What do the professionals in Europe think about the special packaging of music and where is the market taking them? Overall the feeling is clearly that special packaging represents a huge opportunity that must be used but not abused. Following on from the interview in the current (Issue 14 November/December) edition of Digital2Disc, we interviewed a series of music industry professionals with a range of roles in the physical supply chain of the compact disc and discovered that special packaging is here to stay and it represents the future of the physical market – but it is a fragile market.
Thierry Delporte manages the production process in PIAS, co-ordinating several hundred releases a year. Xavier Gatinel is in charge of International marketing at Harmonia Mundi and keep a close eye on artist expectations. Alex Myers is the guardian of commercial strategy at Universal Music international. We also spoke to another production manager, who looks after all the releases at a major label, and who wished to stay anonymous. Their views are distilled here in a short summary of our individual meetings.
Ok, you are not consuming music that comes in a transparent plastic box anymore. That’s very much a thing of the past – isn’t it? Actually, approximately 300 million albums are produced in jewel box format each year in Europe. It’s sad to see how many labels and distributors are contributing to the decline of the physical market by holding on to this 30-year-old packaging format. All interviewees also point out that despite the environmental impact, the plastic box remains an attractive packaging option for price conscious releases.
At least nowadays, all smart major or independent labels release their physical product on a least two formats: a simple jewel box, and the alternative digipack or digisleeve (the carton based packaging). This represents the most basic form of special packaging, but there is also the market of special packaging and new consumer experiences.
As Thierry from PIAS puts it, “The fan who goes in the shop to buy music wants more than a track list and he is happy to pay a couple of extra euros to get it.” So while the jewel box is going down by much more than the 8% of the market, the special package is going up, and increasing margins. In this day and age while there are more convenient ways to music than going to a bricks and mortar shop, but two distinct markets don’t work very well with the download: the gift market and the fan market.
For gifts, say at Christmas, it is difficult to imagine the recipient smiling in front of a download waiting at the bottom of a tree. For the fan, as Gatinel from HM puts it “The fan wants to enter the universe of the artist and want to share more than the music.” For these markets but also for the consumer who still has a little extra disposable income, the industry has created special packaging and there is no turning back. Myers from Universal summarizes the situation succinctly, by saying that digital is here to stay and grow and physical must offer a different experience to compete.
So, the question is: what is the optimum strategy to develop this special market? Interestingly, this is where the approach remains fairly unstructured in many organizations.
Some companies like PIAS or Warner take a fairly cautious approach to special packaging, ensuring that it provides a real added value for the consumer. The latest dEUS album, for instance did not have any special packaging. This cautious approach, in particular in the area of special boxes allows these companies to keep an element of “special” in special packaging; the focus is on cultivating that value-add element that is paramount to winning over the consumer.
Other companies have chosen to transfer all their catalogue into special as a status statement about themselves: they present their product and catalogue as being very much a quality offering. High value packaging is also a way to communicate with your consumer your attention to detail and quality, Harmonia Mondi, the classical label, is a prime example of this type of behaviour.
For massive companies, such as Universal, the parameters differ from one label to another and sometimes even from one artist’s manager to another. Paradoxically this approach is much more individual but, as everywhere else, based on merit. It is surprising – but welcome – to see that no marketing algorithm has replaced common sense and the artistic vision of the label (some big FMCG companies wish they could have this entrepreneurial approach!)
However the growth of the market is also the main risk to the market; losing the uniqueness of the product or even worse, “tricking” consumers into thinking they are buying special packaging may backfire, providing excellent short term profits but in the long term killing this market too.
The Limited Edition (LE) is a perfect example of a good idea which could be rapidly transformed into a nightmare. The consumer sees the Limited Edition as a special offer that will give him the edge on the artist, the label can see it as a way of printing money. Here again different point of views collected come to the same conclusion: these LE products should not be abused.
Consumers value the limited edition nature of the product; it is also the most economical way for the label to behave. The trick is to create scarcity. The labels interviewed manage the rules around LE carefully and responsibly but all have experienced tension with Finance Departments ready to create “permanent” Limited Editions.
Specials are here to stay and they represent the future of the physical market, but it is a fragile market. Consumers may always, in some clearly defined circumstances, be prepared to buy something other than a download but, they are not idiots, and the market must not try to fool them. Myers puts it very clearly: “Specials are here to grow but there has to be enough in them.”
Harmonia Mundi (France) is an independent music record label founded in 1958 by Bernard Coutaz in Arles.Its catalogue is essentially devoted to classical music and, through the World Village label, to world music PIAS is one of Europe’s leading independent music groups consisting of a record company, a physical and digital Sales & Distribution service and the Global Project Management operation offering premium artist & label services. Universal Music Group (UMG), the world’s largest music content company with market leading positions in recorded music, music publishing, and merchandising.
Views were collected by Olivier Durand, Managing Director of Emthelo, an entertainment industry specialist which helps companies to reduce their costs and increase the efficiency of their supply chain.