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June 11, 2008

Music Licensing Revenue Drops in 2007

I saw this story and wanted to highlight the relevant passage for my readers:

"Music fell by the largest margin (5.5%) to $125 million from $132 million in 2006..."

I've highlighted this before, but let me address this issue again.  This is no time for any artist, songwriter, label, or music publisher to be turning down revenue-enhancing opportunities.  This is no time to rest on one's laurels when a licensing request comes in and sit on it until the requestor is forced to go to another party to get what they need.  There is a glut of quality music supply, so the licensee, the buyer, holds the upper hand, not the licensor.

But licensees, as George Costanza might say - you've got hand.

April 25, 2008

Whither the Car Stereo

I caught an article today in today's USA Today on how consumer electronics companies are now offering CD-player-free car stereos.  These are not OEM-installed systems, and automakers would be wise to continue having in-dash CD players as standard features on new vehicles.  Their customers have invested heavily in CDs over the past 25 years, despite the sharp downturn in CD sales this decade.  Even rampant downloaders do a lot of burning music to CD.

Car makers should definitely look to add on options which allow MP3 player owners to use their players in conjunction with car stereos.

As it is, there are still plenty of cars with cassette/CD players, and there are plenty of peripherals one can buy to stick an MP3 adapter into the cassette deck.

The transition to an all-digital music economy is moving rapidly, but those who stick with physical product aren't necessarily Luddites to be shunned, just as people who want to shop at brick-and-mortar stores for certain items they can buy on the web aren't technologically backward.  They just have preferences which are ingrained, preferences which shouldn't be ignored by marketers.

March 19, 2008

What is "Selling Out?"

NOTE: Sorry - I started this post last week and just had the time to get it out today.

A discussion I've heard far too often, both among music industry personnel and those in the media and in the corporate marketing world, is that of trying to define what "selling out" is in terms of a musical act's relationship with a corporate brand.  On the one hand, it is an accepted fact that many acts need some kind of corporate involvement at certain times during their careers to help them financially or with major exposure boosts.  On the other hand, the artists themselves are rightfully wary of aligning themselves with brands in ways which leave them open to criticism from fans and press alike.  An article by Charles Moran in this week's Advertising Age explores this topic again.  Charles also co-writes the great Songs for Soap blog for AdAge.com with Mike Tunnicliffe, which explores the many different brand/artist interactions taking place these days.

One thing rarely discussed is this: artists - ALL artists - need to "sell out" to corporate interests at some stage in their career, and often this involves the corporations they align with the closest and with the highest stakes for their longevity - namely their own record labels and the radio stations/video outlets (and the conglomerates which own them).  Even in this digital, DIY age the large majority of artists seek to be signed by a record label so the label can provide marketing, PR, radio promotion, and distribution of their recordings.  Once the act has music to be released, then they need to go out and promote their single across the radio stations and video channels/outlets which they depend upon to drive their music up the charts, thereby driving album sales and the revenue they might receive based on that airplay.  Yet the major labels (and those indies which are divisions of major corporations) and the big radio conglomerates use music to their own ends just as any corporate brand seeking to license the content from those acts. 

How many artists feel their careers were mismanaged by their labels, both when they were current artists, and with their catalogs after leaving a particular label?  Too many to count.  Those corporations keep cutting staff and roster acts as the industry's physical sales woes increase.  They also have lousy reputations for being dishonest in their accounting to the artists they rely on to develop the content the companies are based on.  But those labels are still the key engines for allowing artists to create and distribute their art as efficiently as possible across a wide range of media.  Even the band Birdmonster, once touted as a completely DIY outfit in Chris Anderson's classic business book "The Long Tail," has signed to a label.

How many artists decry how radio airplay decisions have been centralized by corporate behemoths, leaving virtually no local station autonomy and relying almost solely on audience research to make programming decisions?  How many fans hate when radio conglomerates change station formats in their local markets, thereby leaving music fans deprived of easy access to certain kinds of music?  Radio conglomerates especially just use music to sell advertising time and advertising programs to marketers.  So, in essence, while artists use radio to air their songs, the stations use the music to draw in audiences attractive to advertisers, and the artists have ZERO SAY in what advertising those stations play around their music.

