On the positive side it was an indication of the success of the ‘High Quality – Low Price’ branding; but at the same time it was extremely difficult to turn those attitudes around. Voll started with the big shops. He realised that their main concern was not the price rise in itself but that the increase would start a price war on the high street. He prevented that by exercising judicious diplomacy, and no one undercut the suggested price. As for the record collectors themselves, time and the continuing expansion of the label healed the wounds. ‘People were very sensitive about it,’ Voll declares. It was a hard-learned lesson, and the price of a Naxos CD in Germany remains €5.99.
The label had in fact become too important for the collectors to ignore or sidestep. The special boxed sets appealed to one end of the market; but at the other end, collectors welcomed new recordings of German orchestras that were initiated by Naxos Deutschland, especially the Cologne Chamber Orchestra (with releases such as Römische Weihnacht, Barocke Kostbarkeiten, Telemann: Darmstädter Ouvertüren and Mozart: Heitere Serenaden) and the Leipzig Chamber Orchestra. There were further specialist titles from Naxos Deutschland specifically for its market. These even encompassed a spoken-word series by musicologist Dr Stefan Straub containing explanations of classical music interpolated with music extracts: there was a discussion on the role of sonata form in Beethoven’s piano music, a consideration of musical architecture, and a study of Shostakovich.
Naxos Deutschland’s turnover peaked in the first years of the new millennium in a similar way to that of other European Naxos distributors. The market became tougher. Rivals appeared, some of very poor quality (including one called ‘Nexus’); but they were no more than a temporary threat. The tactics of the major companies could not always be brushed aside so easily, for Germany was a prime classical battlefield and they were prepared to pour in considerable resources. Voll saw off more than he can remember, but one or two had some success and the competition is ongoing. The majors had some great advantages, including big-name artists from their back catalogues whom they could recycle, and the market strength to make special deals with record shops (involving pop as well as classical). Naxos could not compete specifically in either area. Instead Voll made the most of the growing repertoire base and the availability of a huge catalogue.
The issue of the CD boom, which also peaked at this time, was playing its part. When classical CD sales began to drop, the shops that sold them closed by the score, and, although online mail-ordering grew, the browsing-to-buy habit diminished. At the same time, download sales began slowly to make an impact, and other competitors surfaced.
However, there had appeared a new opportunity to promote classical music: DVDs. One day in 1999 Voll went into Diekamp’s office and overheard a telephone conversation regarding the distribution of classical DVDs. Arthaus Musik, an important film and DVD company, was looking for a distributor for its classical DVDs. Voll went to see them and said he believed that Naxos Deutschland, with its specialist classical distribution and knowledge, was in a better position to look after the product than the film distributors they were currently with. They were persuaded and, after a conversation with Heymann, who saw a global opportunity, they gave world distribution rights to Naxos. The approach paid off. A few months later, Voll was approached by other major classical DVD labels, including EuroArts, asking if Naxos would take them on too. Naxos Deutschland was in a prime position to benefit from the rapid growth of the medium and became the absolute market leader in this field. By the end of 2010 DVD sales had grown to nearly 30 per cent of physical sales in Naxos Deutschland.
Since 2008 Naxos Deutschland has concentrated on sales, marketing and press, and the development of musical projects, leaving physical distribution to NGL.
In the twenty years since Voll first distributed Naxos, the German classical record market has changed beyond all recognition. Most sales now go through three big chains (which sell mainly electrical goods) and two big Internet retailers. There are scarcely forty specialist classical dealers left. Curiously, downloads have been quite slow to take off in Germany and they currently make up less than 5 per cent of classical music sales: it seems that Germans like their CDs too much! With this kind of diminished retail face, marketing and press become crucial for a distributor in providing information that a collector or potential buyer can browse. Despite all these changes, Naxos Deutschland has played a key role in establishing the label in the heart of Europe.
The Nordic Countries: Naxos Sweden
Naxos Sweden, led by Håkan Lagerqvist and Mats Byrén, made a special contribution to the development of Naxos in Scandinavia and the Nordic region through a series of bold, innovative television campaigns in the 1990s. These resulted in some exceptional sales, took classical music to a whole new public, and established the brand of Naxos as the most popular and well known in Sweden, with a dominant market share. Now, with some 300 classical labels in addition to Naxos on its distribution roster, Naxos Sweden as a distributor commands a remarkable 85 per cent share of the classical recording market in terms of units. Furthermore, it oversees distribution of these labels in the other Nordic countries via the sister companies Naxos Denmark, Naxos Norway and FG Naxos in Finland: it is the pre-eminent classical network in the whole area.
None of this could have been predicted in 1989 when Viva, a small Swedish Christian music distributor, agreed to represent Naxos in the country. Neither Lagerqvist nor Byrén, forming the sales team assigned to look after the label, had more than a cursory knowledge of classical music and they found the task challenging at the start. Lagerqvist remembers the two of them sitting with the catalogue, trying to prepare the first purchase order. ‘We knew the name of Bach, so we thought perhaps we should order ten or fifteen of a title. But we had little idea about most of the names in the catalogue and really didn’t know what to order.’ Despite those shaky beginnings, Naxos was distributed by Viva for the next three years until the company ran into difficulties and closed in 1993. Klaus Heymann immediately invited Lagerqvist and Byrén to set up Naxos Sweden, which would focus on the Naxos label but also provide a distribution service for other independent classical companies. Based in Örebro, a town 200 km from Stockholm, it began in June 1993 with five employees. Within two years the classical market share of Naxos in terms of units jumped from 10 per cent to 65 per cent.
