What it did do for sure is give people license to dream and scheme. About how to make money, how to gain power, how to build themselves up and tear others down. Without question, the effects have shaken a lot of assumptions about the 'would' and 'should' of business.
The recently announced deal between Samsung - specifically its Galaxy mobile phone - and iconic rapper/impresario Jay Z is emblematic of this change. Samsung has paid Jay Z between $20 and $37 million (depends who you ask, apparently) for the rights to the exclusive release of his next album. $5 million of this goes for 1 million copies of the album to be distributed free to Galaxy users. That's $5 per album, a significant discount, but the money flows directly to the performer rather than to a music label, distributors etc. The rest of the money goes for various marketing tie-ins.
This is significant because it represents a major shift in the way distribution, marketing, sponsorship - and music may work in the future. Samsung is buying credibility with an important demographic, that being anyone under the age of 35 who likes this music and the lifestyle it represents. It is associating its phone, which gets good reviews but is notable primarily for what it is not: an iPhone. The blingy association could be huge for sales and for competitive positioning as a source for music downloads and an badge of taste.
Jay Z is getting platinum album status pre-release. Billboard has announced that it will not include the 1 million give-aways in its compilation of sales, but the album is likely to go platinum anyway, as did all its predecessors. What this signifies is that the power may be shifting to artists, writers, musicians, lawyers, enterpreneurs or anyone else who can forge this kind of connection with his or her audience so that others are forced to reckon with it in order to connect with their own customers. The middleman has been distintermediated as the net has promised again and again, but in a way that, at least for a few, may confer that right in perpetuity. Or until some new technology comes along.
The implication is that other consumer oriented businesses may learn from Samsung and attempt their own deals. Star caliber musicians have been offering sponsorships for years, but not on this scale. And banks, electronics firms, auto makers, food processors and others will be trying to figure out what works for them. The marriage of technology and entertainment has been a boon to both. It makes sense for others to apply the same logic to their enterprises. And this phenomenon shows no signs of ending soon. JL
Hannah Karp reports in the Wall Street Journal:
The connection: Samsung has purchased 1 million copies of Jay-Z’s coming album, entitled “Magna Carta Holy Grail,” slated for release July 4, and plans to give them to Samsung Galaxy smartphone users for free – 72 hours ahead of the release.
As the Miami Heat faced off against the San Antonio Spurs in Game 5 of the NBA finals Sunday night, a curious TV ad aired near the end of the second quarter featuring rap star Jay-Z in a studio, riffing with a cast of characters including producer Rick Rubin and artist Pharrell Williams. At one point, a member of the posse is shown taking notes on a tablet device. More than two minutes into the three-minute video Samsung Electronics Co. 005930.SE -0.30%’s tagline flashes across the screen: “The Next Big Thing.”
The users are to receive the music through an app they’ll receive later this month. (Recipients won’t be able to share it until the official release date.)
Samsung paid $5 apiece for the albums, according to a person familiar with the matter. It wasn’t immediately clear if Nielsen SoundScan will count Samsung’s purchases in its sales tallies.
The partnership could help Samsung compete with Apple Inc. AAPL -0.80%, which recently announced the launch of iTunes Radio – an online radio service bundled onto Apple devices that promises to offer listeners access to certain tracks before they’re available elsewhere.
For Jay-Z, the deal is a precious advertising opportunity and gives him $5 million in sales before the album is even released. The agreement signals the increasing importance of corporate sponsors to the music industry, which has seen sales tank over the past decade.
Jay-Z hinted at the partnership on Twitter two days ago with a photo of a Samsung smartphone displaying text telling fans to “tune in” to the game.
Neither Samsung nor Jay-Z could immediately be reached for comment.
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