Kola 1

Amalba Kola

Professor Vancour

Music and Media

13 May 2015

From Selling Out to Sold Out: Learning from Beyoncé’s Release Strategy

The rising focus on the monetization in the has led to serious concerns regarding the infrastructure of music production and distribution. The convergence of music conglomerates has made it difficult for musicians to succeed without the help of a major label name, thus resulting in the homogeneity of the music available for consumers. With such similar music, it becomes difficult to differentiate and predict what type of music or artist will be successful, and therefore record labels focus on optimizing unique marketing strategies, in order to spread awareness and drive sales.

As a result, the industry is becoming preoccupied with investing more time and money into the marketing of an artist or , rather than finding a quality artist, or developing a masterful album, with the emergence of contracts like 360° deals. Given these changing dynamics between the musician and their label, it is clear that “most musicians make very little money from CD sales and wealth is becoming more and more polarized toward the industry” (Park 27). Artists must now combat these issues with smarter and more innovative techniques in order to reconstruct a business model that values hard-working musicians and recognizes quality artistry. Beyoncé’s self-titled visual arts album is an outlier in this modern music landscape, which invites music industry experts to consider another type of release strategy: one that puts the musician in the position of power, and capitalizes on the power of social media networks. Beyoncé’s secret album release serves Kola 2 as a powerful example of how artists can challenge the modern economy of the music industry and still yield successful results, without sacrificing their artistry and sales to music conglomerate executives.

Record labels band together to create a market with less competition and more control over pricing strategies. The ‘Big Four’ companies, consisting of Sony-

Bertlesmann Music Group, , , and Electric &

Musical Industries, “set prices and create ‘barriers to entry’ against competition by lowering prices or by using their cross-promotional power to advertise their products over those of potential competitors” (Park 23). With such a high concentration of professionals working in so few companies, costs for production and distribution are dramatically reduced because they “can easily cross-promote its own content, as well as earn revenue from sales of electronic products” (Park 21). Beyoncé’s case is a unique one because she is both signed with Columbia Records, an independent label under Group, as well as the founder of her own independent label, called Parkwood Entertainment (Park

26; Gensler 2). The motivation to branch out into smaller, independent record labels stems from a Post-Fordist ideology, which emphasizes production on a smaller scale in efforts to increase revenue. Music conglomerates and independent artists drive the acquisition of independent record labels because it outsources aspects of production and affiliated expense to other companies that are not contracted union workers, which ultimately has “negative consequences for musicians by polarizing wealth between manufacturers and laborers” (Park 31). It is critical to look into Beyoncé’s partnership with Columbia Records, because their joint venture has allotted her the freedom to fulfill her artistic vision, and also to reap fair profits from the finished product. Typical royalty Kola 3 rates for big-name artists, like Beyoncé, are estimated to be about 20%, but through her joint venture, Beyoncé was able to turn a much higher profit (Greenberg 1). Barker notes,

“‘Beyoncé’ is impeccably constructed and calibrate, suggesting whatever money her team may have save on promotion was funneled straight back into production” (3). While the exact numbers are unclear, “even assuming that she co-financed a whopping $5 million budget, the album’s opening weekend alone would have earned Beyoncé and her label a multimillion-dollar profit to split,” deeming the creative risk well-worthwhile (Greenberg

2). Jim Sabey, who is the head of worldwide marketing at Parkwood entertainment states that the company is responsible for producing, “the content that we put on our website, and...[for] our brand partners -- we produced webisodes and even a Super Bowl commercial for Pepsi, with whom we had a partnership,” which further illustrates how powerful of a force an independent label is for an artist in terms of regaining control for how they are represented (Flanagan 2). Here, Beyoncé’s album poses as an example of how an artist can use his or her own finances to dictate the trajectory of his or her own work. While independent labels, like Parkwood Entertainment, grant artists the independence and freedom to express their artistic vision, they also fall at risk of not performing as well because their methods towards creating an album are unconventional and not pretested.

Beyoncé’s motivation to start her own label came from the desire to make her own name in the music industry, and avoid being constrained by big management companies. This way, she is able to control her own money and success and maintain artistic integrity, instead of individuals in major companies, who use the traditional business model to drive profits (Gensler 2). Park states that “owners ultimately make Kola 4 decisions that influence not only the music people hear, but also where and how they listen to it,” and in the case of Beyoncé, who was in charge, she was able to dictate her own unique sound to her audiences directly (19). In an interview, Beyoncé stated that she,

“miss[es] that immersive experience...of watching music videos like Michael

Jackson's ‘Thriller’ as a family, as a mass event….“Now people only listen to a

few seconds of a song on the iPods and they don’t really invest in the whole

experience. It’s all about the single, and the hype. It’s so much that gets between

the music and the art and the fans” (Hampp 2).

