As music sales continue to drop like they’re not so hot throughout the industry, Island Def Jam Music Group is jamming on a new business model: integrating brands into artists’ CD booklets.

The first deal, created for the Mariah Carey release Memoirs of an Imperfect Angel on Sept. 15, is a 34-page co-production with Elle magazine that includes lifestyle ads from Elizabeth Arden, Angel Champagne, Carmen Steffens, Le Métier de Beauté and the Bahamas Board of Tourism. Providing the experiment goes well, the label is eyeing bigger brand deals for booklets of CDs by Rihanna, Bon Jovi, Kanye West and other artists.

The mini magazine contains Mariah-centric editorial (“VIP Access to Her Sexy Love Life,” “Amazing Closet,” “Recording Rituals”) and lifestyle advertising along with lyrics and other CD booklet elements. Elle contributed the editorial and designed the layout.

The booklets were created for the first run of U.S. CDs (1 million) and the first 500,000 overseas, said Jeff Straughn, senior VP of strategic marketing for Island Def Jam Music Group. It will also be available in a digital format for those who buy music online. A condensed version of the Mariah mag, sans the 14 pages of CD-specific material, will be inserted into 500,000 subscription copies of Elle’s October issue, which arrives mid-September.

“The idea was really simple thinking: ‘We sell millions of records, so you should advertise with us,’” said Antonio “L.A.” Reid, chairman, Island Def Jam Music Group, a unit of Universal Music Group. “My artists have substantial circulation—when you sell 2 million, 5 million, 8 million, that’s a lot of eyeballs. Most magazines aren’t as successful as those records.”

Carey was “very open” to the concept when Reid showed her a mock-up of the booklet in a magazine format that included brand imagery synonymous with her lifestyle. “I wouldn’t want to do Mariah Carey and Comet abrasive cleaner,” Reid said, laughing. “I wanted things that really reflected her taste.”

Reid said the program was unprecedented. Terry Dry, president of Los Angeles-based digital-word-of-mouth marketing agency Fanscape, agreed, saying that the CD booklet advertising is a first, though he wouldn’t be surprised if more labels look into doing the same thing: “Hollywood Records [Disney], I know they love to monetize all over the place for something like a Jonas Brothers record. Open any rap record and a couple of inserts will come flying out, usually for a business the artist is a part of. I wouldn’t be surprised if 50 Cent had a Vitaminwater thing.”

Labels are looking for ways to eke out extra bucks, borrow equity and cut costs anywhere they can today. Year-to-date album sales were down 13.9 percent for the week ending July 19, 2009, compared with the period last year, according to Nielsen SoundScan (227 million units vs. 195.5 million units). Of those 2009 sales, 18.9 percent, or 41.9 million, were digital.

Ad revenues are subsidizing 100 percent of Island Records’ costs for the Carey booklet, but label execs also see the alliance as a way to expand distribution at a time when the local music store is becoming as rare as the Beatles’ Yesterday and Today LP with the “Butcher” cover.

“We don’t have music retailers any more, so a smart consumer products company that understands the value in distributing music is going to restore the vitality of our business,” Reid speculated. “If we distribute music properly and if it’s done tastefully, it could be a huge profit center for all of us. That is the missing link—we need partnerships.”

To underscore the point: At one large retail establishment, partner Elizabeth Arden is allowing the label to cross-promote the release. The CD Memoirs of an Imperfect Angel will be merchandised directly outside Walmart’s music aisle with Carey’s new signature Arden fragrance, Forever, which has its ad on the booklet’s back cover. The CD and scent will also be displayed together in the beauty department.

-- Nielsen Business Media

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