DotcomScoop.com

JOSH Kelley has a hit on his hands. The 22-year- old Georgian's major-label debut has cracked Billboard's Top 200, and he recently finished a tour opening for Third Eye Blind.

But for Kelley and his label, Hollywood Records, the greatest success has come online - at, of all places, WalMart.com.

That's where the traditional promotional street team is being replaced by a low-cost tool that may very well change the way record labels market music. And WalMart.com is where Kelley has a top 10 album.

"For less than $10,000 total, we reach 50,000 people a day online," said Ken Bunt, vice president of new media strategy and development for Hollywood Records.

"And we know who is listening to the music, and who is buying it."

What Hollywood is doing sounds simple: The label is replacing street teams - groups of fans who hand out free CD samplers - with an online street team.

Using popular Flash technology, Hollywood has created "microsites," complete with media players, that it distributes free to fan Web sites and to WalMart.com affiliates.

The label also pays to place links to the microsites as advertising on such popular Web sites as Fark.com and CollegeHumor.com.

The media player streams anywhere from three songs to a full album - giving listeners a chance to sample songs and to gain exposure to new artists.

Consumers can then purchase an album at WalMart.com, which allows its affiliate Web sites to link to or install the microsite as free content.

While the idea sounds simple enough, few record labels have found a way to effectively market music online and to push consumers to actually buy physical product.

"When you really think about a record label, the online division is the only one that reaches the consumer directly," Bunt says.

"We've found a very effective way to market online, and we know we're selling records because of it. We know people are listening and buying based on this program."

With the pending proliferation of legitimate download music services, record labels are faced with increasing challenges.

Traditionally, the labels have marketed to radio and to retailers, relying on these partners to promote individual releases.

But that marketing power has shrunk because of illegal file-swapping online, retail store closings and Clear Channel's stranglehold on the nation's radio stations.

"I see this idea catching on," Bunt says. "Some labels are doing it now, but no one is syndicating it the way we are.

"The natural extension of this will be to funnel customers to a digital music store instead of dumping them somewhere to buy a physical CD," he adds. "We'll market directly into the digital music stores."

For Hollywood and the rest of the music industry, marketing directly into digital music stores may be the only option they have in the future.

* Please send e-mail to: bsilverman@nypost.com