Disintermediation: In economics, the removal of intermediaries in a supply chain.
James Taylor provides a text book example of "disintermediation" in the music industry, with the release of his new album. Following his 2002 album, "October Road," Taylor had fulfilled his contractual obligations to Columbia. He has not since signed to a new label.
Taylor decided to try a few things he hadn’t previously done: First, he recorded "James Taylor: A Christmas Album" — his first holiday recording. Then, he cut a deal to sell it exclusively in Hallmark Cards. Lastly, the price for the disc is a more modest $10.95 — or only $6.95 with the purchase of three greeting cards. The CD is Hallmark’s exclusive this holiday season, and in 2005.
There was no advertising, and almost no press. How did the disc do? James Taylor: A Christmas Album has sold over one million copies — in less than two months.
That’s a home run by any measure.
Here’s what the NYT had to say:
In selling the CD, Hallmark is taking a page from Starbucks, which has had tremendous success selling Ray Charles’s "Genius Loves Company" and other releases alongside its chai tea lattés and espresso macchiatos.
"Our expectations from the beginning were very high," said Ann Herrick, integrated marketing manager at Hallmark, "but this project ended up exceeding our expectations and we all here are very happy about it."
Industry watchers say that more artists, particularly older acts who are somewhat out of the current music retail scene, will look to outlets like Starbucks or Hallmark for fresh opportunities."
The success of the holiday CD has Hallmark considering expanding its music promotion: "A Valentine’s Day album by the country singer Martina McBride is scheduled to hit stores in 2005. And Ms. Herrick added, "We’re looking at opening it up to other seasons, not just holidays."
That might not be a particularly welcome development for the major labels; it is, however, good for music fans — and for a music industry that’s becoming increasingly less dependent upon the labels.
James Taylor’s Got a Friend at Hallmark Cards
New York Times, December 17, 2004