Even the venue owners, ticket sellers, and concert promoters are large corporate entities which must be dealt with: Live Nation, AEG, Ticketmaster, etc...  and these companies all have divisions which deal with artist fan clubs, merchandising, and other key parts of the artist's live performance and ancillary revenue streams.

Many artists who would refuse any proactive alignment with a particular brand nevertheless do not complain when particular retailers, hotels, restaurants, banks, health clubs, etc... have in-store music systems which include playlists featuring their own music.

So, let me use a rather crude analogy.  Much as Mademoiselle Rimbaud, the busty French girl pleading to Mel Brooks's King Louis in "History of the World, Part I" pleads she simply does not "do it," I reply to those artists who think they aren't already neck deep in corporate involvement with the King's blunt response: "Come on.  You know you do it.  We all do it.  We love to do it."  There is always a price to pay for releasing one's art and striving to have it make an impact on as mass a scale as possible.  There is always a beast which needs to be fed.  And if you want to achieve mass success, then there is always a game to be played to fire up the engine of that success and keep it running smoothly... which doesn't mean there aren't conscious choices artists shouldn't exercise, just that any claims of artistic purity are proven false on prima facie evidence alone.

Noted music supervisor Josh Rabinowitz of The Grey Group writes a bi-weekly column for Billboard magazine entitled "With the Brand."  In last week's column (no link available through all my search efforts) he espoused the virtues of artists "selling in" to the world of music licensing and doing music promotions with brands.  Why?  The answers are obvious.  In an interconnected world where one is more likely to hear about a video via YouTube than MTV, or hear a new band or song on MySpace or "Grey's Anatomy" than on commercial radio, then the choice to be anything but completely channel agnostic is short-sighted thinking.  Yael Naim and her song "New Soul" are part of the cultural zeitgeist due to an Apple TV ad.  And both the artist and the brand can measure their success together.  Since her song was featured in the ad her download sales have been significant, and Apple can actually, in some fashion, track how much consumers are paying attention to its advertising by watching that immediate reaction.  Similarly, the company can also check out how many YouTube views of its commercial have been seen by consumers, and, as Yael Naim's record is released, how many albums she sells and her success in the digital and mobile arenas - in great part to her association with the brand.

Haven't those been the great questions marketers consistently seek to answer: "How can I quantify the effectiveness of the advertising my company and/or marketing agencies is producing?  How can I tell, in this TIVO/DVR world, if people are just skipping through my company's ads and ignoring them?"  The measurements above are imperfect to be sure, but they are still measurements one can gauge effectiveness by.  Was there any shot "New Soul" would have received any consumer attention in today's oversaturated media marketplace without a major ad or television licensing opportunity such as the Apple ad?  Did she stand any chance at garnering radio airplay of any significance?  No way.

The quotient may be different for some older tracks or artists whose music is used in such a way, but not by much.  90s dance star Haddaway had his once-ubiquitous hit "What is Love?" licensed for a diet Pepsi Max ad aired on this year's Super Bowl.  He had a tremendous increase in download sales after the ad was aired.  Was it an increase the Diet Pepsi Max brand manager thought was significant given his multi-million dollar media buy for the Super Bowl?  Who knows?  But it at least gave him some quantifiable evidence to suggest the ad was the sole reason for that sales increase.

Production music companies are more than happy to be to taking corporations' easy money and leaving the moralizing to the artists with egos who find these opportunities to be analogous to selling one's soul.  There is a market to be served and they are glad to serve it as efficiently and cheaply as possible.

So every artist needs to take a step back and truly ask themselves this: if they are willing to give up their masters to one company - the record label, or if they are willing to go and provide programming to radio conglomerates who don't have any vested interest in music per se, then why are other types of brand partnerships taboo?  They shouldn't be, and if you don't think fans realize this, then you're selling yourself... short.

February 16, 2008

Another Ray of Hope for Record Companies & Artists

What we know about the record business is this: the legal digital download market, while growing, is not growing fast enough to negate or offset either the downward turn in CD sales or the illegal downloading market.  Labels are in deep trouble.