With this neglect of an authentic music listening experience as her primary driving force,

Beyoncé’s mission with this album was to remove audiences from their modern music consumption practices and harkens back to a time where the song and the were not mutually exclusive. On December 13th, 2014, Beyoncé shocked fans and music professionals alike, with the release of her surprise, visual-arts album, simply titled

Beyoncé. While most relies heavily on marketing campaigns that can last for almost a year, Beyoncé’s release challenged this traditional model, and the risk garnered remarkable results. “Becoming the fastest selling album ever on the iTunes store,”

Beyoncé’s album “sold 828,773 copies in its first three days of sale, and was number one in 104 countries” (Stedman 1). The album was featured exclusively on iTunes and was available only as a full album with “almost no marketing or fanfare other than a press release and a banner at the top of the digital-” (Knopper 2). Beyoncé’s surprise strategy echoes earlier release strategies, such as that of ’s 2007 album

In Rainbows. Their strategy allowed fans to purchase their album based on a “pay-what- Kola 5 you-want” model, which gave consumers the power to decide the true value of the music themselves. This was a risky move for the band, especially after they produced this album without the help of the financial backing of their record company, EMI, due to an expired contract (Karubian 395). In the case of Beyoncé and Radiohead, these artists sought to regain control of their music distribution and focus attention back to the value of their music rather than profitability. Jagger comments that “the iTunes structure has changed our perception of worth” and does not adequately consider how much time and effort goes into producing an album (1). Specifically, with the increased importance of the hit single, audiences are becoming less inclined to invest in the album as a whole, which undermines the overall artist’s value. Instead, audiences look to a ‘blockbuster phenomenon’ to peak their interests and “the ultimate result of this hyper-commercial atmosphere for consumers will be the further erosion of the fine line between art, free expression, and advertising” (Park 51). Beyoncé’s marketing-free album seems to be a retort to this traditional model, and her resulting success poses a serious threat to the foundation of the very strategies that musicians and their labels are employing today.

It is important to note that Beyoncé’s secret strategy is one that most artists cannot entirely replicate, due to the fact that they do not have a similar financial empire.

Therefore, they must fund their through contracts and record labels that will grant them optimal exposure to targeted audiences, while also actively combating issues affecting sales, like the rise of piracy with the evolution of the digital media landscape. A report by the International Federation of the Phonographic Industry in 2009 revealed that

95% of music is illegally downloaded,” which results in considerable losses for musicians and their labels, and also speaks to the new capabilities that digital media has Kola 6 allotted to consumers (Karubian 397). As a result, industry executives have adopted different strategies for bolstering sales and maintaining the artist’s value, one of which is through contracts, called 360° deals. These deals are intended to integrate “components of an artist's career that have traditionally been handled by separate contracts with different companies,” including but not limited to, merchandising, promotions, and touring (Karubian 399). This all-inclusive package helps to bring lesser-known artists to the foreground, and also helps maintain a dominant status for already established artists.

In 2005, the band Paramore signed a 360° deal with Atlantic Records, which helped to catapult their talent into a successful and profitable business. Another powerful example comes from ’s 2007 360° deal with Live Nation, which helped to further establish and add value to her name as a ‘brand,’ evident by her notable success in her

H&M clothing line, that raked in over twenty million dollars over the course of one year

(Karubian 427-8). 360° deals mimic the horizontal integration that is taking over the music conglomeration business model, and “with fewer labels owning more music produced by fewer ears and minds means that cultural diversity becomes limited due to standardized industry modes of operation” (Park 35). While this model helps to promote artists on a global scale, it “cultivating[es] an environment that subverts musicians and their music to the likes of the music industry” (Park 52). The very foundation of these music conglomerates and their contracts with artists is grounded in the desire to increase profitability and establish dominance in the field, however, the tactics fall at risk of becoming repetitive and formulaic. The homogenization of music through this framework is inevitable, and artists, like Beyoncé, push towards redefining this business model in efforts to regain creative control and add diversity to the existing pool of music. Kola 7

Despite the effect of homogenization resulting from the 360° deals, the idea of building a ‘brand name’ is certainly not a new concept to the world of media advertising, and certainly not to global superstar, Beyoncé. Contrary to the ideological commentary about the music industry surrounding this album’s release, Beyoncé is no stranger to the world of marketing and brand development. Traditional marketing strategies would require “an initial single to be released to radio, along with an accompanying music video,” as well as, “visit radio stations in a region and perform interviews for magazines and newspapers,” all of which were factors to her previous albums, 4 and Crazy in Love

