HITS Daily Double
Look for Taylor Swift to be the Cinderella story of this year, as she heads to Shania Twain-land with a crossover smash.


Our Resident Pundit Puts on a Happy Face as He Insists Good Times Are Around the Corner
First of all, I’d like to thank all of you who responded (almost unanimously in agreement) with the new chart policies to count a sale as a sale... As we who do charts enter this brave new world, it will take some time for adjustment. Dealing with new sources of information (I wonder if we can get tight with the fine Victoria's Secret folks who will be selling Spice Girls product) takes more time and effort and there will be hiccups, but as we forge forward, we can expect more positive information flow and better chart results.

Anyway, has anyone noticed that boom-boom-boom—records are selling again? (OK, yes I still call them records—I grew up with the word and I still like it.) It was a week that saw Jay-Z, the Eagles, Garth Brooks and Chris Brown rack up 300k+ sales weeks, while Carrie Underwood and Josh Groban scored well north of 100k. YIPPEEEEEE....

It was also a week where the Country Music Awards kicked in sales of the amazing Taylor Swift, whose single, "Teardrops on My Guitar," which we have been writing about for months, exploded at Top 40 radio, along with spikes for Reba McEntire, Sugarland, Kenny Chesney, the Eagles, Garth and Carrie. On top of that, Oprah magic remained in effect—this time for opera sensation Paul Potts. Finally, and tellingly, the Apple music geniuses scored again, as the iTouch commercial featuring a song by Sub Pop's CSS exploded on the digital sales lists, following in the footsteps of the previous Feist Nano spots.

The good news is that next week looks just as explosive, led by Alicia Keys, who’s trending at around 600k.

What does it all mean?

1. People still buy music.

2. Television exposure through licensing and key shows is a bigger factor now than ever before.

3. Many of these titles are "adult"-leaning.

4. The Eagles/Wal-Mart partnership is the tip of the one-way-sales iceberg.

5. The sky has fallen and now we all have to get up.

In the short term, we can look for a holiday season with some optimism. Look for Apple to dominate sales during the holidays and have by far their biggest season ever. Look for Taylor Swift to be the Cinderella story of this year, as she heads to Shania Twain-land with a crossover smash. Look for Ms. Keys and the Eagles to lead the sales parade. And look for the soon-to-be-announced Grammy nominees to absolutely rock the sales world.

The Amazon digital experiment is starting to work, and while iTunes is still the runaway online king, others can and probably will succeed in the near future. Stay tuned.

Can we put on our rose-colored glasses and give thanks for something?

Dial in to [email protected] and tell us what you’re grateful for in the music business this holiday season. The acts you think are tomorrow’s stars as well as the future trends and developments that will eventually help us make the transition to what's next.

The Seventies are back!

This may not be the best time for the record business, but it is looking like a renaissance for the MUSIC business.

Record companies used to hold three strategic advantages that made it neccessary for bands to come to them:

1. Access to Distribution
2. Power at Radio and MTV
3. Marketing

In the emerging age, these things aren't as much of a barrier as they used to be.

1. Distribution is not as compelling when there is no physical product, and no conventional store in which to buy it.
2. Tight radio and video playlists, plus the emergence of talk radio and reality programming make access to those media less valuable to the bands.
3. MySpace, YouTube and the Web make marketing possible for even the tiniest bands, as long as they have some smattering of creativity.

The future of music is the past. In the last Golden Age of Rock, the '70s, artists from Jackson Browne to David Bowie made artistic records that didn't necessarily fit a format, but were so strong that they created one. Bands like KISS and Queen created live shows that literally had to be seen to be believed. Joni Mitchell moved from folk to jazz, and her fans followed happily along.

Now is a great time to start a band. Kids are becoming live music fans, and gobble up CDs, merch and hard tickets, all to see live BANDS, not someone hiding behind 30 dancers, smoke and mirrors. YouTube gave OK Go a real hit, and using a low-tech video that proved you don't need Hype Williams and 500 grand to make something that people want to watch. Colbie Caillat proved that a girl with a guitar and a decent song is more powerful than a girl who can't sing, but dances up a storm! Avenged Sevenfold has shown that a guitar solo is more exciting than a guy with 30 chains and a drum machine.

Young bands just have to do it the old-fashioned way: they have to EARN IT. They have to get back in the van, get out there and PLAY, and do their own artist development in front of an audience. Word of mouth is spread, and the bands that are good enough end up with real fans, not the "you're only as good as your last single" variety. If they like the band, they support the band. The band makes money. They'll sell CDs and merch and make more profit per unit. They learn how business works.

Record companies can benefit from this, too, but only by signing these kinds of bands, and abandoning the Video Stars. If not, the bands will make it anyway on their own.

The Good Old Days are back. We just need to know where to look.

