Brand New Music Business

Originally published in AdWeek ; March 18th 2009

By Mike Tunnicliffe

As the financial storm and economic woes blow a chill wind through the stock market, and music stocks in particular take a bashing to end all bashings, is this the end of the music business as we know it?

Quite possibly -- but that's not what we should focus on.

The real issue is that we're at the beginning of a new era. Music is more alive than ever, consumers are listening to more music than ever before, artists are interacting and building bonds with fans across multiple platforms, digital distribution is enabling artists to get their music out to fans for a fraction of the cost of traditional methods, and brands and other alternative marketing partners are being embraced as the new patrons of artists and music. So, yes, it may be the end of the traditional music business as we know it, but for those willing to embrace change it's the start of a brand new paradigm in the entertainment and brand-marketing worlds.

Last year saw the brand-music partnership space explode with never-before-seen collaborations between artists and brands. Highlights from 2008 include:

• The world's largest consumer brands company formed a record label: Procter & Gamble/Def Jam's Tag Records, to help break new urban acts through its advertising.

• Bacardi partnered with British Dance Act, Groove Armada, to build a global marketing strategy based around music.

• Red Bull and Levi's set up labels and studios to help create and break new music.

• MTV Networks' Rock Band franchise sold more downloads than many digital online stores.

A number of new business models and players also emerged, including promoter Live Nation, which signed a series of mega-global stars away from their traditional labels into new deals that have the concert promoter and artist partnering across multiple revenue streams (known as "360 deals"), of which sponsorships and partnerships with brands will be a key source of revenue. Artists included Madonna, Nickelback, Jay Z, Shakira and U2, which signed a slightly less encompassing "270 deal."

The old notion of "selling out" is long gone. Let's face facts, the music and entertainment industries have something that brands want and vice versa. Put simply: Brands offer artists opportunities for exposure and marketing dollars that simply don't exist anymore in traditional music companies. And brands want to tap into those ever-elusive emotional engagements with consumers (fans) that artists seem to have in buckets.

Fans themselves are endorsing the notion that brands are going to be central to the new music economy and ecosystem. A recent survey by Bauer Media in the U.K. showed that 69 percent of those classified as "most passionate" about music thought that brands being involved with music and artists was a good thing.

Another recent survey, from music-branding company Heartbeats International, polled senior brand marketers and found that seven out of 10 marketers see music becoming an increasing part of their tool set going forward. Usage ranges from enhancing TV commercials and other forms of promotional content, to artists collaborations, music in products and the development of a "brand sound" -- a whole other area with massive growth potential for agencies and "sonic branding" specialists.

As often happens in times of economic downturn, new opportunities arise for those willing to flout convention and look forward rather than backward.

So gazing into my crystal ball, what sort of things might we see happening this year? In broad terms the trend will continue of artists increasingly seeking new business partners and associations away from traditional music companies. More specifically:

• A major artist will almost certainly "sign" with a brand to make their new album and content available exclusively through the brands online- and product-distribution networks. Imagine, for example, something like MyCoke Music. Com partnering with The Foo Fighters. The Foo Fighters' legion of fans would then be interacting and engaging with Coke to get access to their favorite band and the artist will have massive promotional support that's just not available from traditional music companies.

• A new breed of very nimble, rapidly evolving music and entertainment companies will emerge to take advantage of the growing number of digital pipelines and increase in branding and partnerships. A combination of ad agency, content owner, talent agency and technology company, perhaps?

• Some of the new players will emerge as leading aggregators of musical content. As the financial pressure continues to mount on traditional music companies, a number of assets will change hands, fueled by investment money that will be increasingly looking for a home in businesses that can be turned around, if leveraged in new and different ways.

• A major smash hit record will break after partnering with a brand and being featured as the brand's signature tune across multiple platforms. A No. 1 hit single courtesy of Pantene shampoo, perhaps?

Whether these particular predictions come true or not, we'll have to see. But what I can predict with some certainty is that we will see some never before thought possible business models, partnerships and collaborations involving music and brands.

Mike Tunnicliffe is a partner at the Filament Entertainment Group. He can be reached at mike@miketunnicliffe.com.