CD music format is dying? Target doesn't think so

  • Article by: Star Tribune
  • Updated: October 21, 2011 - 9:34 PM

The retailer continues to bet that shoppers will want physical CDs with liner notes and extras.

Like the 45-rmp record, 8-track tape and the audio cassette, the CD would seem like a perfect candidate to join its predecessors in the dustbins of history. (We can thank the late Steve Jobs for that.)

The trend is certainly not looking good for the CD: In 2010, manufacturers shipped 212.4 million units to retailers, a 22 percent decline from the previous year, according to the Recording Industry Association of America. At the same time, the number of digital downloads of albums rose 2.3 percent to 1.3 billion.

But you wouldn't know this if you visited a Target store lately. The retailer has been snapping up exclusive partnerships with artists like Beyoncé, Gloria Estefan and Tony Bennett, to name a few.

The strategy is not new. Remember when Wal-Mart scored the exclusive distribution rights to "Long Road out of Eden," the first studio album from the Eagles in 28 years?

If anything, retailers like Target and Wal-Mart have become even more important to artists still interested in making albums in a era when consumers can cherry-pick their favorite songs on iTunes.

But until last year, Target's best-selling album was an 'N Sync CD in 2001, with more than 200,000 copies sold during the first week. That nearly 10 years has passed and a gazillion artists and records have come and gone, and no one has been able to beat a now-defunct boy band shows you how depressing the music business has become.

Enter Taylor Swift. In 2010, the country superstar, who released a Christmas album at Target in 2007, struck a deal with the retailer to sell an exclusive edition of "Speak Now," an album that contains bonus tracks and remixes.

Consumers snatched up over 1 million copies in its first week of release, more than 30 percent of that total originating from Target shelves.

"We think we helped push her to a million units in the first week," said Target's vice president of entertainment, John Butcher.

In that first week, the retailer moved 360,000 copies, its best showing ever, and 100,000 more than the 'N Sync album. If anything, Swift proved customers still want to purchase CDs, Butcher said, if the retailer makes it worth their while.

"What Taylor did for us, she reminded us that CD can still be a relevant format," Butcher said. "In 2010, after five years of double-digit declines in CD sales nationally, we had our biggest CD in Target's history. That was huge. I had no idea that could be done, to be honest."

"When we look at major new artists when they hit the scene, Target can be an important element to their success," he said. "When we look at established artists, we know they sold very well for many years and when they come back and release a new album, Target can take their album to a new level."

Take Estefan. The former Miami Sound Machine front woman hadn't released an album in several years. So what better way to reintroduce herself to audiences than by releasing an exclusive edition of "Little Miss Havana" through Target last month?

"Gloria specifically is a fantastic artist," Butcher said. "She has been relevant for a long time. We have a wide variety of guests with different musical tastes. That's how we can be successful in selling country and R&B. Gloria fits in specifically in a few different aspects of our music strategy. Latin music has been a growth initiative of ours. She fits perfectly in the pop demographic, our Latin guests. And as we look to have partnerships to build more relevancy in the Latino space, she was a great addition to our exclusive portfolio."

Target's success with its music programs gave the retailer the confidence to recently spend millions of dollars in renovating its entertainment section at all of its 1,700-plus stores across the country.

"We've been so successful in music partnerships for so long at Target," Butcher said. "It was just a way to reinforce the format was still relevant. That's what gave us the confidence that we could reinvent in the [entertainment] space at Target. We know our guests want the physical CD, they want to own their favorite artist, to read the book, to hold it. We knew if we invested in that space that we could continue to provide great things for our guests."

Of course, not all of Target's music initiatives have gone well. In March, Lady Gaga scrapped her deal with Target to carry the deluxe edition of "Born This Way."

The rift stemmed from Target's corporate donations to the MN Forward political action committee. That PAC supported the 2010 gubernatorial candidacy of Tom Emmer, whom gay and lesbian advocates viewed as unsympathetic to their causes.

"The whole experience with Lady Gaga was disappointing that it played out so publicly," Butcher said. "Obviously, a lot goes into forming a partnership. We still carry her CD and it has been selling well. And I'll probably leave it at that."

As will we.

Thomas Lee • 612-673-4113

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