Mike Bradford
Chunky Style Music, LTD

Lenny -

First of all, congrats to you and the HITS team for shaking it all up and including the Eagles sales at Wal-Mart BEFORE that other trade mag decided to change their policies right quick. They would have looked rather silly had they made Britney Spears #1 on their chart, dontcha' think?

In response to your questions and "What does it all mean?"

1. People still buy music. Absolutely people buy music. The recent retail sales reflected on your chart by artists like the Eagles, etc., shows just how well people will respond at retail. And no matter how much people want to hate Steve Jobs, iTunes has sold over 3 BILLION songs. 3 billion sold=3 billion less stolen elsewhere.

iTunes did more to get people to BUY music rather than steal, than any other industry initiative. (Although that alleged industry association, the RIAA, would like to think it's due in part to the lawsuits they file against downloaders. Har-har-hardee-har-har)

The fact is people will always be able to steal music and even Microsoft CEO Steve Ballmer said, "We can build the technology, but there are still ways for people to steal music." That's the hard core (ugly) truth of life in this brave new digital world, but it doesn't mean that the industry cannot survive with new business models in place to generate revenues.

The strong sales you talk about are all by artists who have one thing on common: they all make great ALBUMS that contain a whole lot more than one or two good tracks. People will always buy music that provides them with such a package. Nickelback sold 7 million, Carrie Underwood sold 6 million, Justin Timberlake is closing in on 4 million, and so on, and so on.

It seems to me that these success stories, and the fact that Eagles can sell one million two-disc albums in two weeks, proves that there's no problem selling good music to the public.

If the industry wants to see more weeks like this at retail, they need to re-invest in A&R and artist development for the long-term and focus a whole lot less on audio "flavors-of-the-month," which don't contribute to building a healthy roster at a label.

New artists (not new records...there's a BIG difference) are the lifeblood of the record industry. No matter what format music is played on (CD, MP3 players, computers, etc.) in the future, the opportunities to generate a healthy consumer market exists if NEW artists are established and the best minds in the industry meet with some of the best minds in technology and new media to ensure these artists will not only be heard, but that the means of distributing their music NOW and in the future can be profitable.

Your chart is simple proof that people are buying GOOD music and buying it again in GOOD quantities. The only problem is, the list of artists able to generate such sales isn't as strong as it used to be because too much disposable "product" was signed and put out at retail to fill distribution pipelines and make quarterly numbers.

Industry leaders should be looking at these sales figures and realizing they can regenerate retail dramatically if they sign the right artists that can deliver great music over and over again. (e.g. Alicia Keys, John Mayer, Dave Matthews, Rascal Flatts, etc.)

2. Television exposure through licensing and key shows is a bigger factor now than ever before.

Of course, nothing proves just how powerful television has been in driving music retail the past five years more than American Idol. That one show alone has accounted for over 35-40 million CDs sold thus far. The success of Disney's High School Musical series has also helped them sell almost 10 million CDs at retail. Again, the power of television when married with the right on-air vehicle proves to be powerful.

The Disney Channel's debut of High School Musical 2 also broke records to become the most-watched basic cable television event of all time, according to TV Week. The broadcast drew 17.2 million viewers and was also the most-watched TV telecast ever for kids 6-11 and TV's most-watched Friday telecast in more than five years. It's no surprise then that a third TV movie in the teen franchise is already in the works and a fourth is reportedly in the planning stages.

Any such event that brings people into retail stores (online or off) to BUY music is a good thing. When such occurrences take place, usually other titles see spikes in sales as well. At a time when the industry is going through a difficult time, this showed that even in the darkest hours, there's light to be found.

The loss of MTV as a driving force ( "Music" USED to be their first name... now it's a reality show/lifestyle channel) has made artists and labels seek new television exposure, and those creative forces when put together well, benefit both the show utilizing the music and the artists who get the exposure.

Shows like FX's Nip/Tuck not only feature music in every episode, they feature it on the show's websites and give viewers information. Artist like Death Cab for Cutie and Sia had their exposure balloon when they were featured on HBO's Six Feet Under.

But the success of placing great music on TV and seeing big retail results is not new. Back in 1985 when I worked at MCA Records, we sold over 5 million Miami Vice soundtracks and it became the biggest-selling TV soundtrack of all time because Michael Mann had placed great music to fit each episode. (And yes, because we had big hit singles by Jan Hammer, who wrote the theme, and Glenn Frey, and because Irving Azoff knew the right package would do well at retail).

I believe HITS reported that new Brazilian band on Sub Pop, CSS, is sizzling at iTunes, thanks to their song, "Music Is My Hot, Hot Sex," being used on the current Apple iTouch TV spot. I think we'll see even more television/music retail success stories in '08.

