Covermounts account for 10 per cent - 23 million units - of CD production in the UK today. Almost every magazine and newspaper in the UK will have had some sort of CD offer over the past year, so it will come as no surprise that a recent report on the music business blames CD covermounts for seriously undermining a record industry already reeling from the impact of illegal downloading.
According to Promotion or Plague?, a report from music business analyst Five Eight, CD covermounts have reached saturation point. Worryingly for the record business, the CD's popularity as a giveaway on magazine covers could be the thin end of the wedge: that 23 million is thought to be a conservative estimate.
The rise of the free CD couldn't have come at a worse time for those in the business of selling music. Illegal internet file sharing is increasingly popular, despite prosecutions of individual music fans in the US and plans to take similar action in the UK. And although conventional record sales have shown an upturn of late, they have fallen dramatically in recent years, and the massive sales of MP3 players such as Apple's iPod have brought with them a radical shift in how music is consumed.
So are marketers in danger of biting the hand that delivers news-stand uplift? And is the music industry sending out mixed messages to those marketers? Rob Hanlon, business development manager at Warner Music, thinks so. His company has cut back on involvement with giveaways to the point that it cherry-picks a few campaigns it feels will boost its own back-catalogue sales.
For him, the dichotomy is clear: "We are at a stage where the British Phonographic Industry (BPI) is about to start prosecuting people who illegally download music from the internet," he points out. "But even though publishers pay a licence fee to use music for covermounts, the perception among consumers is that music is being given away for free."
Hanlon says it's not just the number of covermounts being produced - which he describes as "ridiculously high" - but the type of album being given away. He says an uncertain market is being shored up by compilations, which account for one-third of record sales. The fact that most covermounts are compilations immediately undermines those sales. "If people have 40 or so compilations that they've got free, what motivation do they have to purchase more?" he asks.
For publishers' promotional departments, though, free CDs are cheap to put together, stack better on the shelves than other premiums and, for the moment at least, have a high perceived value for consumers. To put it simply, they work, and work well.
Simon Kippin, publishing director at Glamour - a Conde Nast magazine that regularly shifts more than 600,000 copies - says CDs pull through sales like nothing else. "Our two best-selling issues were our last two April editions, which both had covermounted CDs," he says. "We've been doing them for three years, and we wouldn't continue with them if they didn't work."
But Kippin feels the quality of the music Glamour offers separates the title from other, less choosy publications.
"They are incredibly popular with readers because, when we run a covermount, we put together a great CD," he claims. "We only use top artists, not the archive material that some go for."
Kippin recognises that the ubiquity of covermounts is a long-term problem, but insists it is not one that has been raised by any of Glamour's partners in the music industry. For him it's a simple case of market forces.
"The record companies would say no if they didn't want to take part in the promotions," he insists. "And each push has an enormous reach. We have a circulation of 605,000 and a readership of 1.1 million, so it's a great poster site for music companies."
That's as may be, but 60 per cent of the record companies surveyed for Five Eight's report said covermounted CDs failed to increase sales, and a further 35 per cent said the uplift was less than five per cent.
Little wonder, then, that some of the major record companies have pulled out of giveaways. EMI, for example, has joined Warner Music in putting a stop to covermount activity. It started last year by refusing to license out songs from big names such as Robbie Williams, and has since stopped almost all covermount involvement.
Karen Holloway Marsh, business development manager at EMI Marketing, says: "Specialist music magazines might occasionally feature tracks by unbroken artists if there are promotional benefits. But EMI's opinion is that the overall effect of regular free CDs is to devalue music in the minds of consumers. We want to protect the value of our music."
Commercial sense
Hanlon says any covermounts involving Warner artists have to make "commercial sense", either driving back-catalogue sales or, like EMI, breaking new artists. For him, record companies that take a less strategic position are being short-sighted. "You get maybe 拢3,000 in licensing revenue and you won't sell any more CDs," he says. "It perpetuates the perception that music is free."
But Hanlon does admit that a free CD can drive music sales if it is targeted correctly. "The readers of a magazine such as Mojo want to discover new music, and a covermount CD works well," he says. "But this is not always the case with women's titles and newspapers."
Newspapers come in for the most criticism. "They are not giving a lot back to the music industry," says Glamour's Kippin. "Content-wise, there's often a lot of chaff for very little wheat."
As our "week in covermounts" diary illustrates, what's on offer from Fleet Street is very different from that offered by the specialist music press. The newspapers, especially the tabloids, use cheaper paper slipcases, and often flood the market with two- or three-part collections.
