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NEW YORK (Billboard) - During the past two years, one 29-year-old Bay Area music fan reckons she's spent about $200 on music.
She gets most of her music for free from blogs and BitTorrent trackers, but one recent release struck her as cool enough to get her to lay down her credit card. That album, a deluxe reissue of the Beastie Boys album "Paul's Boutique," cost more than she spends on music in most years.
This freeloading fan isn't alone: As of the end of February, the $129.99 deluxe edition of "Paul's Boutique" had almost sold out its run of "a few hundred" copies. Released by EMI and the online music marketing company Topspin, and sold only on the Beastie Boys' Web site, the package includes a 180-gram vinyl copy of the album, a poster and a T-shirt in addition to a CD copy and a high-quality digital download. So far, it has sold as many copies as the lowest-priced reissue of the album, an $11.99 download, according to Topspin founder Ian Rogers. (The album is also available on CD, vinyl and high-quality digital download.)
In an era when labels have to beg or sue most fans to get them to pay $10 or $15 for a plain old CD, some bands are getting a few to lay out more than $100. During the past few years, a number of bands have released deluxe versions of their new albums, including Radiohead, Nine Inch Nails and U2 (the group just released a high-ticket version of "No Line on the Horizon.")
In the next few months, this trickle will become a flood of albums that will sell for more than $50: an edition of Depeche Mode's "Sounds of the Universe" will include two hardbound books of photos; a set of unreleased Jane's Addiction tracks will come in a wooden box; and a reissue of Pearl Jam's "Ten" will come with an extra CD, a DVD and four vinyl records in a linen-covered, slipcased box with a replica of a demo cassette made by frontman Eddie Vedder.
At first there's something almost absurd about the idea that fans who can get music for free would spend so much money on albums. The decline in CD sales shows no sign of reversing, and a generation of listeners have come to see music as something that resides only on a hard drive.
Then again, this is the same generation that has come to see coffee as something that costs $4. And the fact that water comes out of the tap for free hasn't prevented the growth of a large business based on selling it in bottles.
As with bottled water, the right packaging and presentation can create a perception of value in the minds of consumers. Albums, like art books, can have a value apart from the content they hold -- especially if they look good on a coffee table.
"It's a human response -- if you're really fanatical about something, you want something physical," says Chris Hufford, who co-manages Radiohead with Bryce Edge. "It gives you an additional level of ownership. And if you're going to get something, you might as well get something good."
High-end packages also give fans the kind of bragging rights that reinforce their sense of being involved with a particular artist.
"Even though some bands are everywhere, you get a sense that you're not connected to them in any meaningful way," says Jeff Anderson, the founder of Artists in Residence, who sold a high-end edition of Nine Inch Nails' "Ghosts I-IV," that sold 2,500 $300 copies in a single weekend. "What I try to do is create a collectible. People don't want to pay a ton of money for something that feels like a repackaged good. They want a new piece, and they want something that signifies their identity as a fan."
And these packages -- as different from old-fashioned boxed sets as CDs are from record albums -- look more like collectibles than mere discs of music. In some cases, the high prices they sell for may even help convince consumers that they're worth buying.
"It's the Ralph Lauren effect: If you charge more for it, people will think it's really good," Marjorie Scardino, CEO of media company Pearson, said in a keynote address at the SIIA Industry Summit, a gathering of information industry leaders. "With newspapers, we've been able to price it too low for too long. I mean, a newspaper costs less than the price of a latte. We pushed the price up at the Financial Times and we found that our readership went up."
Deluxe editions also represent a way for an artist's most dedicated followers to spend an amount of money that reflects the intensity of their devotion without making an album unaffordable to everyone else. "It's really just the concert paradigm," Nine Inch Nails manager Jim Guerinot says. "First-row seats are a premium; if you're only a casual fan, you'll buy the cheap seats. We were doing this with our merch, in terms of selling a wide range of goods, so the deluxe edition seemed logical."
