BMG Entertainment is on track to close the year with the second-highest market share among the Big Six music congloms. In the bellwether category of current overall market share, BMG has surprised the music industry by trailing titan WEA by less than 1%.
The seismic power shift reflects the fact that more of BMG’s labels are contributing to the conglom’s success in a bigger way and that the labels are breaking artists whose long-term career prospects appear bright: an anomaly in this era when labels often rely on established artists or quick hits with less attention devoted to cultivating the new musical vanguard.
For the third year in a row, BMG has risen a notch in the music conglomerate pecking order and will also lead its competitors — save for WEA — in the important current album market share and overall market share categories.
Industry crawls forward
The music industry has recently only grown by 1% a year, thus the competition is extremely fierce for that piece of the pie — even though the pie is the billions to be made from the sale of some 650 million albums. When one conglom ascends it takes market share from a competitor.
Although BMG labels such as Arista Records and its Nashville outpost are still consistently big producers, it’s the growth from once relatively dormant quarters such as RCA Records — with the Dave Matthews Band franchise and newcomers Verve Pipe — and Windham Hill that figure significantly into the tally.
Loud and the BMG-distributed Jive Records — which has spun platinum for such diverse acts as Bob Carlisle, Jars of Clay and Backstreet Boys — are also having banner years, the latter demonstrating a more extensive role within the conglom than in the past.
In short, BMG is benefiting from an across-the-board success base.
When combined with Arista’s super-sellers such as Whitney Houston and Kenny G, and the unerring track record of joint-venture labels LaFace and Bad Boy Entertainment, BMG can boast ownership of a potent portfolio.
The market share rise comes on the heels of BMG’s North American operation logging a record $1.7 billion in revenues at the close of its fiscal year ended June 30.
The conglom also nailed a number of hot deals, such as inking a distribution pact with V2 Records, the Richard Branson label that has been gathering steam and will bear considerable fruit in the coming year.
In market share, for the week ending Dec. 7, BMG checked in at No. 2 in three important lists: current album market share, current overall market share and year-end market share. The three listings are considered barometers of a company’s performance during the year.
In each category, BMG was second only to WEA, the distributor for the Warner/Atlantic/Elektra family of record labels within the Warner Music Group.
BMG’s ranking in the current overall market share, which includes albums, singles and catalogs, was No. 2 with a whopping 17.92% — less than a point behind WEA’s 18.65%. By contrast, Polygram nabbed the No. 3 post with a 14.01% share and EMI’s distribution arm weighed in at No. 4 with 12.18%.
But perhaps more telling is that BMG’s current album market share as of Dec. 7 was 14.25%, compared to WEA’s 17.65%. The category accounts for album units from recent releases sold domestically from the beginning of the year.
“The numbers tell the industry that we are making the most of what we are getting our hands on,” Pete Jones, prexy of BMG Distribution, told Daily Variety.
“And because we don’t have a lot of catalog to count on, we need to make sure that the labels and the distribution company are working closely together to get each album the recognition it requires. I believe the (second-place showing) suggests we are doing exactly that.”
BMG has been unusually on-target during the past year, though observers note that if the public’s taste in music shifts dramatically the conglom could be caught off-guard, more so than its competitors.
“Between Clive (Davis, Arista topper), Puffy (Sean Combs, aka Puff Daddy) and LaFace, they are really keyed into black music,” said a rival conglom CEO. “Their run will probably hold as long as the public’s appetite for the music doesn’t wane.”
Other rival chieftains suggest BMG is succeeding by playing it safe and not taking any chances or pushing the creative envelope.
But its Windham Hill Group of labels, which includes the Private Music label, is breaking new ground and as a result is one of the conglom’s success stories; its musical center is less dependent on flavor-of-the-month-type acts.
The label, which has gone from almost zero market share to more than 1% in less than 18 months, is making a name for itself in smooth jazz and new adult contemporary (NAC) music, the latter viewed as the successor to the once derisively regarded New Age genre.
Artists such as George Winston and Jim Brickman, whose recent offering “The Gift” is crossing several musical formats, are key to the success of the Windham Hill Group. The group’s success has also spawned several pretenders to the throne.
Virgin Records recently jumped into the NAC fray and Columbia Records is working to get artist Peter White recognized by devotees of Windham Hill’s repertoire.
“Our initial mantra was to not rely on radio, but to find alternate ways of marketing our releases,” said Windham Hill Group prexy Steve Vining. “And it paid off. Now we’ve shifted slightly and we’ve managed to get our artists on the radio and into more markets. And go as pop as we can without losing touch with our (New Age) roots or our core record buyers.”
For the week ending Dec. 7, the Windham Hill Group, with such discs as Brickman’s “The Gift” and “Picture,” its “Winter Solstice VI” sampler and bows by Janis Ian, has managed to post a greater market share than that of Island Records, Sony Music’s the Work Group and jazz strongholds Blue Note and GRP Records.
If the pattern holds, Windham Hill could also top Capitol, Geffen and Rhino on its way to logging a 1.25% market share.
“Market share is a bragging right when you have it,” Strauss Zelnick, CEO of BMG North America, told Daily Variety. “But it isn’t how we run the company. All of the (label heads) are building a legacy. Even if we stumble for a month or even a year, just as long as we’re building a company for the long term.”