The Eagles Sing Duet With Wal-Mart Executives?
Megagroup Partners With Evil Empire
Don Henley is famous for his green causes and bad temper. Wal-Mart is famous for hyper capitalism and exploitation of its workers. What do these two parties have in common? Well they are now in business together, probably for the rest of Henley’s life.
An announcement on October 18 claimed that The Eagles are giving Wal-Mart an exclusive on their upcoming recordings that will be made and released sans major label.
Yes, after 20 years they are free of “the man” and off to take advantage of their independence. They are following the footsteps of several other acts that have either exited their major-label deals or never had one in the first place. They are making direct sales of their work to retailers, thus hoping to tap the large vig normally enjoyed only by labels and distributors. Jessica Simpson did this with 7-11 two years back—pre-selling over 1,000,000 units to the chain most favored by stick-up artists. And then there was the Ray Charles and Starbucks exclusive. One gets you up the other brings you down. Good combo.
There has been a lot of squawk on the blog-o-sphere about this Egalitarian deal. Often they are negative to both sides: “The Eagles sold out,” “Wal-Mart is evil.” But if I were Irving Azoff (the Eagles Manager), I think I would be proud. This is a bold step. Artists are in the business of selling records. They need to sell as many as they can these days. Wal-Mart sells more CDs than just about anybody. It’s logic. Plain and simple.
If you’re thinking that a real rock-n-roll rebel would not make a deal with Wal-Mart, you’re dead wrong. I would bet my last dollar that Dylan, Young and others will be flowing. If this model proves profitable—they’ll be exiting their contracts saying, “Hey I can get $8 for a CD sale today instead of getting $1.50 a sale in a year, AFTER I arm-wrestle my record company with an audit.” Again, it’s logic.
Some have speculated that Wal-Mart will be selling the new “independent” release at a rock-bottom price. But I don’t think so. I think this is a payday for everyone. Expect $15.99 to $18.99 as a starting point. But the better question for me is, will artists seeking these deals really be seeing more profit? Let’s take a look.
Right now the average heritage artist (that means an artist who could get chicks in the ‘60s and ‘70s) gets a penny-rate of between $1.50-$2.50 for a CD sale from their record company. Also, if they are the writers of the songs on the record they get about another 50 cents (some 90 cents) from the label as “mechanical royalty.” So, they net about $2-$4 a CD. In addition, they have accrued millions in advances over the years and here’s the best part: they do not have to dole out the big bucks in overhead, payola, street teams and publicity.
With a direct sale (no label /distributor, etc) the artist becomes the record company. They may get to make about $4 more booty but there’s a whole lot of expense attached to this commitment. They have to print the hundreds of thousands of units (about 80 cents each) and they have to warehouse, ship and accept returns for all of them as well. Even if they are the writers of the songs they can not waive the song-writing fees to their partners and co-writers. So, they probably STILL have to pay their publishing company for half of the mechanical royalty. They will also have to find a way to let the public know about the new record. That means they are now dishing out for payola and street-teams, just like the labels they rebelled against for all those years.
That profit margin gets squeezed in a big way. And remember that there are no guaranteed advances in a deal like this. No limos and no fancy parties with models shipped in by John Casablanca and Ilene Ford.
And what about Wal-Mart’s risk? Don’t they know that no one really cares about a new CD by The Eagles anymore, except over 40-year-old music farts. Why should they know? Is Wal-Mart known for their hipness? Na. But can you imagine what will happen if Don wakes up one morning and sees that they have displayed his product in a way that he doesn’t approve of? Or when he blames THEM for slow sales? Are they really for his wrath? Will Irving buy a new chain-saw to protect his meal-ticket when Wal-Mart executives start sending him nasty memos saying he has to keep Don off the premises and away from the customers who are by-passing his CD on their way to the $3.99 bath-gel?
Logical or not, it’s a big risk for both.
"We are very pleased to be able to bring our customers an alliance with America's greatest rock icons." —Wal-Mart’s David Porter October 17, 2006
“Smaller, more personalized record stores are closing… because of competition from department stores that traditionally have no connection whatsoever with artists." —Don Henley Washington Post interview, February 17, 2004.
Reporting from the front, Moses Avalon, October 19th, 2006