Bob Dylan and Starbucks: A Sign of the Changin' Times

Even a music icon like Bob Dylan realizes that sometimes you have to smell the Starbucks and realize the times they are a-changin'.

Dylan raised some eyebrows -- and drew some criticism -- when he sang and appeared in the backdrop of a Victoria's Secret lingerie commercial last year. More recently, Garth Brooks sparked headlines last week with reports of a deal to make recordings to be sold exclusively at Wal-Mart stores, Sam's Club and their online outlets.

With today's release of "Bob Dylan: Live at The Gaslight 1962" -- a previously bootlegged collection of 10 rare recordings at New York's Gaslight Cafe -- exclusively at Starbucks coffee shops, the singer-songwriter is confronting a dilemma facing both older and young artists today: Finding new, alternative ways to market and sell their CDs and reach their audience.

"I think you're going to find more and more artists trying to build community ties in a sort of brand integration where they bring more people into a store and the store in turn helps them sell records," said M. Sean Agnew, managing executive director and chief executive officer of Blue Metallic Entertainment. "With older artists, traditional retail stores might not give them the same shelf space they reserve for the younger artists who target the younger audience -- the teens -- who buy most of the CDs. An artist like Bob Dylan is iconic but not necessary a commercial hit. So, the challenge is really knowing your audience and finding the places where they go."

According to Nielsen Soundscan, approximately 282.6 million music CDs were sold in the United States in the first six months of this year, down 7 percent from the approximately 303 million purchased by the end of the first half of 2004. However, Nielsen Soundscan reported, paid download sales were up by 104 million units.

This, some experts say, indicates that music lovers are going to retail stores less and turning more to downloads for their iPods or other alternatives. And artists currently atop the music charts and beloved by MTV watchers -- such as Gwen Stefani, Coldplay, 50 Cent, Missy Elliott, The Foo Fighters and others -- have adjusted to their fans' lifestyle and expanded the way they present their music.

"The hotbed for young people is definitely the Internet. If you ask most young people where they hear about music, they'll tell you either from their friends or on the Internet and usually those two things go hand in hand," said Terry Dry, co-founder of Fanscape, a Los Angeles-based online music marketing company. "That's why I think the Starbucks strategy is such a great idea. The Web, downloads, ringtones are skewed towards younger people -- in college and high school. And the challenge facing artists like Sheryl Crow and Bob Dylan is finding the people who will buy the new music or the exclusive recording. Most people are not in record stores as frequently as they used to be when they were in college. So the key is hitting them where they are."

Ringtones Equal $$$

Last year, U2, perhaps in an attempt to tap into the coveted younger market while showing longtime fans that it's still keeping up with the times, had "Vertigo," the first single from its last CD "How to Dismantle an Atomic Bomb," featured on a 30-second commercial for iTunes. They also brokered a deal with Apple Computer to sell custom promotional iPods before the album's release.

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