US: It's American Brandstand: Marketers Underwrite Performers

The hip-hop and R&B producer Jermaine Dupri has discovered
best-selling acts like Kris Kross and Da Brat, has produced hits for
Mariah Carey and Jay-Z, and now runs the urban music division of the
Island Def Jam Music Group. He's also looking for fresh talent for a
new label financed by a company new to the music industry.

The new player? Procter & Gamble.

The consumer goods giant is part of a wave of companies getting into
the music business to promote their own products, essentially becoming
record labels themselves.

Procter & Gamble, for example, is joining Island Def Jam in a
joint venture called Tag Records, a label that will sign and release
albums by new hip-hop acts. It is named after a brand of body spray
that P.& G. acquired when it bought Gillette.

And Mr. Dupri, a music-industry veteran and the longtime partner of
the singer Janet Jackson, sounds quite pleased with his new gig.

"I've never seen someone wanting to devote this much money to
breaking new artists," said Mr. Dupri, who will serve as president
of Tag Records while keeping his position at Island Def Jam. "Nobody
in the music business has the marketing budget that I have."

At a time when online file-sharing is rampant, record stores are
closing and consumers are buying singles instead of albums, getting
into the music business might seem like running into a burning
building. But as record labels struggle to adjust to a harsh new
digital reality, other companies are stepping up their involvement in
music, going far beyond standard endorsement contracts and the use of
songs in commercials.

These companies - like Procter & Gamble, Red Bull and Nike -
are stepping outside of their core businesses to promote, finance and
even distribute music themselves.

A few months ago, Bacardi announced that it would help the English
electronic music duo Groove Armada pay for and promote its next
release. Caress, the body-care line owned by Unilever, commissioned
the Pussycat Dolls singer Nicole Scherzinger to record a version of
Duran Duran's "Rio" that it gave away on its Web site to promote
its "Brazilian body wash" product. The energy drink company Red
Bull is starting a label that is expected to release music before the
end of the year.

And at least some of this music is credible: a hip-hop song that Nike
released by Kanye West, Nas, Rakim and KRS-One was nominated for a
Grammy Award for best rap performance by a duo or group.

Unlike Starbucks, which got into the music business to sell CDs at its
stores, these companies want to use music to promote products they
already sell.

"It's not about money," said Sarah Tinsley, a global marketing
manager at Bacardi. "It's a branding exercise."

Unlike the exclusive album deals that Wal-Mart is striking with groups
like the Eagles, these companies are attracting artists at the height
of their relevance. Two weeks ago, Converse released a single by a
combination of artists that The Times of London called "a
three-headed Frankenstein's monster of coolness": the Strokes
singer Julian Casablancas, the producer Pharrell Williams and the
R&B performer Santogold. Offered as a free download on
Converse's Web site, the song received mostly favorable reviews from
both blogs and newspapers.

"Our instructions to them were to have fun, as though they were
doing any song," said Jon Cohen, co-founder of Cornerstone, a music
marketing company that has set up music deals for Converse, Nike,
Caress and Smirnoff. "It doesn't matter where the music comes from
as long as it's great."

A decade ago, signing a record contract with a body spray company
would have been unthinkable for most artists. But at a time when
labels' promotion budgets are declining, consumer brands can offer
valuable exposure in print and television ads. Jeff Straughn, Island
Def Jam's vice president for strategic marketing, said that Tag
might spend seven times as much promoting a release as a traditional

"When I started in this business 10 years ago, it was hard to get an
artist to stand in front of a sign with a logo on it," said David
Caruso, the co-founder of Acme, the agency that negotiated the deal
between Island Def Jam and Tag. "Now brands are engaging their
audiences with content."

But the brands walk a fine line by making sure that consumers are
aware that they financed a song without having it simply seem like a

"We wanted it to be like they were making their own record," said
Rob Stone, a Cornerstone co-founder, referring to the song that Kanye
West, Nas and KRS-One made for Nike with a celebrated producer, Rick
Rubin. "None of them had to mention the Air Force 1," a Nike

Instead, Cornerstone asked the artists to write a track about the
theme of timelessness and promoted it like any other song, making a
video, promoting it to radio and selling it on iTunes. (Nike's
profits went to the Force4Change Fund, a charity for youth leadership
programs.) As it turned out, the song, "Better Than I've Ever
Been," does mention the sneakers as well as "Nike's straight

For artists, deals with brands can be more lucrative than traditional
record contracts. Performers usually get an advance or fee in addition
to a royalty rate higher than that given by record labels, which is
usually $1 to $2 per sale. If the artist is signed to a label, he
usually has to share the money he makes. In most cases, control of the
recording copyright reverts to the artist or label after a set period
of time.

In another deal Cornerstone negotiated, the electronic music duo
Crystal Method remixed some of its songs to create a workout
soundtrack that Nike could sell on its page in Apple's iTunes store.
The sneaker company gave Crystal Method a small advance but a generous
royalty, according to Richard Bishop, the duo's manager.

The mix sold nearly 40,000 copies online, according to Nielsen
SoundScan, and more than 15,000 copies in traditional stores once
Nike's period of exclusivity ended. Crystal Method's last
traditional album sold 184,000 copies, but Mr. Bishop said the duo
made more money on the Nike project because the royalty rate was so
much better.

"I think in the world today, it doesn't make a difference to the
consumer if a record comes out on Warner Music, EMI, Red Bull or
Diesel Jeans," Mr. Bishop said. "Artists may be better advised to
put their music out with a brand to get better reach and bigger

Groove Armada should also do well in its deal with Bacardi, according
to the band's manager, Dan O'Neill. The yearlong contract calls
for the duo to play 25 Bacardi events and give the liquor company
online distribution rights to its new E.P. - a release with less
music than a CD - which is due in October.

In exchange, Groove Armada receives a monthly fee, money for recording
costs and a generous royalty on music Bacardi sells or gives away. It
retains the copyright to its recording, as well as the right to sell
its E.P. in traditional outlets, where it will presumably benefit from
the money Bacardi spends on marketing.

Music executives say many of the acts now striking deals with brands
are popular enough to do so because they have already benefited from
major-label marketing campaigns: Crystal Method was signed to
Interscope, Groove Armada to Sony.

Although consumer brands are taking on roles once reserved for labels,
they are investing so much money in music because the same digital
technology that whipsawed the music business is also making it harder
to reach consumers.

"We don't just want to talk to people," said Anne Jensen, a
brand-building director at Unilever who works with Caress. "We want
to give them something that adds value to their lives." She said
that Ms. Scherzinger of the Pussycat Dolls was perfect for the
campaign because she embodied the spirit of Brazil. (Though, truth be
told, she is Hawaiian, Russian and Filipino.)

Ms. Scherzinger will get money from her deal with Caress as well as
exposure in the brand's television campaign - the kind of
advertising that a major label would not buy, even for a star.

"If you're only looking at these deals in terms of money, you're
going to miss what they do for each party," said Jeff Haddad, who
manages Ms. Scherzinger and the Pussycat Dolls.

Danny Goldberg, founder of the management company Gold Village
Entertainment and former chairman and chief executive of Mercury
Records, said that deals with brands would turn off fans of some bands
but could be effective in promoting other performers.

"In another era, there was a stigma attached to this," he
said. "Now it's just another way to expose your music."
AMP Section Name:Media & Entertainment
  • 188 Consumerism & Commercialism
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