Are brands the new record labels?

LONDON - As the music industry struggles to adapt to the digital age, Adam Woods reports on how artistes are turning to brands such as McDonald's, Bacardi and Red Bull to promote new music.

Neither Groove Armada nor McFly - not the hippest of outfits - are usually accused of being at the forefront of anything. However, this year, out of contract with their respective record companies, but feeling they still had plenty to give, the two acts signed deals that may set a precedent for cooperation between bands and brands.

In March, Groove Armada shook hands with Bacardi on a long-term association that offers the band a generous corporate patron, while giving the brand a package that includes global live activity and distribution rights to forthcoming material.

McFly, meanwhile, flushed with independence, dipped into the thinking band's bag of 21st century media tricks and pulled out just about everything that was in there.

As well as launching its own record label, the band gave away a new album with The Mail on Sunday this summer, while also inking a major promotional tie-in with McDonald's.

The marketing world's appetite for amenable artistes has never before been reciprocated to anything like the current extent. As record companies and artistes search for new ways of making money, they need new friends. And an understanding brand could be just the kind of friend the cash-starved music industry needs.

Toby Lewis, director of music consultancy Music Ally, whose clients include Apple and Tesco, says: "What is, to brands, a sum that they could lose very easily within their marketing budget is a very significant amount of money in the music industry."

In the US, brands have taken to the new music marketing climate with the naked enthusiasm of an incoming billionaire football chairman diving into the transfer market. Unilever, Converse and Nike have all emerged as patrons of the arts, underwriting new music by established names.

Red Bull is said to be working on the launch of its own record label, while Procter & Gamble revealed in July that it would be bankrolling Tag Records, a new hip-hop label run by producer Jermaine Dupri and named after a popular body spray.

Announcing the deal, Dupri was happy to broadcast the spending power of his new associates. "I've never seen someone wanting to devote this much money to breaking new artistes," he said. "Nobody in the music business has the marketing budget that I have."

So will the UK soon see branded music activity on a similar scale? Giulio Brunini, chief executive of branded musical content consultancy BrandAmp, a joint venture between WPP and Universal Music, believes there is every chance.

"I was in Geneva this month, meeting up with P&G, discussing whether Tag Records is a model we can replicate," he says. "It is perhaps one of the FMCG (fast-moving consumer goods) advertisers that has treated music most conservatively, but it is now pioneering it with a model that is considered a new frontier: a brand becoming a label."

Clearly, success in creative terms does not always equal marketing success for the brand. Starbucks Entertainment teamed up with Concord Music Group to launch the Hear Music record label last March, releasing albums by Paul McCartney and Joni Mitchell, but has since pulled away from the day-to-day running of the venture.

However, former music industry executive Matt Jagger, now managing director of Naked Ventures, which worked on the McFly/McDonald's/Mail on Sunday deal, along with experiential agency Sledge, says there is no reason why brands shouldn't break entirely new bands - although he acknowledges it is a risky, challenging move.

"You could argue that certain brands could do it, under the right circumstances," says Jagger. "Could Apple break a band? Could Sky? Could Yahoo? Could MySpace? These are brands with media power. There are those who would argue that some of these media companies have already done just that, or have made serious contributions."

Not every brand wants to find itself in charge of a label. But marketers continue to sense a value and an engagement in music that is difficult to find elsewhere.

Mutual attraction

Music Ally's Lewis says: "When you look at it from the brands' point of view, we have seen examples of music promotions where the brands have seen greater uplift than they would have had if they had put the same money into traditional media."

However, although the marriage of credibility-hungry brands and cash-hungry stars might seem a perfect one, there are good reasons why the number of genuinely integrated deals in the vein of the Groove Armada and McFly project remains small.

Ric Salmon, managing director of consultancy Harvest Entertainment, says: "There is so much talk about the association of brands and bands, but the simple fact of the matter is that these deals are few and far between."

On one level, this is no surprise, and is also reassuring, as it shows that large brands are not simply rushing in, in defiance of their long-term goals.

"The two worlds often don't mesh particularly well," says Cake chief executive Mike Mathieson, whose brand marriages have included Kylie and Evian, as well as The Streets and Reebok. "Brands tend to work on a far longer cycle than bands. Right now, we are brand-planning Vodafone's music strategy for 2009 - a record company can only tell us what they are doing for the next few months."

Harvest Entertainment has also run up against this particular wall, which is why it frequently finds itself talking to brands in terms of campaign concepts, with the identity of the core artist decided closer to the time. "You might talk about the possibility of slotting various different artistes into a deal, the structure of which can be created before the actual artist is decided upon," says Salmon.

Many artistes are in a position to act alone, but record companies are also amenable to alternative commercial exploitation of their acts. The majors - Universal, Sony BMG, Warner and EMI - have all created entire UK departments for the purpose of striking such deals.

For example, the recruitment policy at EMI, bought by venture capitalist Guy Hands and his Terra Firma group last year, has strung yet another rope bridge between the worlds of music and brands. With Elio Leoni Sceti, who spent 16 years building household brands at Reckitt Benckiser, appointed as chief executive in July, and former Google man Douglas Merrill in charge of global digital developments, the group is clearly keen to learn lessons from the marketing industry.

Then again, there is much that brands could stand to learn about music - such as the fact that a music association isn't necessarily a cure for all marketing ills.

Rupert Leigh, head of music at Mediaedge:cia, whose clients include Sony Ericsson, believes too many brands have historically signed up for music-related strategies, simply because it is the current thing to do, not because there is a genuine fit.

Even when the association is born out of love, Leigh suggests the partnership is often misguided. "Very often, you get a brand manager who thinks: 'I like music, I like going to festivals - how do I shoehorn my brand into this?'," he says.

The new approach - one that media agencies can promote, according to Leigh - is to find propositions that work well for the artistes and build the strategy from there. "The right approach is to speak to artistes and find out the top five brands they would like to work with," he says. "Work on the creative strategy as the starting point, and the money will come from that."

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