As album sales dwindle, new threat to music - the 'freebie'

IT IS, to borrow the title of Prince's most acclaimed album, a sign of the times for the music industry. Yesterday, for the first time in the UK, a bona fide rock superstar chose to release his latest album not in the high street record shops, or even online, but as a free giveaway with a Sunday newspaper.

At a time when the music industry is already struggling to redefine its market in the face of the seemingly unstoppable demand for digital downloads, the move by veteran US artist Prince raises fresh questions about what value we now place on music.

The tactic of giving away an album on the front of a magazine or newspaper - known as a "covermount" - has a pedigree going back to the 1980s when magazines such as Smash Hits would give away "floppy" singles.

It has, however, become refined with the arrival of niche rock magazines such as Uncut and Q, and in the newspaper world it forms part of the circulation war which has engulfed the industry.

The Prince case is different, however. At issue here is not a classic hits compilation or an assemblage of new bands, but a new release from a major artist which should, by rights, have been on sale in high street shops and supermarkets across the UK.

Instead, Prince's label Sony BMG shelved the UK release of the album, Planet Earth, which goes on worldwide sale on 24 July, after the star's representatives used the leeway allowed by his highly customised contract to strike a deal with a newspaper.

The decision to give the album away free has deeply angered the Entertainment Retailers Association (ERA), the trade body for shops who sell music.

Paul Quirk, co-chairman of the ERA, said Prince's decision to give away the album "beggared belief".

"It's an insult to all those record stores who have supported Prince throughout his career," he said. "It is yet another example of the damaging covermount culture which is destroying any perception of value around recorded music."

High street retailer HMV also initially voiced unhappiness with the move, branding it "absolute nuts". However, it relented and offered the paper for sale in its stores.

Prince advances a lofty argument for his UK newspaper deal. In a statement, a spokesman said: "Prince feels that charts are just music industry constructions and have little or no relevance to fans or even artists today. Prince's only aim is to get music direct to those that want to hear it."

Prince developed a pathological hatred of record labels in the early 1990s when he claimed Warner, his then label, was dragging its feet in releasing his prolific output.

Prince is receiving a fee plus a royalty payment of nearly £500,000 from the newspaper for the rights to give away his new album. The publisher picks up the £750,000 costs of printing and promoting the CD.

So Prince is certainly getting paid - and arguably more handsomely than he would have done based on the lacklustre performance of his last release, 3121, which sold just 80,000 copies in the UK.

The publicity furore has been helpful to Prince Rogers Nelson, who has drifted into middle age with an increasingly patchy musical output after the high-kicking sequinned stardom of the Purple Rain era.

The newspaper tie-in has generated widespread publicity for the 49-year-old star - it is unlikely an ordinary release for a Prince album would otherwise have found its way onto national news bulletins.

It has also generated wider awareness of the 21 sold-out live shows he is to perform in London this summer, which will prove a lucrative earner in terms of ticket sales and merchandise. The album will also be given away to fans at the concert.

The Prince giveaway has provoked strong feelings in the record industry because the issue chimes with a growing concern that fans expect music to be cheap or free.

Artists have also entered the fray. Mike Oldfield protested when the same Sunday paper covermounted his landmark Tubular Bells album in April. In a letter to trade magazine Music Week, the composer said: "To group real music with cheap loan leaflets and the other freebies that fall out of most publications is to devalue it. I have no desire to push my music to someone who has not sought it out."

While 60 million CD albums were sold in the UK in the first six months of this year, sales are down 8 per cent on last year.

A portion of that is blamed on the illegal downloading of music from the internet via song-swapping sites, but legal online music services such as iTunes are also held to have created a culture in which music fans "cherry-pick" their favourite tracks rather than buying a complete album.

A second pressure is sales through supermarkets. Big retailers such as Tesco routinely sell chart releases for just under £9 as they are able to sustain more slender margins by selling large quantities.

Stephen Godfrey, director of Rough Trade records, said he believed the involvement of a major star like Prince in yesterday's giveaway would hit these mainstream outlets.

He said: "It's not really taking sales away from the music industry, it's taking away from the supermarkets, from the online retailers, from non-specialists. From our point of view, we don't mind established acts doing that so much. I just think that it doesn't do favours for the value of music."

John Richardson, of Ripping Records in Edinburgh, has sold records in the city since 1975. He said the real issue with giving away music was the fact that it led to less money to re-invest in new artists and a short-term outlook on the part of labels.

"There is no profit being made, not necessarily by retailers like me, but by the actual record companies," Mr Richardson said.

"My main concern is that there is no reinvestment. In the 1970s acts would be nurtured, but these days if you're not a fairly immediate hit, you'll just get dropped."

So is the newspaper industry about to engage in a fresh covermount row? One rival Sunday paper yesterday sought to stage a classic Fleet Street "spoiler" by proclaiming a "world exclusive amazing free Prince CD" offer on its front page. However, what it was actually giving away was 1,000 copies of the artist's classic 1984 Purple Rain album to readers who entered a phone text competition at 25p an entry.

Bob Satchwell, executive director of the Society of Editors, said: "I think the music industry has found a new way of releasing their product with at least getting some return.

"People are now used to getting music straight off the internet for nothing, so at least this is something going back to the artist," he said.

"I don't think we'll see promotions like this every week though, they'll be used sparingly as in the end there is a limited amount of promotional budget in the newspaper industry. I don't think we're about to see some great bidding war."

THE SOUNDS OF MUSIC

WHILE the rise of the so-called "iPod generation" has raised a question mark over the survival of CDs, more than 95 per cent of music sold in the UK is still on plastic disc. Complete albums in digital form - generally lower in price than the physical counterpart - are starting to sell slowly, but sales for the first half of this year amounted to only 2.1 million units.

By contrast, the market for sales in singles is now almost exclusively digital. The 36.4 million downloads sold in the first half of this year represent a near 50 per cent increase on the same period in 2006, and by June digital formats were accounting for just over 90 per cent of all singles sales in the UK.

The marketing of a new album has become all the more critical in a fracturing music market.

Publicist Mark Borkowski, who represented Prince in the UK for 18 months, said: "It's a fantastic publicity stunt. The guy is a phenomenon in terms of live performance but has always struggled to sell records in the last 15 years.

"Prince knows how to create a spectacle about a launch. From Purple Rain to dropping his name, everything has been an event."