Holiday Albums: A Gift for the Record Labels – Businessweek
For most people, the weather is the first sign that Christmas is coming. For music lovers, it’s the flood of holiday CDs suddenly crowding store shelves. More than a dozen holiday albums from big stars have landed recently, including Blake Shelton’s Cheers, It’s Christmas, Cee Lo Green’s Cee Lo’s Magic Moment, Lady Antebellum’s On This Winter’s Night, and Rod Stewart’s Merry Christmas, Baby. There’s even the perfect stocking stuffer for fans of the 1978 film Grease: John Travolta and Olivia Newton-John reunite for This Christmas, available Nov. 13.
Santa’s sack will be overflowing with music this year because holiday discs have become the closest thing to a sure bet for labels and artists. The majority of albums contain vintage standards such as Jingle Bells and The First Noel that are in the public domain, combined with a few copyrighted hits like Winter Wonderland or Let It Snow, and one or two new pieces of music. That formula keeps costs low and ensures audiences will be familiar with a majority of the songs, says David Bakula, an analyst at Nielsen (NLSN) SoundScan. Best of all for an industry that’s suffered years of declining CD sales, consumers remain eager to buy. That’s why every music label wants to have a holiday album, Bakula says.
Retailers such as Target (TGT) and Best Buy (BBY), hoping to keep customers in the holiday shopping mood, place the CDs in prime displays at the end of aisles during the Christmas season, raising awareness without the need for much advertising. As a percentage of the record industry’s total sales, holiday CDs have represented a bigger slice each of the last four years; in 2011 the industry sold 13.9 million holiday albums, 4.2 percent of the 330.6 million total discs sold that year, according to SoundScan. The genre has another draw for record labels: “Holiday albums tend not to be very popular on file-sharing sites,” explains Eric Garland, co-founder of music researcher BigChampagne and senior vice president at Live Nation Entertainment LYV. “For that reason, they’ve never been as widely pirated.”