So, what's the solution? Breaking new artists via the discerning music press is all well and good, but it doesn't reach the millions a red-top can. And although it may be an extremely short-term fix, picking up the licensing fees paid by publications remains an easy way for record companies to make money.
The record industry agrees that covermount campaigns need to drive record sales as well as those of the publication involved. To achieve this, according to EMI, promotions should be backed by a retail link-up, offering money-off vouchers and getting the featured artists displayed prominently in-store. This is something Glamour has done before.
Warner's Hanlon argues that single-artist CDs is the best idea in terms of driving sales. He points out that this has worked well in the past for the likes of U2 and Oasis in links with broadsheets that put out samplers carrying, say, one taster track from a new album, plus live and back-catalogue material.
For its part, the Five Eight report argues that the music business needs to set up an industry-wide body to take up covermount issues and establish a unified policy in order to protect its equity. However, for an industry badly caught out by not getting involved with the internet quickly enough, it remains to be seen whether it can reach agreement on restricting covermounts as it frantically seeks to recoup lost revenue.
WEEK 48 - MONDAY
The weekend may guarantee free music aplenty in the newspapers, but this is not the case during the week (it's the same story for the weekly magazines in this particular week). The first of the monthlies to grab the eye was Q, with its Best of 2004 freebie. Would I have bought it without the covermount? Possibly, especially since many of the featured acts (Keane, Jamelia) are not to my taste. However, I was pleasantly surprised more than once and the pay-off came in the form of The Killers, whose album is now on my Christmas list. Fifteen tracks, 1hr 5mins. Magazine price 拢3.40
WEEK 48 - TUESDAY
Uncut offered a choice of two covers, each with its own CD: volumes one and two of Best of 2004 - Reissues. Weighing up which of the two albums to opt for is annoying (I'm certainly not sold by the 'two collectable covers and CDs' cover strapline). I probably would have bought the magazine anyway because the features look good. Although eclectic, the CD did little for me, so I won't be buying anything. Fifteen tracks, 1hr 1min. Magazine price 拢4.20
WEEK 48 - WEDNESDAY
Moving away from rock music, I went for the launch issue of dance magazine Notion (formerly Klub Knowledge). I'm not the biggest dance music fan, so I probably wouldn't have bought it without the covermount, but the CD was enough to swing it. On Your Level is attractively packaged, has eight tracks of soulful and funky house and does exactly what it says on the tin. Great Friday night compilation, but would I buy anything from it? No, it serves its purpose as it is. Eight tracks, 29 mins. Magazine price 拢3.50
WEEK 48 - THURSDAY
London's Evening Standard is the first newspaper of the week to offer a music giveaway - R 'n' B compilation Urban Voices, which is a tribute to Damilola Taylor, with 10p of the 40p cover price going to the Damilola Taylor Trust. The cause would do more to inspire me to buy the paper than the music, but it's a fairly strong line-up if that's your bag. No extra sales from me, though. Ten tracks, 41 minutes. Newspaper price 40p
WEEK 48 - FRIDAY
Back to rock monthlies with Mojo's rock 'n' roll/blues collection Rock! Rock! Rock!. Mojo was one of the only monthlies to put its December issue out late enough to catch the passing of John Peel, so I'd have bought the magazine regardless, but the CD is excellent. Whoever put this together knows their stuff and it's enough to inspire me to have a decent look next time I'm shopping. Fifteen tracks, 37 minutes. Magazine price 拢3.95
WEEK 48 - SATURDAY
The Daily Star is giving away the third volume of its three-part Soul series. It appears to be excellent, but tracks such as James Brown's Get Up Offa That Thing turn out to be slightly ropey live versions. My computer also tells me there are 15 songs, not the seven highlighted on the back of the disc. On second look, these last eight are all by lesser-known artists and are listed in tiny print. Overall, I was left feeling cheated and wouldn't follow up on this at all. Fifteen tracks, 53 minutes. Newspaper price 50p
WEEK 48 - SUNDAY
I'm not a Mail on Sunday reader, and the second volume of its Ultimate Christmas Album wouldn't make me want to buy it. However, if you were planning a Christmas party, this would be a cheap and simple way of keeping the plonk flowing, with over an hour of Bing Crosby and Tom Jones for your 拢1.20. I'd rather stick pins in my eyes than listen to this, but if you are a traditional Christmas album fan, this would probably be good enough to stop you shelling out on a full-price CD. Twelve tracks, 1hr 8 mins. Newspaper price 拢1.20.