And while the labels are now busy making all their tracks DRM-free for certain online retail partners such as Amazon, it's ironic that two of the industry's new cash cows relies on closed systems: the popular video games Rock Star and Guitar Hero.  Both games offer the user the abvility to upload additional tracks to the game... and the results are phenomenal:

In the two months since MTV Networks and Harmonix released the music-based videogame "Rock Band," players have purchased and downloaded more than 2.5 million additional songs made available after the game's initial distribution.

Activision, meanwhile, said it has sold more than 5 million new songs via download for "Guitar Hero III: Legends of Rock" since it began adding downloadable content in early November.

Now Aerosmith has upped the ante for artist involvement amidst this robust environment for interactive music video games.  My question is why every other major guitar-centric rock band of the past 4 decades isn't doing the exact same thing?  Led Zeppelin.  Lynyrd Skynyrd.  Black Sabbath.  KISS.  Bon Jovi.  Ozzy Osbourne.  Etc...

It's so typical that a band which specializes in resurrecting its career over and over again gets the big picture - an artist's masters and copyrights are assets, and those assets need to provide continuous income or lose value.  And why have one's tracks appear on Guitar Hero via generic game characters when they could appear with the band's own iconic images and patented stage moves?  THIS is how a band introduces new generations of fans to its music while not alienating core, older fans.  And THIS is how to initiate and execute a brand extension properly.  This partnership doesn't mess with the soul of the band or the brand.  It enhances both (as opposed to, licensing "Dream On" for a Buick TV commercial after doing a killer automotive deal with Dodge just a few years earlier).

These games are important to the industry not only because of the obvious licensing revenue and digital track upload potential, but because the downloads take place via a closed system; the tracks work on the games, not your mobile device or digital library/service of choice.  No free downloads here.  This is mostly good news, but it also means the labels are going to look at this and say: "Instead of releasing new music or licensing our catalogs via the Internet, we will now seek to also develop solid revenue streams via closed systems where we have more control, and consumers need to buy music to obtain it."

December 20, 2007

I Guess Colleges Aren't Teaching Ethics 101

David Pogue writes for the New York Times' Circuits section.  He describes how at various speaking engagements he has developed an exercise for his audiences, a kind of morality scale as to what downloading activities people consider immoral or unethical.

His great shock came when he presented this standard exercise at a college lecture.  I've posted what Pogue said about this experience below, but it ought to give anyone of my readers involved in a copyright-intensive industry: music, TV, fim, software, etc... ample pause as we consider what the generations now in college and growing up will deem just and right as we try and earn our livings off of created works.

In an auditorium of 500, no matter how far my questions went down that garden path, maybe two hands went up. I just could not find a spot on the spectrum that would trigger these kids' morality alarm. They listened to each example, looking at me like I was nuts.

Finally, with mock exasperation, I said, "O.K., let's try one that's a little less complicated: You want a movie or an album. You don't want to pay for it. So you download it."

There it was: the bald-faced, worst-case example, without any nuance or mitigating factors whatsoever.

"Who thinks that might be wrong?"

Two hands out of 500.

Now, maybe there was some peer pressure involved; nobody wants to look like a goody-goody.

Maybe all this is obvious to you, and maybe you could have predicted it. But to see this vivid demonstration of the generational divide, in person, blew me away.

There it is in black and white.  Now, I'm sure if Pogue were to ask this question in front ot students at Berklee College of Music or Belmont University's Mike Curb College of Entertainment & Music Business he'd get different responses, but I think overall, on campuses across the nation, the type of response Pogue saw would be the norm.

November 13, 2007

Moderating Panel Tomorrow Night in NYC

I'll be moderating a great panel tomorrow night in New York being presented by the Film Music Network on the use of music in corporate imaging and branding.

Check out the event and please pass the word on to any marketing people of musicians/composers you think might be interested in attending.

Thanks.  I'll let you all know how the event went later this week.

October 17, 2007

Will the Spice Girls Spice Up Victoria's Secret?