Both U2, whose album was released March 3, and Pearl Jam, whose reissue came out March 24, have taken that philosophy to the logical extreme. Sony Legacy will sell Pearl Jam's "Ten" as a $19.98 two-CD set, a $24.98 double-LP set, a $40.98 package that includes two CDs and a DVD, and a $199.98 package that includes -- deep breath -- two CDs, four LPs, a DVD of Pearl Jam's previously unreleased "MTV Unplugged" performance, a cassette of demos, replicas of mementos from the collections of Vedder and bassist Jeff Ament, a vellum envelope with more ephemera and a print commemorating a concert from the time. U2 will also sell "No Line on the Horizon" in several editions, from a $13.99 CD to a $95.98 deluxe set.
Although the idea of selling different versions of similar goods is new to the music business, it's a well-established practice in the auto industry and the fashion world, where designers will create a high-end version of an item of clothing and then license their name to companies that make simpler versions. And instead of turning off consumers, high-priced items often lead them to see basic versions as bargains.
"A $50 edition with some cool stuff looks really cheap in comparison to a $100 set with more cool stuff," says Craig Pepe, the senior manager for music at Amazon. "If there is a version that is slightly more deluxe than the cheapest version, we'll see consumers gravitate toward that."
The idea of selling a pricey package of music certainly isn't a new idea: boxed sets have been around since the '70s. But those products were all about the amount of music -- the number of CDs or individual tracks they included. Today's deluxe editions are selling packaging as much as music, making albums something to save at a time when music is often seen as disposable. It still isn't possible to download an art book.
Like boxed sets, deluxe editions can offer higher profit margins. But even though labels can earn more money on deluxe editions than on ordinary CDs, consumers seem to perceive them as a better buy -- perhaps because the movie business has habituated them to the idea of deluxe releases.
"DVDs usually have ... different editions, and I think the music industry took a look at what the DVD industry was doing and decided to try to copy that," says Carl Mello, the senior buyer at the Boston-based independent music chain Newbury Comics. One edition of "Reservoir Dogs" came packaged as a gas can, and "collectible" editions of the "Lord of the Rings" movies contained statuettes.
Nine Inch Nails' $300 edition of "Ghosts I-IV" might be the gold standard for deluxe editions so far. But the group's former drummer, Josh Freese, might give Trent Reznor a run for his money. Freese, a session drummer widely regarded as one of the best in the business, is releasing his new album, "Since 1972," at price points ranging from $7 to $75,000.
Freese is offering a personal phone call with the $50 package; a chance to cut his hair and dinner at Sizzler for $500; and a drug-fueled ride through Hollywood in a sports car as part of the $75,000 package.
The singer-songwriter John Wesley Harding is also offering some unusual extras to fans who buy his new album, "Who Was Changed and Who Was Dead." The least expensive edition includes a CD, a digital download and a bonus live disc for $15.98; the "superfancy" package contains the CD, download and bonus live disc, plus a DVD, T-shirt and signed art for $79.98. And one fan willing to shell out $5,000 will get the "superfancy" package, plus a private concert at the venue of his choosing -- even if that's a living room.
But very few artists can sell a deluxe edition of any kind. After Portishead asked fans for suggestions on how to sell its music, bloggers at Creative Commons suggested that the group follow the lead of Nine Inch Nails. The group released a $60 set, but its own copy arrived in the mail damaged and Mello says it didn't sell well.
Perhaps Portishead fans aren't dedicated enough. Or maybe the group's fans are too young to have forged an attachment to the idea of physical product, as listeners of Nine Inch Nails and Jane's Addiction have.
"Theoretically, you could build a package for pretty much any band," says John Ingrassia, who put together the deal for Pearl Jam's "Ten" reissue as president of Sony BMG Music Entertainment's commercial music group and has since left the company. "But only a select group of bands have the fan base to make these worthwhile."
Editing by Sheri Linden at Reuters