Help me with the economics of the marketing of Velvet Revolver.
It will be expensive. It will cost us $2 million for the first six months of the project, strictly in marketing.
How do you spend that?
It's a combination of video, video production costs, promotion at radio, advertising, especially retail advertising at record stores, any type of record store, whether it's Wal-Mart or Best Buy or Virgin, or the small mom-and-pop shop. All of that will require a monetary advertising investment on our part, which is one of the biggest differences between now and 12 years ago. It used to be maybe it would fall between number five and 10 on your expenditure list, and now it's generally one or two. That's just marketing. That's not counting whatever the cost of making the record is.
Why?
Because of the way that record retailers operate in this day and age. The Tower Records, the Virgin, the Sam Goodys of the world, those stores are having an impossible time trying to survive. So if you want a record on sale there, you pay to be involved in their external advertising campaigns and in-store advertising campaigns, which are extremely pricey. And when you're talking about certain mall stores, that's what helps them cover their margin and pay the rent, is the record labels putting that kind of money in.
For the big stores -- the Best Buys, the Targets, the Wal-Marts -- who are the bulk of our business -- those three accounts alone are 50 percent of our sales -- we're nothing to them. There's a great stat that music is one-tenth of 1 percent of all of Wal-Mart's gross revenues. So we're the smallest tadpole in the Wal-Mart pond, yet they're the most important thing in the world to us. And Best Buy is not much different. I think we're 3 to 5 percent of their overall revenue.
So if music disappeared out of some of these stores, they're not really going to feel it. But if we disappeared out of their stores, we would feel it. So that's why that dynamic exists.
These guys were sitting in a meeting that we shot, some of the Velvet Revolver guys, and they said that they had heard that day that because of Wal-Mart and Best Buy, they had to have clean versions of their songs. And they were all looking at each other like, "a clean version of one of our songs?" What are the implications of that?
The implications are you won't be in Wal-Mart. And you potentially could not be in Best Buy. But if the band didn't create a clean version, an edited version of the album, you could walk into a Wal-Mart and not be able to buy a Velvet Revolver record. And then, you've got to figure that in large chunks of the United States, the only place that a kid, somebody who's 20 years old, and maybe at the community college or not in college at all, just working, or the person who's over 30 and has a 9-to-5 day job but wants a great rock record, the only place they can buy a record is Wal-Mart. That's the only place they can buy a CD. And if Wal-Mart's not stocking it, I don't think they're going to be driving 30 miles to find a record store. …
And the music section at Wal-Mart is, you know, a third of the size of this office, maybe half the size of this office. It's tiny. And they are carrying maybe 600 titles at a time, 700 titles at a time.
Out of the 60,000--
Out of the 30,000 records that get released every year, they probably have 750 titles.
