Wal-Mart Direct

Last year’s romance between Wal-Mart and Garth Brooks resulted in a highly successful business venture, one that some recording labels are viewing with trepidation.

Brooks might be retired from the stage, but he was quite active last year negotiating a deal with the retail giant that could spell changes in the traditional music distribution model.

The country star owns his master recordings, which he acquired after ending a 16-year relationship with Capitol Records. That is one reason he was courted by Wal-Mart last year for exclusive rights to sell his music in its stores and online. Wal-Mart also has exclusivity to a CD and DVD retrospective box set that sold over the holidays for $25.

Beginning Thanksgiving weekend, the result was 1 million copies sold during 15 days on the shelf, Wal-Mart reps told the Los Angeles Times.

In 2004, Brooks was invited to lunch in Tulsa, Okla., to hear Wal-Mart pitch exclusive rights to his back catalog. He said he felt “pretty important for a guy who has been retired,” and announced Wal-Mart would soon be the only place to buy Brooks CDs once inventory runs out at other stores.

“The middleman’s cost that was eliminated was also eliminated for the people,” Brooks told the Times. “To get a box out like that for $25 just shows me that these guys are not just eliminating the middleman and keeping the middleman’s money – that makes me feel very good.”

The “direct procurement” of artists reflects Wal-Mart’s overall business strategy, dealing directly with vendors instead of middlemen, the paper noted. With business falling at brick & mortar record stores, the Wal-Mart model could portend a new revenue stream for artists, and the Times said record execs are dreading the day an artist like Faith Hill follows suit. Wal-Mart reps from the retail chain were mum on future plans.

The potential direct procurement of music might work best for country artists, considering the retailer is responsible for an estimated 50 percent of the genre’s sales, the Times said. Yet not all record execs are shaking in their boots.

“I don’t get the sense that Wal-Mart is trying to enter the label business,” RCA Nashville’s Joe Galante told the Times. “Labels do a lot of things besides manufacture and sell records. We market musicians, we get radio stations to play songs, we help produce tracks and guide musical careers. Wal-Mart doesn’t have an expertise in those things.”

To that end, Brooks struck a deal last year with Lyrics Street Records, which promoted his new songs to radio programmers, the paper noted. Galante conceded that Wal-Mart understands the country music consumer.

“Wal-Mart understands our customers better than any other retailer, and they have the best single distribution into the communities that buy our music,” he told the Times.