Hot Topic: Investing in Mid-Tier Bands

I just came back from running an errand at the Plaza at King of Prussia. The whole mall is crawling with girls lined up to catch a glimpse of Robert Pattinson from the movie Twilight. 300 fans lined up in some crappy weather this morning to buy $30 shirts and wristbands for a meet-and-greet event.

(The mall seems to have found a use for an atrium once filled with a Strawbridge's.) Undaunted by the herd of fans queued up behind a velvet rope, hundreds more screaming teens are roving the mall -- even though most of the stores are empty.

Hot Topic continues to thrive because it has placed major bets on popular culture. Betsy McLaughlin, its CEO, understands that home runs like "Twilight" and "Napoleon Dynamite" are fewer and farther between, thanks to our fractured media landscape. However, she tells David Randall from Forbes that music from outside of the mainstream plays a major role in the company's success, as well as its future strategy.

We want to be the place to discover what's new in music. It was no longer about the biggest bands and what they were wearing. We communicated that in March of '07 and by December our numbers were positive. Before that, they were all negative. What's interesting now are these mid-tier bands. That's where we need to make the investment.

Here's another place where tastemakers outside radio and music press are making huge impacts on music careers. Like television and film licensing specialists, music coordinators for retail stores aren't necessarily worried about finding hits. Instead, they're creating a mood. That opens up a stronger opportunity for artists who can get great traction among Hot Topic's target shoppers. For many musicians, in-store airplay and live events are becoming more important than radio airplay.