(Philp 225). A typical budget for recording and producing an album ranges anywhere from $125,000 to $300,000, and the money spent towards promotions, marketing, and advertising start at $100,000 and go up to $500,000 (Philp 225). Factoring together all the other costs of hiring staff like producers, choreographers, and make-up artists, the album costs surpass well over one million dollars to produce. When the album is ready to manufactured and sold, it hits another speed bump when it reaches Apple’s iTunes website, which “typically takes a 30% cut of sales,” leaving a profit of just $10 per album sale (Greenburg 2). “More than 95 percent of all musicians who receive advances do not recoup them through recording sales,” and therefore it becomes necessary to partake in contracts, like 360° deals, to expand their divisions for making revenue (Park 27). One of

Beyoncé’s most notable endorsements was made with Pepsi Cola in 2012, in efforts to draw attention to her world tour. This deal brought in an estimated fifty million dollars and granted Beyoncé exposure to international audiences, as well as, a limited edition line of personalized soda cans featuring the her face (Philp 223). Beyoncé has been working on optimizing her brand image for years, ranging from appearances on Saturday Kola 8

Night Live, to hosting the Super Bowl, to performing during the Academy Awards (Philp

223). “Co-branding, which has the benefit of streamlining advertising expenditures,” gives the musician access to a wider audience, without the associated heightened price tag (Park 52). For Beyoncé, using these various outlets to broadcast her name helped to build and strengthen her name as a brand. Through this indirect use of marketing,

Beyoncé was able to use her multidimensional talents to more broadly draw audiences to her as a person and a brand, which is one of the many reasons the album was able to reach such record-breaking success without a traditional marketing scheme.

Beyoncé’s album thrived on social media, in part due to innovative features on sites, like Facebook, being “the first to use the social network's brand-new-at-the-time

‘AutoPlay’ feature for videos” (Flanagan 2). With features like this, Beyoncé’s fans had the ability to engage in her new music without actively trying to, thus increasing the likelihood that they would continue to engage with the material. Beyoncé’s following is monumental, averaging 13.2 million followers on Twitter and 56 million likes on

Facebook (Philp 223-4). In just the first three hours of its release, her album sold 80,000 copies, displaying the enormity of Beyoncé’s fan base and the speed with which the news spread of her release (Knopper 2). Therefore, it is no surprise that when her album dropped, Beyoncé was mentioned over 1.2 million times on Twitter, and according to

Mashable her mentions on Facebook skyrocketed 1300% (Philp 233). These numbers represent “essentially free pieces of advertising, perfect for a generation whose news comes in the form of Twitter links and Facebook shares” (Philp 233). Rhonda Weiss identifies this phenomenon as ‘word of mouth’ (WOM) marketing, a powerful source of social influence due in part to the fact that individuals are more likely to trust similar Kola 9 others who have already experienced or tested a product, rather than a traditional marketing scheme (16). This groundbreaking aspect of Beyoncé’s release speaks to a larger issue within the emergence of the ‘transmedia’ space. Stuart Cunningham refers to transmedia as “a new aesthetic that has emerged in response to media convergence” which involves the incorporation of many media platforms that ultimately contribute to the overall product (422). Consumers are now invited to be an active participant in their product’s critical reception and through the transmedia space it “involve[s] differing, but intensifying, levels of user participation, online social networking strategies, and the attempt to generate multiple revenue streams across platforms” (Cunningham 422) Social media sites, in particular, are influencing how consumers shape their opinions about media products, and further muddling the line between amateur and professional reviews

(Cunningham 415). Because Beyoncé’s album was released to consumers and music professionals simultaneously, no one received preferential treatment. In other words, rather than be influenced by music critics, consumers jumped at the opportunity to explore a new album on their own, and feel as though they were part of an exclusive release community. As a result, her consumers offered immediate positive reviews, which encouraged other consumers to also purchase her album, and eradicate any uncertainty about the product. By facilitating audience interaction, companies not only gain a larger fan base, through increased exposure, but also can gain valuable information from their consumers that goes into modifying and enhancing their future endeavors (Cunningham

424).

Beyoncé’s album was able to shed light on the many economic issues the music industry is currently facing. By challenging the established norm for album releases, Kola 10

Beyoncé’s unprecedented success revealed that these practices might be outdated and detrimental to the overall development and profitability of music production. Music professionals would be wise to pay attention to the techniques that Beyoncé used in her release and how they proved to successfully combat the issues of piracy, homogenization, and financial loss. With the help of her independent label, the growing social media space, and accumulated fan base, Beyoncé was able to break the monotonous cycle of routine releases. Her heavily crowned album threatens the role of music conglomerates, and as a result is seen as a possible solution to the issues faced in the current state of affairs. The Vice President of urban programming at CBS Radio, Reggie Rouse, confidently proclaimed that, “Beyoncé is bigger than a single. Beyoncé has created a movement” (Hampp 2). If this is true, Beyoncé’s movement in the music industry could be monumental in changing the standard with which music professionals approach future album releases and music production in general. Kola 11

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