Hotel, Motel, Holiday Inn - The Major Labels Find Hospitality Partners
Two very similar marketing deals between major label groups and hotel operators popped up this week.
The more significant deal was between Sony BMG and hotel conglomerate Starwood. Meanwhile, EMI has partnered up with hotel chain Fairmont Hotels & Resorts in a similar deal.
Kudos to both label groups for securing these partnerships with their respective partners. However, I am curious as to why a hotel chain would want to establish such an exclusive arrangement with one label group, even major label groups such as this. In the Sony BMG deal, it says that:
"Another goal is to create compilation CDs that will be sold at each hotel. At a price of $20, a compilation for W Hotels -- including such acts as Goldfrapp, Nina Simone, DJ Krush and Dirty Vegas -- has already been developed. Sony BMG and Starwood will share revenue on each CD sold."
$20?!?! The labels can't even sell single artist CDs by major artists at most music retailers for the suggested list price of $18.98 - how many CDs does Starwood think they can actually move for $20 apiece? Room service and the mini-bar are expensive enough, so why try and gouge your customers on the price of a CD when the goal should be to maximize customer purchases by selling those compilations at a reasonable price and having those customers spread the word about the W experience with friends and colleagues, with the CD serving as the soundtrack those customers then play for their party guests and friends in their homes and cars? The release states that Sony BMG and Starwood "share revenue" on each CD sold. The way I read that is that Starwood pays Sony BMG to produce the CDs, earning them revenue, and then Starwood sells the CD at their ridiculous markup, earning them revenue. If the model is different, then someone please let me know, but that's the traditional model for developing a private label CD compilation for sale.
A better question for each hotelier involved here would be - why tie yourself to one label when there are services which can offer similar offerings (DMX Music, PlayNetwork, Muzak, and Trusonic come to mind) which have access to content from multiple labels, including independent labels, thus ensuring an accurate and more representative branded music experience for hotel guests which focuses less on major label priority releases and more on the particular hotel brand? DMX must be somewhat rankled - Starwood is listed as one of their key hotel clients. I know Sony BMG says they will license in 3rd party label content for the playlists for each Starwood chain, but you know Sony BMG is going to focus first and foremost on their own owned content - as well they should.
The problem is aligning a hotel company with a particular major label group in such a significant way means that the success of the partnership rises and falls with the quality and popularity of that label partner's content - as it relates to each individual chain within the company's portfolio. No one can dispute that each label involved here has significant catalog which can be targeted towards these companies' customers; the question is in the execution of these partnerships will the labels skew their offerings too much in the way of current artist ephemera, or rely on the catalog stalwarts that business and leisure travelers might be looking to hear for a sense of comfort away from their home environments.
