To Leak, or Not To Leak, that is the Question

Music industry insiders find upside in album leaks

During the first week of July, Nas' controversial untitled album leaked onto the Internet ahead of its July 15 release date via Def Jam.

But Nas' business partner Anthony Saleh shrugs it off.

"I don't think the leak has hurt Nas in any way," he says, adding that leaks have "helped those who have delivered on their albums with good music ... If (fans) want to support it, they'll go buy it."

Saleh's relaxed attitude reflects a growing belief among some music industry vets that unauthorized leaks of an album before its release can boost sales. Leaks provide a way of generating buzz for an upcoming album. If fans get excited by what they hear, this line of thinking goes, they'll go out and buy the album when it's released.

It's a stance that flies in the face of the conventional wisdom that Internet piracy invariably hurts music sales. In fact, whisper some retailers, labels themselves are sometimes the source of leaks in an effort to stir consumer interest.

Those who believe in the promotional power of leaks can point to recent chart action to bolster their position. During the past year, three of the six biggest debut sales weeks on the Billboard 200 album chart were notched by hip-hop albums that had been leaked: Kanye West's "Graduation," 50 Cent's "Curtis" and Lil Wayne's "Tha Carter III."

MEGA-SCALE LISTENING PARTY

"Graduation" and "Curtis" hit the Web at least two weeks before their intended street date of September 11, 2007. In a much-hyped sales battle over the same-day releases, West's "Graduation" moved 957,000 units in the United States during its release week, while "Curtis" shifted 691,000, according to Nielsen SoundScan. To date, "Graduation" has sold 2.1 million units, and "Curtis" has sold 1.3 million units.

Meanwhile, "Tha Carter III" went platinum during the week following its June 10 release and has sold 1.7 million units to date, even though Universal Music Group estimates that about 1 million people downloaded the album illegally.

"The leak was good for Kanye because he was going against 50 and could show that his album was superior," says Kyambo Joshua, head of Columbia's urban department and co-founder of entertainment company HipHopSince1978, which manages West and Lil Wayne. "It's a give-and-take because if an album leaks before it comes out, you're not losing sales because it's not in stores. It's like having a listening party for 500,000 people and seeing if they go to the stores."

But the leaks-are-good school of thought has plenty of detractors. "I think that it's preposterous to suggest that leaks help," argues Jim Urie, president/CEO of Universal Music Group Distribution, pointing out that the unauthorized release of music wreaks havoc with marketing and release schedules.

"I am annoyed that our labels haven't released albums earlier in reaction to the leaks," Urie says. "Things like Lil Wayne, Fall Out Boy, Weezer -- I would have put them out earlier, but the labels wouldn't. They have held off to honor retailers, particularly the ones who can't sell digitally."

LABEL STRATEGY

But an urban buyer at a leading retail chain who requested anonymity contends that "if an album leaks and the record is good, it will generate big demand and we will usually sell a lot more. (And) if an album is not so good, a leak could hurt album sales because word-of-mouth will be bad."

In fact, the buyer argues, labels commonly leak music from upcoming releases of developing artists.

"They give it to the mixtape guys," the buyer says. "That's how the record gets on the street. They say they don't do it on superstar acts, but who knows if that's true."

Unauthorized leaks have prompted labels to experiment with different ways of releasing new music, such as Lil Wayne's sale of multiple tracks from "Tha Carter III" before the album's release. More commonly, bands and labels have responded by streaming an album online or moving up its release date.

For instance, the Hold Steady posted a stream of its fourth album, "Stay Positive," on MySpace after the album leaked in early June, while the band's label, Vagrant, made the album available on Apple's iTunes Store June 17, nearly a month before its scheduled release date. Without the benefit of physical sales, "Stay Positive" debuted at No. 170 on the Billboard 200 and No. 5 on the Heatseekers chart, and has sold 6,000 copies so far.

"We felt like we had to release the album early digitally given the circumstances," Vagrant general manager Dan Gill says. "It's hard to tell if this will impact sales. I do know that we have to protect the music and combat the leaks by offering it for sale."

When labels track traffic on peer-to-peer networks to gauge the extent of unauthorized leaks, they're conducting market research as well, determining the age, gender and location of downloaders and examining which songs are most popular, says Eric Garland, CEO of BigChampagne, which measures peer-to-peer traffic.

"Over the last five years, tracking downloading went from a hush-hush thing to being one of the key indicators in the marketing and promotion of every major label," Garland says. "In a music market where control over distribution is deteriorating, intelligence about the marketplace is the silver lining."

[Reuters]