NEW YORK (AdAge.com) -- Seven years ago, McDonald's tapped Justin Timberlake in a multimillion-dollar deal to launch "I'm Lovin' it." Now the marketer and a bevy of other brands such as Coca-Cola are bypassing the big stars -- and in some cases the record labels -- to become incubators for tomorrow's superstars.
The fast-food chain is the launch sponsor for Artists & Brands, a music-media agency that aligns up-and-coming artists with campaigns that suit their style, a far cry from the marketer's earlier practices of shelling out big bucks for jingles on spec. In the new model, artists get exposure, while marketers save on fees and get cool points for introducing people to new music.
"In the prehistoric days, like when I started in advertising, you used to say 'I wish I could have' -- name a big-time band -- and then you'd negotiate a lot of money to get them," said Marlena Peleo-Lazar, chief creative officer, McDonalds's USA. "But so much has changed with the music industry, technology and the internet, you certainly still can go and get Sting if you're so inclined -- and have a blank check."
"If you can find new talent instead of renting existing talent, there will be an association with the product, and that's what I think McDonald's is trying to get at," said Ira Antelis, co-CEO of Artists & Brands. He cited "Grey's Anatomy" and the band the Fray as an example of a lasting association, as well as Old Navy, which featured Ingrid Michaelson's song "The Way I Am" in a sweater commercial.
At Artists & Brands, Mr. Antelis is partnering with Rodney Jerkins, a legendary music producer, and Daryl Jones, a top music attorney.
McDonald's isn't alone. Frank Cooper, chief consumer-engagement officer at PepsiCo Americas Beverages, pointed to Green Label Sound, a platform for independent artists that quietly promotes Mtn Dew, as an example of how brands will shape the music industry.
"You'll see through Green Label Sound the rethinking of ownership of music, a rethinking of how to monetize it, how to build the brand of an artist," he said. "And I think you'll see where it's coming from artists, managers, record labels and alternative methods of funding -- and brands will play an incredibly critical part in that."
Eric Sheinkop, president of Chicago-based Music Dealers, a business-to-business music-licensing noted a sharp increase in demand in the last two years, as his staff has grown to 30 people from three. Music Dealers opened a New York office last month, and has a London location opening in September.
Music Dealers works with clients such as Maxwell House, Corona and GMC to find the perfect song for campaigns. The company works from a database with thousands of songs by independent artists that have been prescreened and approved, often turning requests around in a day. Artists working on spec once took weeks or even months.
Mr. Sheinkop, who quit the music management business two years ago to focus on licensing, said one benefit of working with up-and-comers is that "artists are going to be so proud to be attached that they'll push it for you," he said.
But don't count the labels out yet. Coca-Cola made a big splash with little-known artist K'naan last month. K'naan's song "Wavin' Flag," with the lyrics rewritten for marketability, is the centerpiece of its global World Cup campaign. Released last month, it's already No. 1 in China, Mexico and Germany. Coke signed K'naan to make appearances on some stops of its World Cup tour, leading up to the tournament. He'll also be making appearances in South Africa.
But K'naan was already signed to Universal when Coke linked up with him. Joe Belliotti, director-global entertainment marketing at the Coca-Cola Co. stressed that the label has been a big asset in organizing every facet of the campaign and tour. "The music industry is going through an evolution, but there's still really a necessity for record companies," Mr. Belliotti said. "It might look like their role is changing," he said, but "it's got to be a collaborative process, really leveraging the power of each."
Coke owns a portion of the "Wavin' Flag" royalties, and all proceeds will be donated to provide water for schools in Africa.
Some marketers see potential to monetize these endeavors. While underscoring that it's not Pepsi's primary mission, Mr. Cooper said: "There's absolutely an opportunity for us to generate revenue around some of the content and experiences we're creating in entertainment."