In this excerpt from our most recent issue’s cover story on One Direction, Billboard’s Andrew Hampp examines the many moving parts of the group’s business strategy with manager Richard Griffiths, Simon Cowell and more. To read the article in full, subscribe to Billboard or buy a copy of the most recent issue right here.
“Midnight Memories” is the next phase in a whirlwind two-year period for One Direction, during which the group has sold more than 35 million records worldwide, many of them in the United States, the biggest market for the U.K. group. Debut album “Up All Night” has moved 1.9 million copies since its stateside release in March 2012, while last November’s “Take Me Home” has nearly matched it with 1.8 million, according to Nielsen SoundScan. Both albums debuted at No. 1 on the Billboard 200, making One Direction the first British band to enter the top of the chart with its first two albums since the Beatles. The act has also sold 15.6 million singles in the States, led by debut hit “What Makes You Beautiful” (4.4 million copies), as well as “One Thing” (1.5 million), “Live While We’re Young” (1.2 million) and Midnight Memories’ lead single “Best Song Ever” (1 million).
On the touring front, One Direction has grossed $78.3 million from 81 of the 134 shows the band has reported to Billboard Boxscore thus far, with an attendance of 1.2 million to the group’s first global arena tour. The act took home the Breakthrough Award at Billboard’s Touring Awards this month, and is set to embark on an even bigger tour of stadiums in 2014 that starts April 26 in Colombia. Plus, the group’s concert documentary, “This Is Us,” took in a worldwide gross of $68 million, according to Box Office Mojo.
No wonder Sony Music U.K. CEO Nick Gatfield said in a 2012 interview, “What you might not know about One Direction is that they already represent a $50 million business — and that’s a figure we expect to double next year.” Of course, $100 million isn’t a figure a label arrives at based on recorded-music sales alone. But senior executives of One Direction’s team confirm Gatfield’s quote, and indicate that Sony has participation in everything from touring revenue, merchandise and the documentary, which was released by Sony Pictures.
“I hate the word ‘synergies,’” says Simon Cowell, founder of One Direction’s label Syco Entertainment, who helped assemble the group on the U.K. version of “The X Factor” in 2010. “But there’s a lot of ways we’ve worked together between myself and Sony and ‘The X Factor’ — obviously their touring and merch generate a lot of money. I don’t like thinking of them as a brand, to be honest. They’re just five guys doing incredibly well, and if the money comes in, even better.”
“It would be an exaggeration to say it’s a 360 deal,” Griffiths adds. “But it’s no secret in today’s world that the labels are involved in ancillary income as well as recorded income. So I suspect we’re a very important act for [Sony] in many senses, and we make sure that we get suitably compensated by them.”
Part of building that empire is brand deals with Mondelez International and Office Depot, which sponsored the 2013 tour and are expected to continue their relationship with the act in 2014; a global fragrance licensed to Elizabeth Arden in the United States called Our Moment; and a book (“One Direction: Forever Young”) published by HarperCollins. Griffiths is open to further brand partnerships, but within certain criteria. “They’ve got to work with us from our scheduling point of view — there’s a limit to how much we can do on the road. And we won’t get involved with alcohol or fast food.”
But the real opportunities for growth in the 1D empire lie with the music itself. “Midnight Memories” strategically features a more grown-up sound, and “Story of My Life” has a shot at unseating “What Makes You Beautiful” as the group’s signature song, particularly at radio. On Billboard’s Mainstream Top 40 airplay chart, the song became 1D’s highest-charting debut in November, entering at No. 28, and rising to No. 26 the following week, according to Nielsen BDS. Of One Direction’s previous hits, only “Beautiful” has gone top 10 at Mainstream Top 40 (peaking at No. 3), though the band has charted five other singles in the top 20.
“We’ve got a chance to get a radio perspective on ‘Story of My Life’ that differs from the last record,” Columbia Records chairman Rob Stringer says. “With some of that demographic it tends to hit a wall at a certain point, and we don’t think that’s the case with this song. We’ve seen a little bit of that in the U.K. as well — [BBC] Radio 2 has really jumped onboard and played this, and we’ve never been played on that station before.”
Columbia executive VP/GM Joel Klaiman adds, “A few tracks on the album open up new formats for us — [adult top 40], AC — which should help us reach different fans. The music falls somewhere between Mumford and Phillip Phillips and pays homage to another sound or something the boys may have grown up listening to.”
“Story of My Life” is also the central theme to the first 1D Day, a global fan event held Nov. 23 in Los Angeles accompanied by a seven-hour live stream on YouTube sponsored by Google. In an age when Lady Gaga can tap Vevo and Clear Channel for a live stream of a multimillion-dollar album release event, One Direction seized the opportunity to uniquely leverage its combined Twitter following of 88 million (for @onedirection and the members’ individual accounts) and 22 million Facebook fans to host a truly global event with little involvement from traditional media.
Though the band fielded offers from top TV networks in both the United Kingdom and the States to broadcast the event, “we turned it down because this had to be a free, interactive event,” says Ben Winston, executive producer of 1D Day and co-director of “This Is Us.” “Doing a seven-hour love letter to those fans, only available online for free, is a nice, completing-the-circle moment for a band who gained such a following online. We wanted people to be able to watch this on their phones or their laptops and feel like the band was with them in their homes.”
Part of the broadcast will include segments from each territory, including “Story of My 1D Life,” in which some of the act’s biggest American fans will discuss their favorite 1D concert experiences. “They’ve always been fans-first, and we wanted to come up with innovative ways of making them accessible to their fans,” Columbia senior VP of marketing Doneen Lombardi says.
Leading into 1D Day and album release, Columbia has been tracking three key hashtags — #storyofmylife, which has had more than 11 million mentions on social media (50% from the United States), #midnightmemories (7.5 million, 45% of which were U.S.-based) and #1dday (1.5 million mentions, 45% from the States). “Even though the U.S. is leading the pack, we’re starting to see major growth across the globe with our fan base,” Columbia VP of digital media and marketing Kathy Baker says. “What we realized with 1D Day was we can only be in one place at a time, so even though there were huge demands for them globally, we decided to make this one big fan event where everyone could watch and participate from their respective countries.”