Why Jay-Z’s $5 Million Samsung Deal Will Change Music Forever

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From Business Insider:

At $5 a copy, Jay-Z is almost certainly getting a far higher royalty rate than he would if those sales came from download stores or the dwindling number of record shops on the high street. The album is already a banker in an age when there are, in sales terms, few superstar certainties.

The benefit for Jay-Z, apart from a guaranteed $5m, is turbocharged promotion and profile raising. But the benefits for Samsung are potentially greater. For a company that spends an estimated $4bn a year on marketing, the $20m it handed over to Jay-Z and Roc Nation is chump change. To put that in content, global record sales last year generated $16.5bn – so Samsung throws a quarter of the gross value of the entire record business just at marketing every year.

Away from the boardroom cheers, it is not all wondrous news. For the fans, this is the diametric opposite of the Philips Red Book standard that, in the 1980s, dictated all CDs had to play on all CD players. Non-Samsung-owning fans are effectively being penalized for not having the right device and given the hard sell to upgrade, because this deal is really about atoning for the fact that Samsung’s own Music Hub music service has failed to capture the public’s imagination. This all says, arguably, more about Samsung trying to steal a march on the iPhone and iPad in the smartphone and tablet markets and using music to do that – just as Apple did with the iPod in 2001 and the iTunes

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