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Coldplay album's success proves a point and iPod's dominance
Los Angeles Business Journal, July 4, 2005 by Hilary Potkewitz

When British alternative rock band Coldplay released the album "X&Y" exclusively on iTunes, with two extra songs not available anywhere else, the great clatter heard around the world was the sound of records being broken.

The first single, "Speed of Sound," is the best-selling song on Apple Computer Inc.'s iTunes Music Store--not a surprise, given that digital downloading has been all about singles, which make up more than 98 percent of all digital sales.

What was surprising, even stunning, was the album sales. In the first week of its June release, "X&Y" sold 64,000 albums through iTunes, eclipsing the 37,000 sales during the first week of U2's heavily promoted "How to Dismantle an Atomic Bomb."

"When we launched U2, you knew that was a big number. Now you see bands like Coldplay come in and double that," said Steve Berman, head of marketing and sales for Interscope, U2's record label.

With "X&Y" iTunes proved that the digital medium can sell albums, not just singles--a watershed for the still-fledgling online music model. For artists and record labels that have been trying to figure out how to continue selling albums in the digital age, Coldplay showed that it could be done.

At least it could be done on iTunes. The Coldplay success provides more evidence of Apple's dominance over online competitors like Los Angeles-based Napster Inc., Yahoo Inc. or RealNetworks Inc. "ITunes has done a tremendous job," said Berman, who also heads up sales and marketing for the Geffen and A&M labels, all part of Universal Music Group. "I'm sure these other partners we have in digital music will continue to grow and figure out their business."

Marketing strategy

Coldplay's strategy is a case study on how online marketing has advanced in just a matter of months. Where the U2 release late last year relied on iTunes exclusivity and a televised iPod commercial featuring the band, Coldplay's label, EMI Music, made sure to assault consumers from all fronts--using a wider set of marketing partners than just Apple.

A deal with Cingular Wireless LLC had a song clip from "Speed of Sound" available as a ring tone a week before it was heard on radio. Two weeks before the album's June 7 release, the band appeared on "Saturday Night Live," and Apple ran an iTunes commercial featuring the band's new video and offering the album for pre-order on iTunes.

Yahoo Music posted an online version of the video on its Web site that week, but could not sell the album. MTV Networks' Web site, MTV.com, streamed the album exclusively for the week prior to its release, but it was not downloadable. The day of the release, AOL Music had an exclusive stream of a Coldplay concert, again available for listening, not purchase.

But when it came time to purchase the album, all roads led to iTunes, though EMI is careful not to play favorites in talking about the campaign. "We had lots of different initiatives with Coldplay and lots of our digital partners," said Jeanne Meyer, senior vice president with EMI Music, a unit of EMI Group Pie. "To suggest there was just one is a misnomer."

Apple's Web site is still the only place to download the album with the two bonus tracks, although the regular album became available through all services after its release date.

"I don't think top acts are going to go with smaller companies on an exclusive," said Frederick Moran, media analyst with the Stanford Group. "Players with clout like Apple iTunes can attempt to corner proprietary content."

But why would AOL Music want to be part of a marketing effort that ultimately sends customers somewhere else? Because it got a live concert, which was viewed more than 700,000 times the first week, according to EMI. As for Yahoo, Coldplay was the number one rock video title during its debut week.

Napster has done some exclusive releases. Last year the Dave Matthews Band made Napster the only digital music service to sell its catalog, snubbing iTunes. But the music was also available for download from the band's own Web site. Tom Petty also signed an exclusive deal to sell some albums digitally, although he did not launch any new records with Napster.

"The one thing that works against Napster is that they're losing money, and there will be less availability, less desire to do that exclusivity unless it's another huge marketing campaign," Moran said.

Napster spokeswoman Dana Harris declined to discuss plans for competing for artists' releases. She said the company has focused instead on providing extras like interviews with artists and live performances for "true fans of the band."

Yahoo Music executives also declined comment.

The music industry, however, can hear the silence--and perhaps the frustration. Cameron Strang, chief executive of Indie record label New West Records, admits that New West provides iTunes with the most exclusive opportunities because it's the biggest retailer. "It's just the size," he said. "Apple's made a huge investment and they've done a good job."

While Strang said "the competition is getting stronger every day," he conceded that L.A.-based New West's next two exclusive releases--heavy metal icon Alice Cooper and Memphis funk artist Delbert McClinton--will be on iTunes.

For Moran, Coldplay's "X&Y" success did not necessarily prove that albums will live on. He sees iTunes' two-week head start as nothing more than an advanced-sales tactic used regularly in the traditional retail world. "In order to get people to download the entire album, you have to offer them big incentives," he said, like the bonus tracks.

Yet while digital downloads only account for 8 percent of the Coldplay album's first week of sales, some music executives see it as leap in digital music's evolution.

Universal's Berman described how the promotional machine used to work: "Put out a hit record, get it up on the radio, on video, get the band on tour, and sprinkle a little magic along the way." That model has been turned around, and it has music executives looking at their computers first.

"Eighteen million people are hitting (social Web site) MySpace. Thirty million are living on (Yahoo's) Launch.com. AOL Music is getting millions of people in front of music, and iTunes is selling millions of downloads per week" he said. "We have to retrain ourselves completely."

Copyright 2017 CBJ, L.P.
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