News : Apple, labels stir up deluxe digital Cocktail

By Antony Bruno

DENVER (Billboard) - Downloadable music didn't kill the album cover. The CD did.

By shrinking the size and visual impact of the recording industry's mainstay product -- and then encasing it in plastic security packaging -- the shiny aluminum disc marginalized the LP to a nostalgic memory. By the time the MP3 format came along, consumers shrugged off the absence of album art and liner notes.

"We were living for so long with the CD cover art space after vinyl went away that we lost that feel of a great tactile, creative experience," says Livia Tortella, Atlantic Records general manager/executive VP of marketing and creative media. "Something got lost when you had to crack open the plastic CD with all the marketing stickers on it."

Enter Cocktail: a new digital music format that Apple is developing with record labels. The format will go beyond a simple PDF file of liner notes, and instead bundle photos, videos, lyrics and other assets with an album's music. Details remain slim, but label sources confirming the effort's existence point to it as the digital version of the record sleeves of yore.

The Cocktail format would enable fans to play an album without having to open their iTunes music management software. Supported devices haven't yet been confirmed, but industry sources expect them to be limited to the more advanced iPods, such as the iPhone and the iPod Touch. There have also been rumors of a yet-to-be-announced multimedia tablet computer from Apple that would fall somewhere between an iPhone and a laptop in terms of size and functionality.

MORE REVENUE, NOT MORE SALES

Will the Cocktail format drive greater digital album sales? Probably not, but that's not what the music industry is expecting from it. Instead, label sources position it as a way to further monetize existing digital album purchases. While pricing information isn't available, Cocktail-formatted albums will almost certainly cost more than the standard album available on iTunes.

One major-label source notes that when a digital album is released as both a standard music-only download and a deluxe download with extra content, the deluxe version typically outsells the standard one by 85 percent to 90 percent in the first few weeks after its release, even though it usually costs $2 to $5 more.

"It's not about selling more albums," a label source says about Cocktail. "It's about selling more unique kinds of content. We as an industry have found that when you offer more content, there's an appetite for it. So why not continue to offer more?"

Cocktail wouldn't be the first effort by the majors to push more interactive versions of digital albums. For instance, Atlantic's Fanbase application, which it has bundled with the CDs of such artists as Rob Thomas and T.I., aggregates photos, videos and news specific to an individual artist from various online sources. Tortella says Fanbase has been downloaded more than 200,000 times and is viewed up to 4 million times per month.

Cocktail-formatted albums would include only content selected and bundled by the label, but the broader goal would be the same -- to offer fans a more immersive digital music experience than they have had with MP3s and CDs.

Apple has already offered a variety of incentives at iTunes to enhance the appeal of digital album purchases. Its "Complete My Album" option allows fans who have purchased one or two songs from a record to buy the remaining tracks at a discount. Through a partnership with Ticketmaster, iTunes has bundled digital albums with the purchase of a concert ticket. And earlier this year, its new iTunes Pass format provided artists and labels with a way to sell a "subscription" that allows fans to purchase an album along with other exclusive content that is released in stages.

"Kids will either choose to buy something or not," Tortella says. "It's up to us to make it as exciting as possible to get people to want to buy. When you're dealing with different product configurations, it makes it more exciting."

(Editing by SheriLinden at Reuters)