From Piracy To Promotion

Creating win-wins for music lovers and industry

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%%STORYIMAGE_RIGHT%% As close to 90 million people watched February's Super Bowl, a commercial came on starring a 14-year-old named Annie Leith. "Hi, I'm one of the kids who was prosecuted for downloading music free off the Internet," she said. "And I'm here to announce that we're still going to download music free off the Internet. And there's not a thing anyone can do about it."

To the tune of Green Day's "I Fought the Law," the spot featured 16 other teenagers busted by the Recording Industry Association of America for downloading music. The spot concluded with the on-screen legend that PepsiCo's Pepsi-Cola and Apple iTunes would join to "give away 100 million free songs."

Just like that, corporate America co-opted a bitter struggle between the record industry and ardent file-sharing music lovers with a feel-good, old-fashioned, win-win capitalist solution. Four months later, Apple Computer announced consumers had redeemed 5 million songs through the Pepsi promotion, which helped raise the total number of downloads the iTunes store had sold to date to 70 million.

Other corporations have entered the online music marketing fray. McDonald's Corp. recently launched a reported $30 million ad campaign for Sony Corp.'s new online music service Sony Connect, with a commercial that debuted on the NBA Finals offering a free download to anyone buying a Big Mac meal. United Airlines also hooked up with Sony Connect for a program in which frequent flier miles can be exchanged for music and music bought online can be turned into miles.

The now-legitimate Napster has affixed its kitty logo on promotions with Miller Brewing Co. and Molson USA, Energizer batteries and Citigroup credit. Heineken is offering free music downloads through Real Networks; Musicmatch has hooked up with Coca-Cola Co. and Papa John's for an in-store giveaway.

$1.9 BILLION IN '07 ONLINE SALES

With Forrester Research estimating the legitimate music download market (excluding music subscriptions site revenue) will rise from $36 million last year to $201 million in '04 and $1.93 billion in '07, it's obvious the likes of Apple iTunes, Sony Connect and Napster are making an impact. And marketers will undoubtedly play a key role.

"There are just too many of these online services right now. The difference between those that will still be here two or three years from now and the ones that have gone out of business is whether they got enough people hooked on it early," says Josh Bernoff, VP and principal analyst at Forrester. "These partnerships are essential to the services in terms of bringing in people to sample them. I don't know if they're essential for the Pepsis and McDonald's of the world, but [the partnerships] do help give [the services] relevance with young consumers."

United Airlines helped launch Sony Connect in May with a performance by Sheryl Crow aboard a flight from Chicago to Los Angeles that generated national coverage. The singer-songwriter landed and immediately headed to Sony's Santa Monica, Calif., campus where she performed another set for assorted VIPs and media types. As part of the promotion, United Mileage Plus members are being offered the chance to redeem miles for songs.

Dave Keenan, United Airlines Loyalty Services VP-business development/financial services, is more than satisfied so far. "We're looking for ways to improve the value of our Mileage Plus program and to have that currency be meaningful for everyday purchases. What better way to use it than purchasing music, which is such a large part of everybody's lives?"

Sony Connect General Manager Jay Samit says corporations have sponsored and given away music for more than 70 years. "It's called radio," he laughs. "This is just a different model." One of Samit's key strategies for Sony Connect is to create "alternative currencies to cash," using music as barter. A promotion with Toyota Motor Sales USA offers 60 free downloads for anyone who test-drives its Lexus.

"We're all about luring people from the pirate experience to the legitimate download," Samit says. "With all the competition from games and DVD, music is as popular as ever. People want music in their lives.

"Being able to give you high-quality music without a computer crashing from spyware, brought to you by products and brands you know and love, is a natural fit. And the promotions can be customized to reach any demographic. For every target audience, there's a musical hook to match it."

Musicmatch's "4 & More" campaign with Coca-Cola offers every Papa John's International customer who buys four 20-ounce Coke beverages in the special "4 to Go" Music Edition carrier a code for four free downloads, worth $3.96.

ADDED VALUE

"It builds traffic and awareness for us by hooking up with nationally known brands," says Musicmatch VP-Marketing Mike Matey. "And it offers consumers added value as an incentive to purchase product these companies are trying to drive in the marketplace. We're both trying to reach the elusive 18-to-35-year-old buyer."

Matey points out that more than 90% of the consumers who've redeemed coupons for free tracks haven't been to the Musicmatch site previously. "The matchup was serendipitous. Coca-Cola was looking for a music partner, and we were looking for a big brand."

Larry Linietsky, Napster senior VP-worldwide business development, says co-promotions with Molson, Miller, Energizer and Citigroup have helped Napster "gain more of the consumer's confidence and consciousness."

At the same time, Linietsky insists these companies come to him, without his having to seek them out. "They want that Napster kitty head on their product," he says. "Their own internal research shows the value of our brand in communicating their message to a particular target demo."

Energizer VP-Marketing Jeff Ziminski says his partnership with Napster for the long-lasting e2 batteries is "a perfect tie-in for us ... Audio devices consume more batteries than any other category. Our e2 brand is aimed at younger buyers for high-tech devices."

A GREAT FIT

Linietsky says Energizer is a great fit for his company, too. "They make batteries for CD and MP3 players, which means the consumer will more than likely open the package right at their computer and type in the code right then and there.

"It's a product that makes it into the home office, which is where we want to be," he says. Online music promotions also eliminate the expense and labor of having to pick, pack and send physical product for fulfillment.

"We eliminate the whole problem of getting clearances and coupling artists from different labels," adds Linietsky. "You can put the code anywhere on the package, and more importantly, the consumer chooses the songs he wants from a vast library. It puts the music decision in the hands of your customer."

And while corporations and online download services might seem ideal, do these "free" songs somehow devalue music even further?

"On the contrary, these companies are trying to put a value on music," insists Linietsky. "They're showing that two free downloads can add $1.98 to the value of your purchase."

"It proves music has a demonstrable worth," says Samit. "Our research shows 58% of those who took advantage of the McDonald's offer returned 4 hours later to purchase more music."

Samit even foresees a day when McDonald's locations and United Airlines flights equipped with wireless Internet access will debut all sorts of entertainment items, including videos and games.

"McDonald's can go from a quick-service restaurant to a quick-service entertainment center," he says. "Or when you're taking United from New York to L.A., you can purchase three albums with your frequent-flier miles, listen to them on the trip and walk off the plane with them on your player."

%%PULLQUOTE_RIGHT%% United's Keenan agrees: "We're interested in improving the quality of life for our travelers any way we can. Music and other forms of entertainment are very important in helping us enable our customers while they're flying with us. And it helps move our Mileage Plus program forward."

Like the influential Medici and Borgia families of the Renaissance, the modern-day corporations--in search of that elusive 18-35 market-- are serving as patrons of the online musical arts, pouring money into an industry that promises to explode. By 2008, Forrester says, legal downloads and legitimate sub services will total $4.57 billion.

"In 2004, the objective is to get people to try your service. In 2006, the objective will be to get people to make a commitment, to become a subscriber," says Forrester's Bernoff.

Musicmatch's Matey is convinced online music is here to stay, with or without corporate backing. "These promotions will never eclipse the core value of music. They're supplementary," he says. "We've sold more than a million downloads without them."

And maybe one day, the RIAA won't have to sue teenagers for "stealing" music over the Internet, as that McDonald's worker poses a new question, "Want a song with those fries and shake?"

Roy Trakin is senior editor at Hits Magazine.

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