The biggest deal I was ever a part of was for Victoria's Secret.  Back in 2001, in coordination with Universal Music Group's Classics Group, we forged a deal to sell in two million custom Andrea Bocelli CDs in conjunction with his appearance on the brand's network TV fashion show.  I also worked with the brand on a much smaller deal in 2005 while at Sony BMG, developing a Chris Botti single-artist compilation which was sold during the Valentine's Day selling season of 2006.

I hadn't heard of the brand doing a deal to bring in any music CDs into the chain since.

In 2003, Victoria's Secret did a custom, single-artist Sting CD with Universal.  Sting also appeared on the brand's network TV fashion show special.  In 2004, I believe, Victoria's Secret launched a TV campaign featuring not only the music of, but the presence of, musical icon Bob Dylan.  At first, some questioned Dylan's choice for appearing in the campaign, but more so, there were voices critical of Victoria's Secret for using Dylan at all.  As Seth Stevenson from Slate noted at the time:

So, it makes some sense for Bob. But what about Vicky? Why would a brand that's about sexiness, youth, and glamour want any connection at all with a decrepit, sixtysomething folksinger? The answer, my friend, is totally unclear. The answer is totally unclear.

Even if Victoria's Secret hopes to bring in more boomer women, do those women want their underwear to exude the spirit and essence of Bob Dylan? Or, conversely, is Bob Dylan the sort of man they're hoping to attract? Even if you're of the belief that men frequently shop at VS for their ladies, I still don't see the appeal of this ad. I, for instance, am a man, and I can assure you that Bob Dylan is not what I'm looking for in a woman's undergarment. (And if I found him there—man, would that be disturbing.)

Victoria's Secret wouldn't return my calls, but media reports say the idea of putting Dylan's face in the ad (they'd been using his song—"Love Sick"—in ads for the past year or so) came straight from corporate chief Les Wexner. To the company's surprise, Dylan accepted their offer. It's at this point that someone at Victoria's Secret should have stopped the madness. Just because you can hire Bob Dylan as the figurehead for your lingerie line, doesn't mean you should. Perhaps no one was willing to say no to the big boss, or perhaps they fully expected Dylan to say no. Joke's on them.

Victoria's Secret also ordered up a few hundred thousand custom Bob Dylan CDs from Sony Music... CDs which did not sell well at all for the brand.

It was after that campaign that the brand shied away from making large commitments on selling CDs in its stores, despite the ad campaign receiving serious buzz when it launched.

Notice one other thing here: Andrea Bocelli, Sting, Bob Dylan, Chris Botti - they are all male artists that the brand surmised would appeal to its core female shopper.  They weren't appealing to the male aficionados of the Victoria's Secret catalog.  In that sense, most of these seem smart tie-in partner artists for this brand to align with.

So, imagine my surprise checking out the Wall Street Journal today and reading how Victoria's Secret is going to be the exclusive retailer for a new Spice Girls greatest hits CD through January of 2008 (paid subscription required).  Capitol Records is selling over 500,000 units of this release - on a one-way basis - to the chain.  The group will also appear on the upcoming Victoria's Secret fashion show broadcast.

I'm all for making deals, but I think the question now, as back in 2004, is what does Victoria's Secret get out of this deal?  In this case, more specifically, the question to be raised is: "Why is Victoria's Secret partnering with a group out of the limelight since earlier this decade, a group which has no current relevance to the U.S. marketplace, a group whose hits (even "Wannabe") faded into the ether of pop ephemera?  And even if they are able to answer that question in a reasoned manner, then why in God's name did they purchase so many of these CDs... on a one-way basis?!?!"  Is Mrs. Beckham's allure really that compelling to the Victoria's Secret audience?  More than Rihanna?  More than Fergie?  More than Beyonce or Jennifer Lopez (both of whom own their own fashion lines, so their fit with the brand may well have diminished)?  But at least those acts are more fresh and current-sounding than the Spice Girls.  I've sold frontline CDs into "non-traditional accounts" on a one-way basis, and record companies should continue to sell CDs into these accounts using that method.  I'm sure the label is taking a certain amount of margin hit in order to make that scenario more palatable for Victoria's Secret.  BUT, there was seemingly little incentive for the chain to commit so much money - and I'm assuming it's at least $3 million - to purchase this amount of CDs.  Yes, they are going to be selling the CDs for a profit, but just as with other merchandise sold in their stores, Victoria's Secret will be stuck with a lot of cold merchandise if the Spice Girls CDs don't sell well.

