Beyonce sticks it to Target, giving Wal-Mart shoppers $37,500 in gift cards (+video)(Read article summary)
Beyoncé responds to the boycott of her "XO" album by Target and Amazon by visiting Wal-Mart. Beyoncé handed out $37,000 worth of gift cards to Wal-Mart shoppers on Friday night.
Beyoncé continues to rewrite the book on how to sell music.
On Friday night, the pop star walked through a Wal-Mart store in Tewksbury, Mass., pushing a cart like any other shopper before stopping to announce that everyone there would get a $50 gift card. The store manager told Us Magazine that she gave out 750 cards totally $37,500.
Clearly, Beyoncé was sending Target and Amazon.com a message: Boycott my new album and I'll give my love and dollars to a competitor.
The controversy surrounding the release of Beyoncé's latest album, "XO," illustrates how the music business is changing.
On Dec. 13, Beyoncé surprised fans and brick-and-mortar retailers with the sudden release of the album only at Apple's iTunes store. The 14-track, 17-video digital album was priced at $15.99. The album became an overnight bestseller, and more than 1 million copies have sold so far.
But some retailers, such as Target and Amazon, were not amused by her one-week exclusive deal with Apple.
Target released a statement explaining that Beyoncé's fifth studio album would not be carried by its stores.
"While there are many aspects that contribute to our approach and we have appreciated partnering with Beyoncé in the past, we are primarily focused on offering CDs that will be available in a physical format at the same time as all other formats. At this time, Target will not be carrying Beyonce’s new self-titled album ‘Beyonce.’”
Amazon, in protest, also decided not to sell the physical album. Amazon is selling, but not promoting, the digital download version of "XO." Part of the Beyoncé surprise release plan included a ban on pre-sales of the album, normally an effective way to build sales.
Amazon was miffed that the album distributor, Sony Music Entertainment, had prevented pre-sales, according to Billboard magazine.
Amazon is reportedly still steaming that Sony Music Entertainment handed down an edict that Amazon, or any other retailer for that matter, couldn't pre-sell the Beyonce title. Pre-sales of new titles has proven to be an effective marketing tool and the Sony edict was interpreted as further protecting the iTunes exclusive window.
According to sources, Amazon may be considering further reprisals against Sony Music Entertainment and Columbia down the line, although conversations are said to be still ongoing between the label and the merchant.
The Beyoncé album sales strategy reflects the major shifts underway within the music industry. According to Motley Fool, in 2013, physically packaged music sales will total about $13 billion – only half the sales of six years ago. Meanwhile, digital music sales have now reached $10 billion annually.
Who are the big players? Billboard reports that iTunes has 41 percent of today's retail music market. Wal-Mart has 10 percent, Amazon has 9 percent, and Target comes in at 5 percent.
While Beyoncé challenged the traditional brick-and-mortal retailers with this album release, she also challenged the business model of digital music vendors, including iTunes, by refusing to sell single-tracks of her new CD. The "XO" songs can only be purchased as a complete album.
Beyoncé's husband, the rapper Jay-Z, also has a creative flair when it comes to challenging traditional marketing models. The first 1 million copies of "Magna Carta Holy Grail" album were initially only available on a free app by Samsung. Jay-Z reportedly sold Samsung the initial exclusive rights for $5 million.
Jay-Z has described the music business today as the "Wild West." If so, keep your eye on this pair of gunslingers. You can expect to see more creative marketing plays from this power couple.