At Best Buy, An Album Sounds A Sour Sales Note

[madison]

DATE: Dec. 16, 2008

SOURCE: The Wall Street Journal

At Best Buy, an Album Sounds a Sour Sales Note --- Long-Awaited Guns N' Roses Effort Performs Poorly, Fails to Match Wal-Mart's Success With AC/DC Release

By Miguel Bustillo and Ethan Smith

16 December 2008

The Wall Street Journal

"Chinese Democracy," the notoriously long-in-coming Guns N' Roses album, hasn't turned out to be the big hit that Best Buy Co. expected when it scored the exclusive rights to sell the CD in the United States.

That's bad news for the nation's biggest electronics chain by sales, which paid millions of dollars up front for 1.3 million copies of an album that has sold just 318,000 copies in the U.S. during its first two weeks in stores -- and looks destined for bargain bins.

Despite considerable curiosity about singer W. Axl Rose's marathon production -- which took well over a decade, prompting the makers of Dr Pepper to declare that if the album ever came out, they would give a soft drink to every consumer in America -- "Chinese Democracy" entered the Billboard charts in third place after being released Nov. 23. Then sales plunged 78% in the second week, to just 57,000, according to Nielsen Soundscan.

The disappointing performance of "Chinese Democracy," which was distributed by Universal Music's Interscope Geffen A&M label group, comes at a tough time for Best Buy. The Richfield, Minn., company recently warned that sales for the last third of its fiscal year ending Feb. 28 could fall 5% to 15% from a year earlier. The company is expected to post lower quarterly earnings Tuesday.

Best Buy declined to discuss "Chinese Democracy." In an interview before the album's debut, Gary Arnold, the retailer's senior entertainment officer, predicted it would be the rock record of the year.

Reached for comment, Guns N' Roses manager Irving Azoff predicted the album would ultimately sell well, adding: "The race is far from over."

The album's poor showing contrasts with the success of AC/DC's "Black Ice," which is sold exclusively in the U.S. by Wal-Mart Stores Inc. "Black Ice" made its debut at No. 1 on the Billboard album charts after it was released by Columbia Records in October; it has sold about 1.6 million copies in the U.S., with about six million copies shipped world-wide.

Whereas Best Buy backed "Chinese Democracy" with a marketing campaign centered solely on the album, Wal-Mart saw "Black Ice" as a way to sell more than music. The company hawked AC/DC T-shirts and an exclusive AC/DC version of MTV Networks' Rock Band videogame.

"As we looked at AC/DC's loyal fan base, that's when this idea came about: How do we pull in the music with other things?" Gary Severson, Wal-Mart's senior vice president for entertainment and electronics, said in an interview. "Some artists allow you that opportunity."

AC/DC has served as a youth icon for decades. It came into the release of "Black Ice" with the most popular back catalog of any band other than the Beatles, even though its music isn't available through download services such as Apple Inc.'s iTunes Store.

Columbia Records Chairman Steve Barnett said the Sony Corp.-owned label began the marketing groundwork for "Black Ice" before AC/DC was in the studio, mindful of the band's lasting power. "Almost every avenue to connect with youth culture in America, we took," Mr. Barnett said in an interview.

"Chinese Democracy" generated its share of publicity, thanks in part to the negative reaction Mr. Rose's album title elicited from the Chinese government. But while AC/DC did its part to ensure its album's success -- it granted dozens of magazine interviews, and 50-something guitarist Angus Young put on his iconic schoolboy outfit for another world tour -- Mr. Rose went AWOL.

The reclusive singer declined interviews with Rolling Stone and the New York Times, according to people familiar with the matter. He also didn't complete a music video in time to promote "Chinese Democracy," which diminished Interscope's ability to advertise the album online and on television, and undercut Best Buy's ability to promote it on monitors in stores.

Nonetheless, Interscope is unlikely to be hurt by the sales because Best Buy agreed not to return any of the 1.3 million discs it bought. Interscope and Universal Music are owned by Vivendi SA of France.

During a question-and-answer session on a fan Web site last week, Mr. Rose remarked that "it very well could be true" when a questioner suggested his detachment was hurting sales. But, he added, "What I have to say a lot of people have no desire to hear."

While "Chinese Democracy" has failed to catch on with radio stations, Mr. Rose's record company is betting on a heavy rotation of another sort to boost sales. Two cuts from the album were included in "StripJoints," a CD compilation packaged with Exotic Dancer magazine that went out to 2,500 sexually oriented clubs.

"It's always nice to present music to people when they're having a good time," said Bob Chiappardi, chief executive of Concrete Marketing, which was hired for the strip-club promotion. "It's all about association."