When Jay-Z, Metallica Get Leaked: How Record Labels Deal

There's not much they can do besides bumping up releases.

Jay-Z and the G-Unit are just the latest victims. It happened to Metallica, Eminem and Nas too.

Friday’s earlier-than-planned release of Jay’s The Black Album and G-Unit’s Beg for Mercy is the music industry’s latest move in its struggle against bootlegging (see “G-Unit, Jay-Z To Duke It Out In Stores” ). Highly anticipated albums almost always surface on the Internet or the streets, and when they do, the only thing the helpless record industry can do is play catch-up, pushing forward their release dates to stop the bleeding before it saps the vitality out of an album entirely.

“It’s unfortunate because you put months and months of thought into it and then have to rejigger it all, spend more money on advertising to drive the message about the [new] release date,” said Steve Berman, senior executive, sales and marketing for Interscope Geffen A&M, which had planned to release Beg for Mercy four days later, on November 18. “It complicates so much internally, but it also just speaks to what a huge problem we’re facing in our business. We’re at the point now where we can’t even control this.”

Illegal downloading and burning, both practices deemed “piracy” by the Recording Industry Association of America, are partly to blame for the ailing music industry. Overall sales are down 31 percent since 2000. The 10 top-selling albums from that year sold a combined 60 million copies. In 2001, that figure shrank to 40 million. Last year it dwindled to 34 million.

Bootlegging and downloading are harmful enough once an album is released, but when it occurs days, weeks or sometimes months before a record is available in stores, the labels can only sit back and watch potential customers vanish by the hour.

One of the first notable albums to find its way online was Radiohead’s Kid A, which was available to file-sharers months before its October 2000 release date. Since then, high-profile albums by Nas, Eminem, Metallica, Korn, the Strokes and Audioslave, among others, have either surfaced online or on the street before their scheduled release. Even though Jay-Z and G-Unit’s leak couldn’t have come as that much of a shock to label executives, they were nevertheless powerless to do anything more than cut short the advance time.

“I’m so used to it,” said Jay-Z, who had planned to release his album two weeks later than he did. “It’s almost like you’re planning to do one thing, and then you just got to go to plan B.”

“For any major release now, we’re prepared for this scenario,” Berman said. “Just in case we have to, logistically, we’re prepared for it.”

Preparing for it means printing enough copies of the album and then rushing them to the label’s distributors. Attempts are made to ensure all the copies ship at the same time, so that big-chain stores like Target or Best Buy don’t stock their shelves any sooner or later than an independently owned record store. Often this means working within the chain store’s distribution schedule, which they’re not readily willing to bend for a product they see as “loss leaders”: Stores like Target make little or no money off albums, instead, their low prices are used to draw people into the stores in the hopes that they’ll purchase other items.

“So much of our music is now purchased at the mass merchants,” Berman explained, “and in some respect you’re beholden to their [way of doing things], of what days they ship music into their stores. Music isn’t their number-one priority.”

No one is really certain where leaks occur. First, blame was placed on the advance copies given to the media. When that was curtailed by watermarked copies and advances that didn’t leave the record-company offices, fingers then pointed at the recording studios. Bands began toting their works-in-progress around with them or locking computer hard drives in a studio safe, and still the problem persisted. Now, the manufacturing plants are cited as the place where the levee breaks.

With no way of plugging a hole they can’t exactly find, labels are instead looking for ways to make owning the finished copy more valuable than a burned version.

“For any major record, we’re looking at what the opportunities are to, first, protect the album as best as we can, and second, to come up with ways to make the fans feel like they’re going to get something of value,” said Interscope Geffen A&M’s head of new media, Courtney Holt. “Both of those factors go into whatever decisions we’re going to make, in terms of when to release it, how to protect it and what we’re going to give kids at the end of the day.”

The most popular “added value” attractions labels have devised are the bonus DVD, which often features music videos, some concert footage and interviews, and an interactive element using the artist’s Web site. With CD recognition software, having a legitimately purchased album in your computer’s CD-ROM drive allows access to special areas of an artist’s site. Blink-182′s new, self-titled album is among the latest to employ this incentive, while using an “all access” code provided inside copies of Kid Rock’s new album lets fans in on exclusive videos, pre-sale tickets and autographs. Copies of P.O.D.’s Payable on Death include a bonus disc that gives fans the ability to remix one of the tracks on their PlayStation game consoles.

The latest incentive offered by the Universal Music Group is “golden ticket”-style raffles. A handful of copies of LPs by the G-Unit, Blink-182 and Jay-Z include a certificate that provides the winner with prizes ranging from a diamond-encrusted G-Unit medallion to Mercedes Benz automobiles (see “G-Unit, Blink-182, Puddle Of Mudd Offer Fans Golden Opportunities” ).

All the technologically advanced extras ironically hark back to era before CD-burning and the Internet, a time when an album’s packaging was an essential part of the music experience. When singles gave rise to LPs in the mid-1960s, artists were able to more fully express their art with printed lyrics and gatefold covers spattered with big photos and/or artwork. Only early pressings contained these features, making it a top priority for fans to rush to record stores as soon as albums were released.

“I think the thing you’re going to see is a shift in what the art is,” Berman predicted. “The album may express some art that’s visual, that’s got a lot of different components to it. It gives the artists a chance to express their art musically and visually.”

It’s too early to tell whether the labels’ latest ideas for add-ons will help stop the widespread piracy or any attempt will be seen as too little, too late. File-sharing services have already been deemed legal by the courts, and any attempt at shutting down one seems to only spawn others. Labels may revamp their business models and realize the true profit margin in the legitimate digital distribution of music, using services such as iTunes, Rhapsody and Napster 2.0.

In any case, it seems the days of spending $17.99 for just 14 songs on a shiny silver platter are over.

Which album will you pick up on Friday — Jay-Z’s The Black Album or the G-Unit’s Beg for Mercy? Take our poll.

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