3. Many of these titles are "adult"-leaning. Again, the strong retail showings by the Eagles, Springsteen, Josh Groban, Reba McIntire, Garth Brooks, even Andrea Bocelli (!), and others, are all evidence that there is a HUGE market out there for the demos the industry
mostly negates, the 40+ demographic.

It should be remembered that the 40+ (and now 50+ demos) are people who were brought up on rock and roll music and just because they've gotten older doesn't mean they don't still love their music. Look at the tickets sold by the Eagles, Garth Brooks, Billy Joel, Elton John, Springsteen, the Stones, Van Halen, Aerosmith, The Who, Paul McCartney and others. Look at the audiences and you'll see the same upper demos for the most part.

Whoever thought that just people get older they stop buying music was sadly mistaken. Just give those people quality and they'll buy it every time.

4. The Eagles/Wal-Mart partnership is the tip of the one-way-sales iceberg. The alliance is certain to turn a whole lot of heads. I'm sure there are other artists who are watching this all go down and now thinking about their retail futures. Of course, they probably started thinking about it several months back when Prince decided to sell his new album to the London Daily Mail Sunday newspaper and 3 million were distributed in one day and played a big part in his selling out all the concert dates he did in England.

The list of the artists that could generate such excitement at retail as the Eagles have done with their Wal-Mart (and Garth Brooks did previously with the chain) is very small, so I don't think we are likely to see Wal-Mart rushing to make a whole bunch of these type deals in the immediate future.

The Eagles haven't had anything new at retail in almost three decades, yet their tours, their concert DVD, their exposure on TV, have all assisted in keeping their fanbase and growing it over the years. This partnership made great sense and it's a win-win for the Eagles and Wal-Mart.

I think we'll see more retail partnerships made in the future, whether they will all be as successful as the Eagles is another question entirely. Let's also not forget that the Eagles album is a two-disc set that sold for an incredibly low price. If I was Starbucks, I'd be rethinking my pricing yesterday.

5. The sky has fallen and now we all have to get up.The "sky" fell a long time ago as far as the industry's growth is concerned. Regardless of these recent spikes in overall sales at retail, the CD will continue to decline in sales worldwide. Over 150,000 million iPods and other
digital music players already sold tells you that the consumers don't really care about building their personal CD libraries anymore. Their music libraries now exist on those iPods.

While there is less profit for the industry to be made in selling music by the unit online, with online distribution, labels can drastically reduce manufacturing costs, distribution costs, packaging costs, etc. Yes, CDs generate more profits, and if labels want to still reap those profits from retail sales, prices on CDs MUST come down. If the Eagles can sell 20 new
songs for approximately 59 cents apiece at retail, so can a whole bunch of other artists. It's obvious that the pricing of the Eagles album had a big impact on so many people buying it so fast.

Looking ahead, it's time to stop whining about the industry's problems and seek solutions for a better future. It's time for industry leaders to put their best creative minds at work on formulating innovative ideas that will redefine marketing as we know it now in the business. It's time to sit down with some hi-tech companies and their creative people and see if new
symbiotic relationships can be formulated.

Columbia head Rick Rubin said in a recent New York Times article, " Too many people make and love music for it to ever die. It will never be over. The music will outlast us all."

That about sums it up. If the labels want to be a part of it, I would suggest they start swallowing that proverbial "hard pill" (the facts that they cannot change existing technology), and get on with designing their future. Whatever it may be.

Steve Meyer
Smart Marketing Consulting Services

Hi Lenny,
I am grateful that it seems that the old school record folks are finally pulling their collective heads out of their arses, and realizing that "the times they are a-changin"... Even though in this, the eleventh hour in the eleventh month of the year, I hope that these realizations are not too little, too late. Pulling out of iTunes? A great idea, if you have a backup plan. If you don't have one, well, get ready for another year of being Mr. Jobs' bitch.
If I were were running one of the majors, I would open my own e-store, brand my catalog, and my artists, and tell Jobs to sod off....Yes, it will be tough, but in the long run, it's the only way to protect their assets. I would also make friends with Bebo, Facebook, etc., and hire a zillion widget/application programmers, and innovate and implement some new branding and sales strategies pronto.
Forget radio. It not even relevant to anyone under 25... Also no one under 20 watches TV on TV either. It's become all about convergent New Media, and the music business better figure out a way to capture back that demo, and the best way to do that is to utilize what that demo uses for its media platform- i.e, the computer and the mobile phone, and market/ brand/sell to that area.
It's gonna be a fun new year indeed! We all have to dare to be bold in how we tackle these issues. "You cannot achieve the aim without suffering." Gurdjieff

Guy Eckstine
I'm thankful that icon "Artists" such as Bruce Springsteen, Joni Mitchell, John Fogerty, Steve Earle and others can still release "Albums" containing "Lyrics" that speak-out against the overthrow of our constitutional rights with intelligence and bravery. And for "Artists" like Jay-Z bravely standing up against corporate monoliths like Apple, insisting that iTunes sell creative authorships as a complete "Album-only" if so requested by the "Artist" who created the work. I am thankful for the "Artists," for without them, there would be no creative content.
David Bean

With my rose-colored glasses firmly across the bridge of my nose, I see images of Donnie and Marie, of Sunny and Cher, of Hee Haw and of **gasp** Lawerence Welk. Negativity is out, music shows with professional musicians enjoying themselves are in. Life is good. The 21st century has become fun again. Now... if only we could find some writers with spare time on their hands...