‘We were profitable from the start, but the challenge was getting Naxos established in the large retailers and classical specialists,’ explains Lagerqvist. Time and again, he and his team ran into overt prejudice against the label because of its Eastern European orchestras, conductors and instrumentalists. The buyers in shops were just too lofty to accept it. ‘We found it difficult to break into the classical specialist stores and we therefore decided to put together a totally different strategy.’ This was an ‘authorised Naxos retailer’ network, offering one retailer in each town exclusivity and special terms on three conditions: 1. That Naxos was racked separately; 2. That the whole catalogue was stocked; 3. That all new titles would be taken on a subscription basis. The bigger cities often had two or three authorised Naxos retailers, but each would have its own area to cover. It was established quite quickly. The next step was the development of a special four-CD boxed set, Best of Naxos, a popular compilation sold at a competitive price. Naxos Sweden then took out one full-page advertisement in the biggest national newspaper and carried the complete list of authorised Naxos stockists. Within a short time 20,000 sets had been sold – an exceptional result for a classical product – and they had made such an impact that independent classical shops and the classical departments in the big music stores could no longer ignore the label. By 1994 Naxos was being stocked by the bigger retailers, while the authorised ones were kept happy with special terms. Naxos Sweden was accumulating a tidy profit but Heymann and Lagerqvist decided to invest it straight back into the business and go for a larger share of the classical market. ‘Klaus was very inspiring and supportive at this early stage and he wa
s prepared to take a risk,’ says Lagerqvist.
The following move certainly was a risk: a nationwide television advertising campaign, the first classical music campaign of its kind in the country. ‘We invested all of our marketing budget in this one venture. The idea was to make an enormous impact,’ Lagerqvist recalls. It worked. Terrestrial commercial television had recently started in Sweden, and Lagerqvist and his team, not being traditional classical distributors who were set in their ways, saw this as an obvious route. ‘I saw the market as a triangle. The top 5 per cent were the knowledgeable classical consumers who knew their classical music. The next band, 25 per cent, were those who knew a little bit, maybe had one or two classical CDs in their collection. (I was like that. I remember as a teenager buying Vivaldi’s Four Seasons, taking it home and listening to it all the way through, rather frustrated, because I was waiting for the one tune I knew in it. When I found it I was happy.) The largest band at the base of the triangle were the 70 per cent who knew nothing about classical music. Obviously this was the best sector to aim at. How could we tempt this group of people to buy a classical CD set? We only had to ask ourselves the question: what would tempt us? We believed that everyone would like a bit of classical music and we had a slogan: “Everybody Loves Classical Music”. It is all about helping people to find what they love.’
The product was a three-CD boxed set called Klassiska Favoriter. It was October 1994. For the thirty-second advertisement, Naxos Sweden developed a simple story. The scene was a noisy, colourful, chaotic children’s party: the children had faces painted as animals, and the parents were struggling to keep it all together. The scene was then transformed into a painting of an idyllic paradise scene, with Adam and Eve surrounded by animals, and gentle classical music warmed the picture. Within months, the set sold 100,000 units. Fortunate timing meant that it peaked at Christmas. It was elected Christmas Present of the Year by the national TV news and it entered the overall top-selling music chart at position one, where it remained for three weeks. To date it has sold more than 330,000 units and it still sells a few thousand each year. For a young company, run by people with little classical music knowledge, it was an astounding success. As the cash tills were ringing, Naxos Sweden was preparing its second television campaign, which was very different though no less bold.
‘Having opened the classical doors for the first time for many people, we felt we should educate them a little, and we came up with the idea of a CD of specially recorded Swedish classical music played by the Helsingborg Symphony Orchestra.’ The composers included Stenhammar, Söderman, Larsson, Alfvén and Peterson-Berger. They were not household names; and it was a one-CD set, so the revenue per sale was much smaller. In the event, the high cost of the TV advertisement could not be justified – not in simple financial terms. Svenska Klassiska Favoriter, released in spring 1995, sold 150,000 copies, which was impressive given the repertoire but hardly sufficient to recoup the marketing costs. Lagerqvist acknowledges that it may not even have paid its way to date. The benefit was in the exposure gained by the Naxos brand: its dedication to music, notably Swedish music, was broadcast far and wide. This was beyond the simple balancing of books and would pay dividends in the future. Undaunted, the company launched its third TV-promoted album – Klassiska Favoriter, Vol. 2 – in the autumn of 1995. The theme was an off-the-wall concept concerning a monkey, but it worked. This also sold 150,000 copies though the income was better as it was a three-CD set. It was followed a year later by Klassiska Favoriter Opera, which sold 120,000 copies and, in common with all these sets, continues to sell well.
