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MARKETING REVOLUTION SWEEPS THE MUSIC BUSINESS

An Ad Age Special Report on Music Industry Advertising

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CHICAGO (AdAge.com) -- Ravaged by plummeting sales, online piracy and a wide-reaching technological revolution, the music industry is rushing to reinvent the way
Companion Story:
THE MUSIC MARKETING OBSTACLE: 30 BILLION ILLEGAL DOWNLOADS A YEAR
Legitimate Online Services Need High-Powered Marketing Strategies

DOWNLOAD Other Music Report .pdf Items:

> Wall Poster Guide to Music Marketing: At-a-Glance Overview of the Major Players and Statistics


> 8-Page 'Music in Marketing and Advertising' Report: From the Print Editon of Advertising Age



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it sells its products. And among the areas most impacted by this frantic new quest is virtually every aspect of music-related advertising and marketing.

CD sales plummet
Consumers across all demographics are buying fewer CDs than ever. Sales are down 13% from just two years ago and continue to plummet, with no end in sight.

The industry has pinned the blame for much of the current downturn on Internet file-sharing, illegal downloading and CD-burning. And, despite the promise of "legal" sites like Steve Jobs' much-ballyhooed iTunes Music store, music companies are scrambling to find a solution that will expose and monetize their investments.

Their sense of urgency is easy to understand. Consider, for instance, the recent study of 12- to 44-year-old consumers by Edison Media Research, that found that those who have downloaded more than 100 music files report that their purchases of CDs have dropped 61% from the year before. In addition, 71% of those heavy downloaders have "burned someone else's copy of a CD instead of buying one," and 48% say they no longer buy CDs "because they download music for free over the Internet."

Grasping
In this climate, artists, managers, labels and publishing executives are all grasping for alternative revenue streams, or at least another partner to help share the ever-increasing promotional budget to launch new artists and continue to sustain career acts.

The result is an explosion of marketing campaigns and plans that intertwine musicians and product promotions in new and novel ways.

"At most record companies, the astute marketing people have been tying together artists and products for many years," says longtime industry executive Phil Quartararo, EMI Recorded Music North America executive vice president who oversees the company's new in-house marketing entity, EMI Music Marketing. However, the consumer today is more inundated than ever before by those competing for multiple advertising impressions. "The weight has been put on us to become more focused and selective in coming up with non-traditional sales relationships."

Steely Dan & GM Credit
Adds legendary music manager Irving Azoff, who has about 20 corporate deals for the summer, including Eagles and Infinity, Steely Dan and GM Credit and Christina Aguilera with Skechers, Target and Mattel: "Times are not only tough, they're getting harder. We are selling less catalog and fewer new records. With the economy as bad as it is, costs haven't gone down. We need to make up for some of these losses. These types of deals are natural."

This is nothing new, of course. Entertainment Marketing Communications Inc. founder Jay Coleman is considered the father of music marketing, launching early pairings such as Earth, Wind & Fire for Motorola and the groundbreaking sponsorship of Coty U.S.' Jovan for the Rolling Stones' 1981 tour. The struggling musk oil company paid $500,000 and, according to Mr. Coleman, "it put them on the map in a major way."

Stones and The Who
The Stones went on to cement sponsorships with Anheuser-Busch's Budweiser, Sprint, Tommy Hilfiger and T-Mobile for their most recent Euro jaunt. The Who have used Miller Genuine Draft as tour sponsors, Paul McCartney's show was promoted by Visa International and Phil Collins was presented by Sears, Roebuck & Co.

Management powerhouse The Firm, whose music clients include Mary J. Blige, Dixie Chicks, Jennifer Lopez, Michelle Branch, Enrique Iglesias and Korn, was one of the first to recognize the importance of these deals and has aggressively pursued opportunities. For example, The Firm and Maverick Records have teamed young singer/songwriter Michelle Branch with Unilever's Thermasilk, which sponsored her recent 12-city tour with a radio and online campaign. To demonstrate its commitment, the label is allowing Thermasilk to use the music for free, a tactic becoming much more prominent.

High-profile campaigns
Examples of recent high-profile ad blitzes include Celine Dion and Chrysler Group, which helped launch the diva's new album and

Sting's 2000 Jaguar comercial.
Led Zeppelin's Cadillac commercial.
Celine Dion's Chrysler commercial.
Meat Loaf's GM commercial.
Shakira's Pepsi commercial.
Rapper Common's Coke commercial.
her much-hyped Las Vegas connection; Led Zeppelin and General Motors Corp.'s Cadillac; Jewel and Schick; Shakira and Pepsi-Cola Co.'s Pepsi; Jay-Z and Heineken USA and Reebok; Enrique Iglesias and PepsiCo unit Frito-Lay's Doritos; and Mya and Common for Coca-Cola Co.

Interscope Geffen A&M, Records Marketing/Sales Head Steve Berman, who made a cameo appearance in this year's Mya and Common spot, says the partnership between advertisers and labels is inevitable.

"Our goal is always to match up the right artist, the right brand and the right song, and time it to penetrate the marketplace from all angles, together," he says.

From radio to commercials
With the passage of the Telecommunications Act in the mid-1990s and subsequent consolidation of the radio business under monoliths such as Clear Channel Communications and Viacom's Infinity Broadcasting Corp., getting a song heard on the air has become harder than ever. Labels and artists have turned to major advertisers and TV to help reach the broader demographic audience once delivered by radio. These days, with the cherry-picking encouraged by most file-sharing services, legal as well as illegal, and the perception that many hit albums are composed of mostly filler beyond the hits, the record industry's sharp growth over the last two decades has been curtailed disastrously. And that is why the exposure music can receive on TV becomes so important.

