Terms are still being ironed out, but McDonald's has already gained unanimous approval from a key franchisee committee and ordered production of a TV spot for late June or early July, according to two executives close to the negotiations. Up to a dozen countries are expected to eventually participate.
Unlike the similar short-term promotion PepsiCo recently did with Apple for its iTunes music service, McDonald's is exploring a long-term deal intended to tap the power of the digital music movement to drive sales by positioning McDonald's as a lifestyle brand. The idea is to assign different point values to different menu items. Those points would accrue on a loyalty card, giving kids without credit cards their own currency to download music off Sony's Internet music site, Connect.
Sales of music have been decimated by illicit downloads, and the music industry is embracing pacts with marketers that recognize young consumers' desire to digitally download tunes while encouraging them to do it via paid legal sites.
McDonald's executives declined to confirm the deal, saying nothing had been signed. Sony would not comment.
Putting music on its menu is expected to help McDonald's reinforce the more youthful image it put forth with its new ad campaign via Omnicom Group's Heye & Partner, Unterhaching, Germany. The marketer is planning to further emphasize the five-note "ba/da/ba/ba/ba" sound that opens its advertising as a branding device much like those used by Intel and T-Mobile, said an executive close to the company.
hit `em where they live
"Brands like McDonald's are trying to be relevant to consumers through entertainment... and being loyal to lifestyles," said one marketing expert close to McDonald's. "They want to communicate with consumers where they live and thrive, so they're taking the music category and putting a stake in the ground."
Sony initially plans to feature 500,000 tracks that can be downloaded onto Sony devices for 99¢ per song or $9.95 for albums. McDonald's hopes to extend the alliance to include other Sony products such as motion pictures, wireless phones, video games and computers.
The deal has been complex on various fronts, including technology, and issues relating to how to execute the alliance in McDonald's 10 to 12 biggest markets. U.S. consumers, for example, download music over the Internet onto personal computers, while those in some overseas markets prefer to download tunes to wireless devices. There is also concern Sony would try to push its roster of musical artists over those of other labels. There has also been discussion about how McDonald's would deal with songs that carry parental advisories and the potential backlash over kids downloading objectionable music.
McDonald's would also like to avoid promotional pitfalls like the one faced by Pepsi and iTunes. Customers figured out that by tilting Pepsi bottles, they could read the code on bottle caps to download free music without buying the cola. Pepsi responded by capping the number of free downloads a consumer could redeem each day, but faced a barrage of negative publicity.
In another similar agreement, Starbucks Coffee Co. this week launches a CD burning service via Hewlett-Packard in 2,500 stores nationwide. Under the plan, patrons can sit at HP Tablet PCS stations where a music expert will suggest new artists and genres. Customers will be able to sample music and have selections burned onto a CD.
contributing: alice z. cuneo