Wal-Mart or Bust?

The occasion that brought this all-star line-up together? Not a festival or cause but Wal-Mart Stores’ annual shareholders meeting. Wal-Mart was the largest music retailer in the country last year, so musicians (and their labels) are eager to maintain good relationships, appearing in the special concerts for the chain, which are also open to the public.

During her performance, Ms. Underwood volunteered that a Wal-Mart had recently opened in her hometown, Checotah, Okla., and Keith Urban changed his lyrics from “Goodbye, city, I’m country-bound” to “I’m Wal-Mart-bound.” And the retailer is using its leverage to aggressively pursue new deals.

On Tuesday Wal-Mart started selling on an exclusive basis a three-disc collection by the popular 1980s band Journey called “Revelation.” The difference, however, is that there is no middleman: the album was bought directly from the band without the help of a record label. Journey went right to Wal-Mart and kept most of the money a record company would normally take as profit for the group. Last year Wal-Mart made a similar deal with the Eagles, who like Journey are represented by Front Line Management, the nation’s largest music management company.

The deals highlight the changing dynamics of the music industry as once-powerful labels decline because of the migration to digital downloads. To fill the gap, musicians are scrambling to connect with fans, and Wal-Mart is using these exclusive deals to assume a new role: hit maker.

The Eagles’ double disc, “Long Road Out of Eden,” sold 711,000 copies in its first week and three million since its release, according to Nielsen SoundScan, impressive numbers at a time when CD sales are declining. Journey sold 45,000 albums in its first three days on sale, and Irving Azoff, founder and chief executive of Front Line Management and a music industry veteran who ran MCA Records in the ’80s, predicted that it would sell more than 80,000 copies in its first week. That is probably enough to debut in the top five, and significantly more than its last album sold in total.

“With the downturn, the labels couldn’t match the marketing commitments that Wal-Mart could make,” Mr. Azoff said. “It was well in excess of anything a label could do.”

Front Line took on some of the traditional work of a record label, producing a video and promoting songs to radio. But most of the marketing was done at Wal-Mart itself. The chain ran print, radio and television advertisements that promoted the exclusive availability of the Eagles album. Stores display the Eagles and Journey albums in several locations, not just the music department, and this week some stores had the Journey DVD playing on their big-screen televisions.

In some ways, the arrangements that Wal-Mart has made with Journey and the Eagles represent the mainstream equivalent of the path that artists like Radiohead and Nine Inch Nails have taken by releasing albums on the Internet without a traditional label.

“It just goes to show you that fewer artists need to be associated with record companies,” said Larry Mestel, chief executive of Primary Wave Music Publishing and former chief operating officer of Virgin Records. “They don’t need to give up a big chunk of money to the record companies when they’re iconic. They can go direct to Wal-Mart and make four to five dollars per CD.”

It’s hard to tell how much traditional labels are threatened by the prospect of artists’ selling directly to retailers. New albums from more established acts can be less profitable if they have negotiated a higher royalty rate. And although the Eagles are reliable sellers, Journey is what industry executives delicately refer to as a “heritage act,” a steady summer concert attraction that sells relatively few albums of new material.

One reason the Eagles and Journey albums have sold so many copies is their price: $11.98. That’s an unusually low retail price, especially for “Revelation,” which consists of one CD of new songs, one CD of new renditions of Journey classics and one DVD of a recent concert performance. But one of Wal-Mart’s goals in promoting such releases is drawing customers into stores with a bargain they can’t find anywhere else.