Does Online Marketing Help Record Sales?

Online marketing for any band or artist is a key component of driving all new record sales. Metallica and Radiohead - new album releases have driven huge traffic to websites. But does this correspond with charts and CD sales?

HitWise, a website traffic tracking company, says that while the Bands & Artists category as a whole hasn't seen much of an increase in share of US visits, the volatility within the category is huge as popularity of websites for bands and artists changes daily. This daily popularity contest is driven largely by events in the industry such as album releases, concerts, and more recently, live webcasts.

The launch of iTunes at the start of May impacted the share of US visits to Bands & Artists websites, as users searched iTunes for songs to download, however the novelty and lack of content may have worn off. Traffic to Bands & Artists sites has seen an increase since mid May, HitWise data show.

Record labels are now aggressively doing deals with online providers in an effort to pump up sales for their artists. The sites are anxious to showcase those artists as a way to keep people coming back and entice them to pay for premium services.

"As a whole, online services are tremendously helpful to us," said Adam Lowenberg, vice president of marketing for Arista, which also represents Pink, Dido and Sarah McLaughlin. "The fact that it's so difficult to break new artists especially, any leg up you can gain goes such a long way these days."

The month of June has seen the release of highly anticipated albums from two of the world's biggest rock acts: hard-rock mega-stars Metallica and phenomenally popular British band Radiohead, and the bands' websites have soared in the Hitwise Music - Bands and Artists category this month.

Metallica's official website (www.metallica.com) currently holds the top spot in the Bands and Artists category, with just over 2% of category share (week end June 14th). The site has been on the rise since late March where the site ranked at #13, it steadily rose to #3 for the week ending May 3 and finally reached the coveted #1 position in the week ending May 31. The band's new album 'St. Anger' was released five days earlier than originally anticipated in an effort to thwart music pirates, and on the date of its release (Thursday June 5), the official Metallica website's market share reached an impressive 5.18% of visits to Bands & Artists websites, its highest ever market share percentage.

Majority of Metallica's traffic for week ending June 14th came from Search Engines (24.55%) and other Bands & Artists websites (13.1%) of which 10.68% was other Metallica websites such as Metallica Vault (4.55%), MetClub (2.48%) and Encycolpaedia Metallica (2.48%). Email Services (8.76%) and Software (2.83%) highlight the large contribution that online marketing strategies have played in referring traffic to this No. 1 website. With 8.13% of Metallica's traffic then visiting Retail Music sites to look at purchasing the CD - delivering high volumes of qualified traffic play a key role in this online strategy.

Radiohead's latest release, 'Hail to the Thief' - a welcome return to form for the British rock band after its recent forays into experimental electronica - has also prompted a surge in traffic to the official Radiohead website (www.radiohead.com) and a range of fan sites. Radiohead's official site has soared from #20 to #8 in the Bands & Artists category for the week ending June 14, with an additional increase in traffic on the eve of the album's North American release on June 10. On Monday June 9, the site leapt to an all-time high of #3 in the Bands and Artists category, almost doubling its market share from 0.8% to 1.54%. The site also jumped a couple of notches later in the week as the band's U.S. tour dates were announced on June 13 jumping from #11 to #9.

26.43% of traffic to Radiohead.com came from Search engines for week ending June 14th, 25.44% from other Bands & Artists websites (mainly Radiohead sites such as www.greenplastic.com - 13.47%, www.atease.com - 4.86%, www.radiohead.tv - 2.00% and www.followmearound.com - 1.75%). Email Services (10.47%) and Net Communities & Chat (2.74%) also highlighted the huge amount of traffic resulting from online marketing initiatives. After visiting RadioHead.com, 27.95% went to other Bands & Artists sites (25.53% other Radiohead sites), 9.6% to search engines, 7.8% to Multimedia websites and 2.8% to Retail - Music sites.

Hitwise Demographics for both Metallica's and Radiohead's official websites reveal interesting information on the sites' users: a vast majority of Metallica website users are male (71%), while their largest group of visitors comes from the 18 - 24 age bracket (a substantial 23.8%). Of Radiohead's website visitors, roughly half are female (47%), and are spread across age groups, with the largest percentage of users in the 45 - 54 group (29%) and 25 - 34 group (28%).

Staind's label, Elektra Records, has done online promotion for the band before, but not to the extent of its current AOL program. "This was something different -- doing Artist of the Month and doing a live Webcast was a cool component," said Camille Hackney, vice president for strategic marketing and new media at Elektra. "It was a big, concerted effort that pushed the needle."

"It's vital when we book major TV shows. When you look at the audience reach that AOL has and Yahoo! Launch, it puts them up there in a competitive position with TV outlets and radio and all the rest of it," said Nikke Slight, senior vice president for new media at Atlantic Records. "[Online] is a critical part of our marketing plan. We have to be there."

J Records' Tom Corson, executive vice president of worldwide marketing and sales, agreed: "It's like radio play or press ... everything is an impression in a highly competitive environment. You want to get as many impressions for your artist in the right way as you can."

After the second day on First Listen and a Netscape promotion, the platinum-selling artist shot to No. 3 on Amazon's Top Seller's List of the 100 hottest CDs based on advance orders. Atlantic saw a 30% jump in CD sales in the first week of the release of Jewel's last album, Spirit.

Major labels have high hopes that for-pay online music subscription services will reverse their declining fortunes. Apple reported that its iTunes sold more than 2 million 99¢ downloads as of May 14, only two weeks after its debut. While the labels are enthusiastic about the Store's prospects, there are some drawbacks -- there are only 200,000 tracks available and a Windows version of the enabling software won't be available until later this year.

Compact-disc shipments in the U.S. fell nearly 9% in 2002, while shipments across all music formats dropped 11%, according to PricewaterhouseCoopers. Illegal file-sharing, peer-to-peer networks and free music download services such as iMesh, Grokster and Kazaa have had an impact.

Most analysts maintain that the music labels will probably never completely kill free music download and file-sharing services. Kazaa averages about 14 million visitors a month while the music channel on AOL logged 10 million unique visitors in April, according to Nielsen/NetRatings.

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