Dear Lenny:

I’ll give thanks to the growth and success of so many independent labels and publishers in the Country music world, how they can compete against the majors at radio and retail. While I’m not a fan of re-releases of current albums, the fact that Wal-Mart will be doing such an exclusive with Jason Aldean, as well as the successes of Taylor Swift and Little Big Town, among others, show how there is still room for artists to be discovered in that genre despite shrinking major label rosters and radio consolidation. It’s happening on the publishing level as well, where so many hit Nashville songwriters are jumping to small, boutique publishers, or self-publishing their own catalogs.

The whole world of what we all consider “non-traditional retail” and exclusive is one which needs more attention paid to it, but more from the perspective of understanding what it is the retailer needs in order to have music be successful in their chain. They need more lead time than record retail; in other words, they don’t want to be approached a couple of months out from release date (or closer!) about particular titles. Their planograms are set up MONTHS in advance of a selling season. They don’t see CDs as a product which, on their own merits, warrants shelf space when other items will turn over faster for a larger margin, so the labels had better address pricing concerns if they think they’ll just be able to sell in tons of product one-way to a retailer like Victoria’s Secret or other specialty chains. And these chains expect their suppliers to deliver product and work with their supply chain using EDI, so the labels had better adapt and be able to deliver product as such, because given how low-margin music sales are on a relative scale to other goods, those chains need INCENTIVES to want to stock music. They want partners who are easy to work with.

Some non-trad sectors demand that labels shift their A&R focuses completely. Look at what Tween Brands, home to Limited Too and Justice chains, has done for all of the tween-focused music coming from Disney Music Group. And they sell physical product that’s CDs folks! for full price! But if you look in their stores, Disney product is all you see. That strikes me as incredibly, what’s the word I’m looking for… STUPID on the part of the other labels, that they haven’t developed any artists with this chain in mind when they know there is a company with over 700 stores and a SoundScan account no less! selling units to a highly targeted, captive audience! That account is Top 5 or better on all those major Disney releases you can bank on it! Now, music is certainly not a major part of those chains’ total merchandising strategy, but it won’t be at any non-trad. retailer, whether it be a department store, fashion retailer, etc… If labels are expecting that, then they need to get a reality check. But the point is single-artist album releases need to be targeted towards different accounts differently. High School Musical doesn’t fit at Whole Foods, but (in theory) the Robert Plant/Alison Krauss record ought to do gangbusters there.

On the downside of things, I’ve had four friends in the industry lose jobs at one of the major labels over the past two weeks, so for them, the glass is less than half full. It still seems that the industry is only addressing their Wall Street masters by trimming staff and having less and less people to work the records they need to sell well, rather than addressing larger issues. And would it be so out of whack if the label heads told the bean counters and corporate financiers that head count issues were off the table for a while, and that these artists need care and feeding that only a label staff can give them. Otherwise, why sign these artists and make them any promises whatsoever that key people will be in place to work their records?

Peter Kohan
Kohan Music Group

Greetings Lenny!

I've enjoyed reading your articles and blogs since finding the HITS site a couple months ago. Keep up the good work.

I'm grateful for music first and foremost, without that, what do we got?

And I'm grateful for the technology that has allowed artists to empower themselves, as it should be. We are in the weeding-out process on both ends of the spectrum. The "powers that be" that do not have anything to offer the artists they wish to work with will be weeded out, and the artists with nothing to offer will be weeded out.

Frankly, there are artists out there who want to be stars with minimal talent and are not ready or will never be ready to be stars. Look no further than American Idol to see numerous examples. If it was NASCAR, these folks would be driving a Ford Pinto. Same thing on
the "business end"... artists are learning true numbers and are thinking why should I pay to play in this fashion IF I can do it myself and make as much or more money.

I admire the "indie" spirit when it works and I admire the major label process when it works. What I don't admire is people getting rich from offering nothing, and, unfortunately, this is not exculsive to either the indie or the major label scene.

This empowerment will make people work harder and think smarter, and will eliminate or minimalize those who don't have the desire to do so. Harsh reality for some, good news for others.

And lastly, I'm grateful for people who can sing and play and entertain without electricity if need be. Electricity killed the campfire star! Somebody should make a video of that and put it online. :-)

All the best in 2008!

Tim Walker
365 Songs in 2007