Originally published in Billboard Magazine, January 28, 2006.

CLASSICAL TAKES DIGITAL LEAP

By ANASTASIA TSIOULCAS

Digital downloading has begun transforming the classical music marketplace.

From new faces to household names, artists across the classical spectrum are enjoying a growing percentage of album sales courtesy of digital retailing. And it is happening faster than even the most optimistic marketers could have expected.

The numbers are stunning. Digital downloads are responsible for 19.7% of total U.S. sales for violinist Hilary Hahn's recent album of Mozart sonatas, according to Nielsen SoundScan. For Yo-Yo Ma's "Silk Road Journeys: When Strangers Meet," downloads make up 10.7% of sales.

Such successes are not limited to mainstream repertoire or the major labels. Downloads account for 16.8% of sales for pianist Christopher O'Riley's second disc of Radiohead transcriptions, "Hold Me to This," released on Harmonia Mundi's World Village imprint.

And then there is new artist Janine Jansen. Downloads have amounted to 73% of sales of the violinist's album of Vivaldi's The Four Seasons.

While U.S. classical album sales were down 15% in 2005 compared with 2004, digital downloads of classical albums grew 93.9% for the year. That figure lags behind the overall digital albums market, which grew by 194% in 2005, but it still indicates a shifting climate.

Classical labels increasingly see digital sales as an effective remedy for the genre's woes, including shrinking retail space, aging consumers and slow-moving deep catalog. Digital retailers also are proving to be important partners in setting up key projects and launching new artists.

"There's a vast amount of [classical] repertoire and recordings, not to mention a number of different varieties of consumer interest, and it's very tough to try to pack all of that into a traditional store," says Jonathan Gruber, VP of new media for classics and jazz at Universal Music Group International.

The digital realm can overcome space limitations and at the same time transform the shopping experience, Gruber says. "You can experience music far more fully and immediately than you can at retail today," he notes. "And if you want to sample just a taste of a particular interpretation of a piece, you can do that for just 99 cents."

Apple VP of applications Eddy Cue applauds the digital efforts of Gruber's team, citing Jansen as a notable success story. Her album, released Oct. 11, 2005, on Universal Classics' Decca label, was promoted heavily on iTunes.

Promotional elements included a banner and mini-shot of the album on iTunes' main page. The artist also was featured in the iTunes classical newsletter the second week her album was available. In addition, Universal offered an exclusive track to iTunes customers and a PDF download of the album's booklet.

Thanks to such efforts, the album quickly reached No. 15 on iTunes' overall album chart and peaked at No. 3 in its second week on Billboard's Top Classical Albums list.

Similarly, Hahn's digital success is in many ways attributable to prominent placement on iTunes that reached beyond the traditional classical consumer base. Promotional highlights for Hahn included a banner on iTunes' main page, a module in the site's general newsletter and a blurb in its classical newsletter.

And as with Jansen, the exclusive material that Universal Classics offered iTunes consumers undoubtedly revved up sales as well. These elements included interview tracks with Hahn and a PDF version of the CD booklet.

Cue also cites strong iTunes business for pianist Helene Grimaud. Always more of a connoisseur's pianist than a household name, Grimaud's album "Credo" was Universal Classics' first title on iTunes. The recording includes works by Beethoven, John Corigliano and Arvo Part.

"Credo" immediately cracked iTunes' overall top 10 upon its January 2004 release; during the album's first commercial week, 58% of its sales were digital.

While these sales patterns are impressive, they apply only to a minority of classical releases, and all involved are quick to say that digital retailing presents its own set of challenges.

"Digital business means a theoretically infinite amount of stock space, but there's a downside to that limitless space," Gruber says. "You have to be able to find the stuff you're looking for."

To court consumers, placement programs are crucial. "We've been very forward in working with the digital retailers to place our titles on the main page at iTunes and other outlets," Gruber says.

Digital stores can also help consumers navigate the often daunting classical world through sampling and search capabilities. The user interface at eMusic is particularly classical-friendly, with search fields for composers, conductors, soloists, ensembles and specific works.

The ability to browse online has created interesting opportunities for shoppers to exercise their musical adventurism.