In 1997 Naxos Sweden decided to change tack and approached the lifestyle market, with spectacular success. Lugna Blå Timmar (‘Blue Hours’), a three-CD compilation of music suitable for ‘blue moods’, with a stylish cover, was the subject of a Nordic-wide television campaign and has reached sales of 300,000 worldwide. Other campaigns followed, but the company’s marketing activities were not wholly based around TV advertising. A Christmas disc made in 1996 with the Göteborgs Domkyrkas Gosskör, a boys’ choir, sold 40,000 copies with no TV advertisement and entered high in the overall top-selling music chart. This proved too much for the classical establishment. ‘The majors who controlled the top-selling chart made a new price rule so that Naxos CDs could only be seen on the classical mid-price chart, which of course had only a small exposure and circulation. I guess they were thinking: if they can’t beat them, restrict them,’ says Lagerqvist. It was petty, and too late. Market research conducted by a Swedish university showed that by the end of the 1990s Naxos was the most well-known classical brand in the country. And if people didn’t identify the brand itself, classical music still meant to them Klassiska Favoriter. The commitment to television had worked. What’s more, those who knew the Naxos brand were ten years younger than the average classical music buyer.
The 1990s were peak years of growth for Naxos Sweden. In 1998, five years after the company had begun, the number of employees had tripled and the turnover had more than quadrupled. As in other territories it coincided with the CD boom and it was impossible to sustain in terms of CD sales. However, the company was also initiating more and more recordings of Scandinavian music. With the help of a classical music advisor, Lars Johansson (a former retailer), it put forward an increased number of recording proposals to Heymann and made nearly fifty recordings over the years. Prominent among these has been the Swedish Chamber Orchestra: its performance of symphonies by Joseph Martin Kraus, the ‘Swedish Mozart’, won a Cannes Classical Award at MIDEM Classique in 1999. Behind these special projects, Naxos Sweden was proving adept at the month-by-month release and distribution of Naxos and Marco Polo and the steady promotion of the rapidly expanding catalogues.
In addition to all this Naxos activity, the company was becoming the leading distributor of classical independent labels, both home-grown and foreign. Virtually all the independents from the Nordic countries, UK, France, Germany and even the US were looking to Örebro for their foothold in Sweden. Among them were BIS from Sweden, Hyperion (the first major independent label to join Naxos Sweden, in 1997) and Chandos from the UK, Harmonia Mundi and Naïve from France, ECM from Germany, Telarc from the US; and all the most important classical DVD labels. The dominance of Naxos Sweden was made possible by the majors’ decision to withdraw from the field. (A majority of the majors themselves eventually decided to consolidate into one distribution network.) Naxos Sweden’s list encompasses jazz, folk, Christian music and pop music as well as classical.
The changing face of classical recording made the first decade of this century a testing period for distributors in countries with small populations, and this was especially true of those in the Nordic region. Some kind of conglomeration was inevitable, though a clear route was not obvious in the beginning. The four countries of Sweden, Denmark, Norway and Finland have different languages and different traditions. For most of the twentieth century they had all sustained their own distribution networks, representing many of the same labels. (The very first distributor of Naxos in Europe, signed in 1987 by Heymann, was actually Olga Musik in Denmark, run by Birger Hansen.) Increasingly, because of the strength of Naxos, Lagerqvist was travelling around the region to advise and see how they could work together more closely, initially in the distribution and promotion of Naxos products but also in other areas, including logistics and even marketing. The natural drop in CD sales was not being compensated by a growth in the digital medium, at least not in commercial terms: the notorious success of The Pirate Bay (an illegal file-sharing website) created specific problems for Sweden and the Nordic area as a whole. Classical music suffered less than pop and other genres from piracy, but it was affected. (Such was the spread of The Pirate Bay’s operation that the day on which the four key personalities involved were found guilty of assistance to copyright infringement, and given one-year prison sentences, Internet usage in Sweden decreased by 40 per cent.)
Heymann found that if he wanted reliable dist
ribution in the Nordic region, he had to dip into his pocket and invest in the independent companies that had distributed his labels in the 1990s. One by one, they became Naxos companies: FG Naxos in Finland had already been formed in 1995, and was followed by Naxos Denmark in 2002 and Naxos Norway in 2011. There was a growing benefit in consolidation. It was clearly no longer sustainable for each country to have its own warehouse and stock many independent labels, most of which were small. The Naxos Sweden warehouse in Örebro is now the central Nordic warehouse, and the Naxos offices in the individual territories provide mainly sales and marketing functions. The problems of language have been overcome: English links them all.
Naxos Sweden has grown and changed in other areas. In recent years it has been acquiring Nordic labels. These include Proprius, Prophone, Swedish Society and the Finnish label Ondine. ‘We don’t know how long the CD will be with us, and the importance is to have material rights, to have something to distribute in whatever format people may want,’ says Lagerqvist. He sees a new, extended role for Naxos Sweden: as a service provider to classical labels. ‘To our 300 labels we offer distribution, sales and marketing, but also we can help with product development, manufacture, artwork, digitisation, advice on recordings – even help with contracts.’
The Story of Naxos Page 40