Universal Music Group is testing the all-digital waters with a new label venture that sells its releases exclusively through download and streaming services like iTunes, Rhapsody and Napster.
UMe Digital bowed Nov. 22 with more than a half-dozen album releases from the likes of the Shazam and Ken Stringfellow of the Posies.
But UMG executives are quick to caution that the move should not be seen as a signal that the CD format is on the way out. The strategy reflects stocking trends in retail as much as it measures the company's confidence in the physical format.
UMe Digital is a unit of Universal Music Enterprises, UMG's catalog and special products division. The digital label is designed to further UMe's mission of driving sales of established artists, not discovering new ones.
UMe president Bruce Resnikoff says UMe Digital's focus is acts that have a built-in fan base but don't play into a mass-market retail strategy.
Other acts launching with UMe Digital include Parthenon Huxley of post-Jeff Lynne (news)-era ELO; Rusty Anderson, session musician for Paul McCartney (news) and Ricky Martin (news); Elton John (news) guitarist John Jorgenson; Black 'N Blue, the band from Kiss touring guitarist Tommy Thayer; Shania Twain/Amy Grant guitarist Will Owsley; and rock veteran Dan Reed.
"The retail environment has changed significantly with the shift to the," Resnikoff says. "There are so few records in the stores now, relatively speaking, it's almost impossible to get many artists into those places."
As a result, the label will not distribute physical CDs, either online or offline. However, its content will be available to the digital arms of bricks-and-mortar retailers like Virgin, FYE and Tower.
UMe's move could be the start of greater exploration of digital-only distribution opportunities by the major labels. Warner Music Group reportedly is developing a similar venture.
UMe says the new venture recognizes the growing opportunity in digital distribution, as download sales are expected to exceed 100 million this year.
"It's hard to imagine that every label will not have a similar download-only imprint at some point soon," Resnikoff says.