At iTunes, it is an easy leap among genres for some classical customers—many of whom would probably never venture into the classical section of a traditional retail store. For example, some who have snapped up Deutsche Grammophon's recent recording of Osvaldo Golijov's genre-bending song cycle Ayre are also purchasing tracks by such diverse acts as Alice in Chains, Amadou & Mariam, LeAnn Rimes and 2Pac, not to mention music from jazz legends like Stan Kenton and Anita O'Day.

"Certainly, that kind of browsing is something that we've tried to encourage from the beginning, in the way the site has been built," Cue says.

"Great music can and should reach an extremely broad audience," Universal's Gruber says. "When you walk into a retail store, you're blown away; it can be very intimidating to a newcomer. What the digital medium allows us to do is to focus attention on recordings, artists and composers whom we think will appeal to a lot of people, and break through a lot of the barriers that exist in the physical retail world."

Other labels are depending on their brand identity to set them apart in the digital realm. Such is the case with Naxos, known for its budget-friendly recordings of everything from classical standards to groundbreaking projects like the massive Milken Archive of American Jewish Music series and the label's own commissioning of new music from composer Peter Maxwell Davies.

"The strength of the Naxos brand is something that consumers actively seek out, whether it's a wall of our covers at traditional retail or online," Naxos of North America CEO Jim Sturgeon says.

He says making content available digitally provides unique A&R opportunities, particularly for special-interest titles that do not warrant print runs and inventory stock. "That's a plus for a label like Naxos," Sturgeon observes. "For example, via digital service providers we're offering about 1,200 titles that are otherwise out of print."

Digital sales are growing rapidly for Naxos. "Within the first 10 months of 2005 about 11% of our revenue came from various digital service providers," Sturgeon says.

In October, Naxos forged a major initiative with eMusic under which the site is making 75,000 of the label's tracks available for download. With that deal in hand, Sturgeon expects digital to account for as much as 14% of the label's total revenue.

The spread of titles selling well for Naxos via eMusic gives a glimpse at the varied consumers digital music attracts.

During October-November 2005, Naxos' top five albums at eMusic included titles from the label's A-Z series, which introduces consumers to classical music, as well as Beethoven's ever-popular Symphonies Nos. 5 and 6.

But also among the top sellers were two albums conducted by Marin Alsop featuring music by contemporary American composers John Adams and Philip Glass. (The Glass disc was actually the top earner for Naxos at eMusic.)

Clearly, some shoppers are gravitating toward old favorites and classical music for newbies, while others are seeking more adventurous kinds of music.

Naxos subscribes to the "long tail" theory of Internet distribution, which says that low-selling titles cumulatively can result in a substantial market. "Between 30%-40% of our current [digital] sales are coming from albums that are being downloaded only once or a few times a month," says Junko Gardenour, Naxos' business development manager for digital services.

Despite these early success stories, some classical labels have yet to enter agreements for digital downloads, believing that such matters as audio quality outweigh the sales benefits.

"The compression of sound files brings an inevitable degradation in sound quality," argues cellist David Finckel, who with his wife, pianist Wu Han, founded and runs the independent ArtistLed label.

Finckel sees both sides of the industry. As a member of the famed Emerson String Quartet, he also records for Deutsche Grammophon.

"That issue might not be as noticeable in pop music," Finckel says, "but in classical recordings we're trying to achieve the illusion of real instruments playing in real space, and that standard just isn't available yet."

However, the success that other labels are seeing—even those just starting out in the downloading realm—might just sway some holdouts.

"I'm already just amazed at what I'm seeing with digital providers, and our very first revenue statement came this past September, when we started with only one title," says Rene Goiffon, president of Harmonia Mundi USA, which is using the Independent Online Distribution Alliance to handle its digital needs. The early results are "fabulous," Goiffon says.

"Within the first revenue statement, we see 150 full album downloads for a disc of Andrew Manze and Rachel Podger playing the Bach solo and double violin concertos. That's an album we released about nine years ago and have done absolutely nothing to promote recently. Figures like that are pretty significant for classical deep catalog."

In today's marketplace, what could be better incentive than that?   ••••