Firm Finds a Niche in Specialty Music CDs

Tena Clark was determined to make a career out of music, but knew she didn’t want to spend her life scraping by, playing the drums in bar bands. The rural Mississippi native focused on songwriting and producing, moving to Los Angeles by way of Nashville in the early 1980s.

She found a new outlet in movie music, writing, producing and supervising music for films ranging from “Police Academy II” to “My Best Friend’s Wedding.”

But Clark’s latest venture promises the greatest returns of all. Disc Marketing, Clark’s year-old Pasadena company, produces “special markets” albums--CDs that are sold or given away by retailers, airlines and other companies to customers. CDs have become popular premiums with corporations, from Starbucks to Gap, because music has a high “perceived value”--marketing lingo for consumers’ thinking something is worth more than they paid for it.

For years, companies like K-Tel and Time Life have marketed albums of tried-and-true hits, the equivalent of second-run theaters in movie exhibition. Record labels didn’t pay much attention; they felt it was a side business that took resources away from breaking and selling new acts.

Major Clients Like Sears, United Airlines

Over the last couple of years--prompted by slumping sales--the labels have taken notice, especially because many of the CDs are advertiser-supported. Today, it’s most often major record companies that produce promotional CDs.

Clark is finding a niche for her company amid the large players. After just a year, Disc Marketing has already done projects for such companies as Sears and United Airlines. The company has 30 employees, 29 of them women. 1998 revenue is expected to top $4 million.

Clark’s company is an example of the small but fast-growing firms that are fueling Los Angeles’ robust entertainment economy. While movie and television production get the most notice, outfits like Clark’s are broadening the business and opening up new avenues of exploitation for entertainment producers.

To some, it may sound like a sellout for a woman who’s written and produced songs for such soul greats as Gladys Knight and Patti LaBelle to now be creating marketing materials for big firms. But Clark had already penned jingles for such companies as McDonald’s and General Motors’ Oldsmobile, and she sees her new venture as a way to pre-sell her creations, ensuring they’ll be heard--and she’ll be paid.

“I was tired of spending a year or more on [an album] and by the time the record’s about to come out, maybe your marketing person or head of [artists & repertoire] has changed,” Clark said in an interview at the Craftsman-style house that serves as her headquarters. “I love knowing that what I produce and work on is already sold and will get out to people.”

Clark knows she has to find an angle to compete with the big record companies. She goes to clients with a proposal custom-tailored to their needs, from packaging to song selection. And because she records new versions of most songs rather than using pricey and hard-to-get master recordings, she can give clients more of the songs they want.

Clark said labels can sometimes be loath to sell rights to a song to a competitor--which is one reason she’s kept her use of original masters down to only about 30% of the songs she uses. Clark focuses on getting well-known songs, whereas labels may be inclined to put unknown songs by new artists on a CD as a marketing device.

“It’s all about the song,” Clark said. A recent example: For a United Airlines Mileage Plus CD--sent to some of United’s top customers--themed around the city of Chicago, United desperately wanted “My Kind of Town (Chicago Is),” famously recorded by Frank Sinatra.

When a Disc Marketing executive contacted Sinatra’s label, she was told the rights to the Sinatra version were unavailable. So Disc Marketing licensed the publishing rights, then had a Los Angeles-based big band, the Pat Longo Orchestra (which had backed Sinatra and other stars), record the song.

The cut became so popular, it attracted airplay in Chicago; listeners compared singer Rick Riso with a young Sinatra. Disc Marketing has fielded thousands of orders for the CD at $12.95 apiece. (The company owns the master and gives United a percentage of sales on the album.)

United executives were also delighted. “We’d never done CDs, though we’d been pitched on them before,” said Ann Storbeck-Peterson, marketing manager for United’s frequent-flier program. Clark “had a fresh approach, ideas on how to make our product come alive.”

For Sears, Clark last year produced an album of lullabies (all produced and arranged by Clark) priced at $9.99 for the chain’s infants department. Clark uses sturdy cardboard “digi-packs” rather than hard plastic jewel boxes to package her CDs; with the Sears CD, the fold-out portion is used to provide information on child safety and health, in addition to promoting Sears. Clark is now in discussions with the retailer about other projects, including a possible permanent music “boutique” within the infants department.

A small but growing area for Disc Marketing is fund-raising CDs. After a test in about 300 schools last year, the company will sell Christmas CDs and tapes to an estimated 2,000 schools, to resell at a profit. Because music, especially in the CD format, has a high perceived value, schools can sell a CD purchased for $6 for $12 or more--a hefty profit margin for such programs.

Branching Out Into New Areas

Disc Marketing has also entered the business of in-flight entertainment--the music played over the earphones on airplanes. The company got into it almost by accident.

“We’d started doing the frequent-flier CDs for United,” said Clark, “when their contract [for in-flight entertainment] was coming up. They encouraged us to bid on it.”

It did, and got the contract away from one of a handful of firms that has long controlled the in-flight arena, AEI Music Network. Joe Carreira, vice president of AEI’s in-flight division, contends that companies like his--which has provided in-flight entertainment for 28 years--are better positioned to offer the breadth and depth the airlines expect today.

But Clark stresses that her firm can offer full service through partnerships. Through a deal with Pace Communications, which provides the in-flight video and magazine for United, Disc Marketing is for the first time linking the three components for United. Advertisers, from record companies to auto makers, are lined up to help defray the programming cost for United.