Yes, CDs are more of an impulse buy item than in years past.  Yes, it is smart for a record company to sell in releases to chains like Victoria's Secret.  But shouldn't the merchandise fit into the lifestyle of the chain's customers?  For all the research done on fabrics and designs by the Victoria's Secret team - my preliminary instinct is that they went with the Spice Girls based on instinct alone.  If an American can name as many, or more than, three Spice Girls hits they are a rare exception, and this is a U.S.-only deal.

So the big bet Victoria's Secret is making is that the Spice Girls' presence will help cause a run on their stores for the CD, but, more importantly, lead to an uptick in sales overall at their stores during this promotion.  I applaud the brand for finally going outside of the "male artist" box and noticing their predominantly female customer base enjoys music from and admires female artists as well.  It remains to be seen if the Spice Girls, and this particular greatest hits project of theirs, will serve to move the needle in a positive direction.

September 26, 2007

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.

August 14, 2007

Premature Autopsies Revisited

I had the chance to speak with a client I worked with a few years ago.  He's in the promotional products business.  He and a musician partner have, over the past few years, developed their own CD compilations for branded CD premiums, and in a market many see as dire, has sold over 2 million CDs to his various corporate clients.

And while I'm not slighting the quality of the music he has produced, this is not name-brand music per se.  There are no stars fueling this activity, though this guy has certainly done some cover versions of some hit tracks for his projects when need be.

So, as I've said before, even in the special markets field, the future is not entirely wrapped up in digital download or mobile.  Physical product still has a crucial role to play, especially when you consider that CD premiums are still an appreciated gift.  Just because people own iPods doesn't mean they aren't uploading music onto iTunes from CDs.  If iTunes sales reflected the amount of music actually placed on iTunes software and iPod devices by consumers, then we'd see there is still an incredibly strong demand for music.  It's just that we as consumers alreaady own a lot of the music we desire, just in CD form.

June 20, 2007

Mining for gold with Midas

As I've written of recently, there are solutions for many brand that lie outside of the major labels when it comes to music.  The disruption at those major labels has given rise to start-up independent labels and DIY artists outside of the label system altogether.  In Nashville there is a set of indie labels that have had much success as the majors have retrenched and cut back on the number of artists on their rosters.

Why does your brand need to pay attention here?  Because these labels have each had runs of chart and sales success with artists and potentially don't have the high economic barriers to entry your brand might find in seeking to tie into major label artists.

For the record - I think corporate brands and country music fit extremely well together.  Most people can relate to country music because the artists and songwriters deliver content about the lives the majority of us lead: we work hard for our goals, raise real families with real problems, and often need to look outward for guidance and redmption. 

Let's take a look at one of these labels and see what brands have - and have not - done with artists on that label.  Midas Records has a couple of artists, Emerson Drive and Whiskey Falls, one which has launched and achieved chart-topping success at Country radio and received numerous nominations from the Academy of Country Music, and the other whose album has yet to launch.  Which artist do you think has gotten the love from corporate marketers?  If you guessed the hit artist you'd be wrong.

Emerson Drive just had the #1 Country Single in the nation - during the CMA Fan Fest, the industry's biggest live event!!!  So here is a band that has reached a milestone most acts would kill for.  They have a solid album.  This seems like a well-oiled machine a brand would want to leap into and take for a test drive, at the least.  Not yet.

Whiskey Falls is about to launch their new album on Midas and has gotten love from TV and corporate brands.  On the TV side, their song "I Can't Stop Loving You" garnered key placement in an episode of the NBC soap opera "Days of Our Lives."  Meanwhile, they scored both a placement and an appearance in a new national TV spot for auto repair chain AAMCO.

Did you know about these bands?  Emerson Drive has been around for a while.  They started out on Dreamworks Nashville a few years back.  This current album is their third release.  The point is to keep seeking out acts whose music and image suits your brand's needs and not necessarily accept star power as the currency your brand needs to be dealing in.