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Disintermediation: In economics, the removal of intermediaries in a supply chain.

James Taylor provides a text book example of "disintermediation" in the music industry, with the release of his first holiday album. Following his 2002 Columbia album, "October Road," Taylor had fulfilled his contractual obligations. He has not since signed to a new label.

James Taylor: A Christmas Album" sells for $10.95 -- or $6.95 with the purchase of three greeting cards. It was recorded for Hallmark Cards, and it will be their exclusive this holiday season and next.

It has sold over one million copies in less than two months.

NYT:

In selling the CD, Hallmark is taking a page from Starbucks, which has had tremendous success selling Ray Charles's "Genius Loves Company" and other releases alongside its chai tea lattés and espresso macchiatos.

"Our expectations from the beginning were very high," said Ann Herrick, integrated marketing manager at Hallmark, "but this project ended up exceeding our expectations and we all here are very happy about it."

Industry watchers say that more artists, particularly older acts who are somewhat out of the current music retail scene, will look to outlets like Starbucks or Hallmark for fresh opportunities."

TBA Network, an entertainment-consulting firm, negotiated the deal with Taylor. A similar deal was brokered for Hallmark with Christian music artist Steven Curtis Chapman.

The success of the holiday CD has Hallmark considering expanding its music promotion: "A Valentine's Day album by the country singer Martina McBride is scheduled to hit stores in 2005. And Ms. Herrick added, "We're looking at opening it up to other seasons, not just holidays."

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Source:
James Taylor's Got a Friend at Hallmark Cards
LOLA OGUNNAIKE
New York Times, December 17, 2004
http://www.nytimes.com/2004/12/17/business/media/17adco.html