Why Garth Brooks Should Have Gone With iTunes

Courtesy
Garth Brooks, 2007.

The superstar took a gamble by launching his own digital store -- can it pay off? Well, the outlook isn't bright.

Last week, Garth Brooks debuted GhostTunes, a new music download store seemingly created to be the exclusive source of Brooks' digital catalog. Although the store has a wide range of other artists and genres, the focal point is a $29.99 bundle that includes Brooks' new album to be released this fall, another new album to be released next year and nine of his previously released albums.

Fan-friendly it is not. Only albums, not individual tracks, can be purchased. To buy Brooks' music in a digital format, fans have to purchase at a new, unfamiliar store rather than their preferred music retailers. Basically, Brooks has built a system geared toward maximizing album sales rather than maximizing revenue and access to his music -- and that's if his plan works. There's ample reason to believe Brooks will have a difficult time getting people to shop at GhostTunes.

"It's hard to think of a case where an artist changed consumer shopping behavior, at least recently," says analyst Russ Crupnick. Labels and artists usually take the safe, predictable path and have sold their music where people most desire to purchase music. Even though Radiohead and Trent Reznor have succeeded with alternate, direct-to-fan strategies, other major artists have stayed within the proven retail model. Not even Walmart could get people to buy their downloads, notes Crupnick.

To justify his digital strategy, Brooks needs to generate as much revenue through GhostTunes as he would have through a well-publicized exclusive at iTunes. While it's difficult to say exactly how many albums Brooks would have sold at iTunes, there are two artists whose iTunes debuts can be used for comparison purposes: AC/DC and The Beatles.

Focusing on just the catalogs' first week at iTunes, AC/DC had first-week digital sales of 48,000 albums and 696,000 tracks -- all catalog. The Beatles had first-week digital sales of 119,000 albums and 1.4 million tracks -- also all catalog.

For the sake of example, let's assume Brooks' first-week sales at iTunes would have been the average of AC/DC's and the Beatles' sales. That equals sales of 83,500 albums and 1.05 million tracks, or 188,300 track-equivalent albums (TEAs). While Brooks' new album is currently available only through the $29.99 bundle -- in order to goose preorders of the high-priced bundle -- the new album could be available individually on street date. That would help unit sales tremendously.

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Here's where the comparison gets tricky. Brooks could sell a high number of units because the bundle contains 10 titles (and 1 forthcoming title) for $29.99. (Individual catalog titles are priced at $12.99.)  But the bundling of the albums drives down the average price of each unit. Thus, it's best to judge Brooks on revenue rather than units sold.

For Brooks' first-week sales at GhostTunes to beat his likely sales at iTunes, he will have to generate $1.65 million. That equals 55,192 bundles at $29.99, or 50,1861 bundles and 10,000 albums at $12.99, or 46,529 bundles and 20,000 albums. Or, if the mix skews toward individual album sales, Brooks would need to sell 11,878 bundles and 100,000 albums -- to pick a nice, rough number.

It won't be easy. To achieve those numbers, Brooks would need to match what comparable artists have sold at popular download stores. First-week digital sales of seven recent country albums -- all available at iTunes -- averaged 59,100 and ranged from a low of 9,000 (Martina McBride's Everlasting) to a high of 169,000 (Brantley Gilbert's Just As I Am), according to Nielsen SoundScan. And those figures ignore potentially significant track sales. For example, Gilbert's Just As I Am had already achieved 1.3 million track sales by the time of its May 20th release.

Brooks has a few things working in his favor. His moves garner significant media attention. The launch of GhostTunes and the kickoff of his current tour were widely covered, as were previous concerts and distribution strategies (such as his exclusive with Walmart). He also has a new album -- neither AC/DC nor the Beatles had a new album when they debuted at iTunes -- and has the ability to set a low price for a bundle with eight previous studio albums and a live album.

But there are obvious problems. The biggest and most obvious hurdle is changing consumer behavior. Not only does Brooks need to get people to GhostTunes, he needs to convince them to get out their credit card and buy something. The ease with which people make purchases at iTunes or Amazon -- the retailers already have their credit card information -- doesn't exist with GhostTunes. Nor does GhostTunes have the trust of a major, familiar retailer.

Timing is another issue. GhostTunes would have been a better idea when download sales were growing strong. But the download stalled in 2012 and began falling in 2013. Even though country fans still tend to buy albums, country has not been immune to the industry's trends: country's digital album sales are down 15.3 percent through August 30th. The new reality is that a successful album launch is multi-platform and multi-format in nature -- physical retail, digital retail, streaming services (whether YouTube or subscription services), old-school promotion, digital marketing and, especially in the case of country music, terrestrial radio.

These numbers cover only first-week sales, not the long-term sales that will ultimately measure Brooks' success. But the factors mentioned here apply to the weeks before street date, the first week and successive weeks. There are clear benefits to partnering with established e-commerce companies to reach fans and sell music. The benefits of creating your own download store and competing with those e-commerce giants are far less clear.

Some number of fans will undoubtedly buy the album bundle at GhostTunes. But Crupnick believes Brooks' approach would work better "as a surrogate artist website than a digital store." Ultimately, GhostTunes is a bet that Brooks can sell more units by himself than through iTunes, Amazon and the rest. Deep discounting could get him there. But a more traditional approach would probably generate more revenue and better serve his fans.