What The U2 Leak Says About Music Biz

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David K. Randall, Forbes

Recorded music sales continue to trip up even the most seasoned artists.

For the second consecutive time, it appears that a U2 album has leaked before its official on-sale date. Fans on a U2 message board were elated Tuesday that Universal Australia, the Australian arm of Universal Music Group, began selling No Line on the Horizon as digital downloads for two hours before the tracks were pulled. The album is scheduled to be released on March 3.

A spokesman from Universal said that he was not aware of the leak, and calls to Interscope, the label that put out the record, were not returned.

The move shows once again how groups that became famous for selling massive amounts of records in the '80s and '90s are tripping up when putting out new albums. Bruce Springsteen was recently forced to apologize to fans after signing a deal to sell a greatest hits compilation exclusively at Wal-Mart, despite the retailer's history of questionable labor practices. Guns N' Roses signed a similar exclusivity deal with Best Buy that resulted in disappointing sales.

For artists, the question is how to make an album release an event when fans no longer have to wait outside of a record store at midnight to purchase it. Footage of those fans often helped spread the word that a new album was on sale and made the album stand out amid other temptations for entertainment dollars.

U2 either sees this as a colossal blunder -- or a marketing ploy to get fans talking beforehand. Representatives from the band did not return requests for comment.

The band itself won't take much of a financial hit. Albums sales generally make up less than one-eighth of an artist's income, and many of the fans that are clamoring for the album early are most likely die-hard fans who will purchase either a physical copy or one of the limited-edition box sets priced at $95. The band also recently made $19 million from exercising a put in its contract with Live Nation.

But it may interfere with the band's choreographed attempts to market the album. The group opened the Grammys with a single, "Get Your Boots On," and recently announced that they would play Letterman for a week straight. The band is expected to tour this summer, which would be a boost for Live Nation.

Bono, the band's lead singer, is a partial owner of Elevation Partners, a private equity firm with a substantial investment in Forbes.

© 2009 Forbes.com LLC™. All Rights Reserved.

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This page contains a single entry by Jonathan published on February 18, 2009 11:59 AM.

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