Take, for instance, the longtime sales spike seen by Sting, when his eventual hit single "Desert Rose," which couldn't garner traditional radio airplay, was used as the theme to a Jaguar TV spot and a Compaq Computer Corp. campaign.

Dirty Vegas
Likewise, U.K. band Dirty Vegas' techno-rocker "Days Go By" became a hit only after it was exposed on a Mitsubishi car commercial. Every song on Moby's album Play was used in a commercial, helping it go multi-platinum in the process.

Universal Music Publishing Group Worldwide President David Renzer says that for the last few years, most of his company's revenue has come from synch -- licensing his songs for commercials. Still, label partners continue to urge him to be flexible on those fees to gain exposure for acts they're trying to promote, such as Andrew W.K., a new artist whose music appeared in commercials for Coors Brewing Co., Target Corp. and Nestle's KitKat.

"There's a balance between preserving the value of copyright and taking into consideration the promotional opportunities to help break an act," he says. "It's a healthy tension."

Marketing vet Mitch Litvak is the founder of the L.A. Office, a one-stop shop for brands and entertainers to strengthen their promotional-commercial ties. It hosts The L.A. Office RoadShow, a conference, which last year drew more than 600 attendees, helping introduce brand marketers to opportunities in major films, TV and music.

Correct match
"The most important thing is to know your brand's essence and match it properly to your artists," Mr. Litvak says. "So much gets messed up when you try to get an artist to fit a product or a product to fit an artist."

"Just think of bands as brands," adds Mr. Coleman. "Reinforcing that can help sell merchandise, records, tickets and content."

Although the idea of rockers shilling for commercials no longer holds the stigma it did when Nike used John Lennon's "Revolution" to sell running shoes, there are some who still condemn the practice, such as Tom Petty, U2, John Mellencamp and Bruce Springsteen. Neil Young parodied the practice in his award-winning video "This Note's for You," with the refrain "Ain't singin' for Pepsi/Ain't singin' for Coke/I don't sing for nobody/Makes me look like a joke."

Elvis Presley
But the tradition of rock 'n' rollers hyping products goes back to at least the mid-1950s, when the King himself, Elvis Presley, did a radio jingle for Southern-Maid doughnuts as part of his contract with the "Louisiana Hayride" show, undoubtedly arranged by his prescient manager, Col. Tom Parker. Elvis' image continues to be used in advertising, the latest a series of Keebler elves spots and National Basketball Association promos.

Ayiko Broyard, manager of music marketing for Davie-Brown Entertainment, admits any partnership between a star and an advertiser can be a gamble: "If your artist doesn't perform to expectations or reach the intended audience, then neither will your product, and the campaign will be doomed." Mr. Coleman points to the Celine Dion Chrysler TV spots, which featured the Crossfire, as a misstep. "If they were promoting a minivan or an SUV to soccer moms, like the later commercials did, it's fine," he says. "But they were promoting a sports car, which is usually a male-dominated item, and I think they turned off a great many men buyers by using her."

While the risks are great, the rewards can be even greater, especially as the partnerships become more innovative and creative. The current multimillion-dollar initiative by independent Big3 Records and Comdex Group's LidRock to promote young rock singer/songwriter Rachel Farris is a prime example of out-of-the-box thinking.

CDs in soda lid
The label, Coca-Cola, 20th Century Fox, Universal Studios Theme Parks, and Anschutz Entertainment Group's Regal, Edwards and United theaters are partnered in the promotion. Starting in June and running through July, Ms. Farris' video has been played in theaters before the feature presentation, while consumers who bought a large Coca-Cola received a 3-inch, two-song CD of her music, which was embedded in the lid. The disc also includes two spots, one for Universal Studios Theme Parks and another for the new Farrely brothers-directed comedy Stuck on You, starring Matt Damon and Greg Kinnear and hitting theaters this fall.

Four million of the CD lids were earmarked for distribution on 7,000 screens in the top 25 markets, with more headed for Universal Studios parks in Los Angeles and Orlando. Ms. Farris' song "Soak" will be used as an accompaniment to the theme parks' water slide rides, while Fox is offering free tickets to the premiere of "Stuck on You" to registrants on Ms. Farris' Web site.

Big3 Records' president, Bill Richards, says sales of Ms. Farris' CD have tripled since the promotion began: "There has to be another way to get music in people's hands. Instead of illegally downloading music, you get it for free. If you don't hear something, how can you possibly know if you want it?"

Music as sponsored activity
With millions of dollars being spent on pairings of artist and product, it's a foregone conclusion that these partnerships will take on a larger role as the industry tries to reverse its downward slide. One wonders if music will simply become a sponsored activity, brought to you by not just the record label but third parties as well, with their own products to sell. Concludes Mr. Richards: "The music industry's regular way of doing things doesn't seem to be working. I believe, with the impressions she's getting, Rachel Farris will be a household name by the end of July. You've got to be pro-active. You have to play offense, not defense, in this business ... or you'll go out of business."

Adds Mr. Azoff: "What's good for one artist may not be right for another. ... The exciting thing about our business is we can continue to come up with new and innovative ideas to keep the checks coming in."

~ ~ ~
Roy Trakin contributed to this report. Mr. Trakin and Mr. Pollack are senior editors at Hits Magazine.

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