darren Stupak said. “So the sales can only get better.”

Some major labels initially were afraid the iTunes digital album card could hurt CD sales, but Starbucks Entertainment CEO Ken Lombard sees it as a way to expand the coffee merchant’s overall musical offering. “It won’t take away from the CDs we are carrying,” he said.

iTunes VP Eddie Cue said that Apple views the cards as “a way to leverage digital in the physical space.”

Conventional music merchants are open to the concept as well.

“We would carry both the CD album and the card,” one retail executive at a traditional chain said. “The more ways we participate in getting music into the hands of the consumer helps keep the customer active in our stores.”


In the meantime, Sony BMG Music Entertainment and Universal Music Group had been shooting for an October debut of the ringle, which combines a physical CD single with a digital ringtone download. But Sony has pushed that launch back to November 6, according to Amazon. UMG’s debut has probably been moved to next year.

Retail sources said they have been told by the two majors that the holdup is due to both companies’ efforts to improve customers’ experience in redeeming ringtones from the discs. Sources close to UMG also said that if a new format is introduced later in the holiday selling season, it might get lost in the retail shuffle.

Nevertheless, traditional retailers have high hopes for the ringle, which they believe could fill a long-vacant sales niche.

“We used to do a hell of a lot of single sales, and the ringle could bring back the single in the store,” one senior retail executive said. “Also, we are not participating in the ringtone business at all, so we like that aspect of it.”

Sony BMG and Universal see ringles as a way to get consumers to place CDs into the computer, which would help acclimate customers to the concept of “connectivity” to label and artist sites. Labels consider connectivity a key ingredient in helping buttress sales of physical product.

Amazon already lists some 101 ringles, with Cyndi Lauper’s “Girls Just Want to Have Fun” regularly turning up at the top of its ringles page. Amazon is preselling the title for $4.97. Other top pre-order titles come from such artists as Carrie Underwood, Pink and Beyonce.

Ringles on the release schedule are a mixture of current records and old favorites. Genres range from pop, R&B, rock and country to New Age, Christmas and Latin.