In March, media giant Bertelsmann said it would run out its BMG Music Service continuity club and shut down the business by 2010. The announcement was part of the bigger news that Bertelsmann will try to sell its US Direct Group division, a year after acquiring Bookspan. The Direct Group includes book, DVD and music continuity clubs under the Columbia House, BMG Music Service and Bookspan brands.
US representatives confirmed that Bertelsmann is shutting the music continuity club but wouldn’t comment further because of the ongoing sale process. The headquarters in Germany hadn’t responded by press time.
“With the demise of BMG Music Service, there isn’t much else out there as far as pop music continuity clubs go,” says Sheryl Benjamin, VP at list management firm Direct Media, which manages lists for continuity clubs in several categories.
“There’s a little more room for specialty clubs,” she notes, as several remain including Musical Heritage Society’s Jazz Club and International Masters Publishers’ Classical Composers Club.
One of the problems music continuity clubs face is the growing popularity of MP3 players, which give consumers access to music whenever they want it.
“Consumers want control of the process instead of the other way around, like it used to be,” Benjamin says. As a result, “continuity is in the process of reinvention” as clubs try to figure out how to give members more control. She points to HCI’s Silkies hosiery club, which now allows members to decide how often they want shipments as an example.
The growth of digital music is behind Bertelsmann’s decision to shut down the BMG Music Service club, company representatives said during its annual analyst meeting in March. The company’s US CD business fell in line with market declines in physical music sales, which dropped off by more than 20% in 2007, according to Bertelsmann. The US DVD club also didn’t perform well, and Bertelsmann is considering shutting it down, too. Book clubs, however, are relatively stable.
The primary difference between books and music is that the books are not available online digitally, while music is, says Barry Blumenfield, CEO at BMI Fulfillment Services, “so there is little incentive for people to join a continuity program.”
“I don’t think that non-digital direct marketing of music goes away” simply because of iTunes, says Aram Sinnreich, managing partner at Radar Research.
Time Life Music continues to market music through DRTV; however, record companies are “more and more interested in exploring digital direct marketing in place of traditional media” because of the high cost of TV and print, Sinnreich continues. Still, “there’s a legitimacy that comes with having an artist on TV or radio that you can’t replicate with MySpace,” he says.
But there are signs the industry is trying to figure out the revenue and marketing models for digital music in a post iTunes universe, Sinnreich adds. MySpace Music will launch later this year and will include the entire digital music catalogs from Universal Music Group, Sony BMG Music Entertainment and Warner Music available for download. Nokia’s service, Comes With Music, will give anyone who buys a Comes With Music mobile device access to the Sony BMG music catalog for a year. Consumers will be able to download tracks to both their mobile device and computer.
