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Music festival brand sponsorship revenues expected to sore this summer

 

Hein

It is estimated that almost $1.5 billion will be spent on music festival sponsorship by brands around the world this summer with IEG expecting a 4.4% rise in global sponsorship revenue for events.

Last week Coachella Festival showed the power that festivals can have when it comes to advertising opportunities and brand partnerships. Long gone are the days when only alcohol brands were the ones fighting for advertising space at festivals.

Now cosmetic companies are buying tent-spaces to pamper customers in, clothing companies are paying celebrities to wear their garments to the events and mobile phone companies are sending push-notifications to their users alerting them to which acts are about to walk on-stage.

Even on the fringes of Coachella it was interesting to see that the likes of General Motors were holding a party in which guests could be driven around in their new car, riding the ‘cool’ of the festival without actually being there.

“Our formula is not to be at the festival,” Dave Barthmus from General Motors told Ad Age, “because outside the festival grounds a person can have a driving experience… You can create your own environment, plus it’s more cost efficient because there isn’t the cost of being on the Coachella grounds.”

Brands are also able to be more interactive than ever before at festivals. It used to be that simple banner advertising was available to those with big budgets, but now it seems that more innovative ideas are really capturing the imagination of festival-goers.

Imagine using bathrooms that are a little more luxurious than the usual portable toilets, sponsored by Charmin’s toilet rolls. Or how about renting a Bedouin tent that’s been constructed by the Marriott Group to exemplify the quality of their hotel rooms?

Lastly it was interesting to see that Coachella organisers had harnessed the power of mobile technology offering customers an application, which would alert them to things that were going-on close-by to where they were.

When music meets business…

Pono

When Neil Young teamed up with Kickstarter to seek crowd-funding for a new high-end audio device, called Pono, it was obvious that fans would be keen to get behind him.

But this week it was announced that the campaign has quickly become the most-funded project in the history of the website with 18,220 backers pledging $6,225,354, an amazing level of funding given that Neil was initially seeking just $800,000.

With incentives including ‘dinner and a listening party’ with the legend himself it may not be all that surprising but once again shows the power that musicians have to gain revenue in other industries by harnessing their personal brand power.

As the ‘race to the bottom’ continues with digital download prices it is more important than ever that artists capitalise on business and branding opportunities, a few of which are doing this incredibly successfully.

At MIDEM 2014 Will.I.Am gave an impassioned keynote speech about how the music industry should be competing with the technology industry.

“Our music sells other people’s hardware, and it’s a hard pill to swallow,” he said, “Record labels should not compete with other labels – they should compete with Samsung, with LG. I challenge you to challenge those you think you probably shouldn’t go up against. That’s what Dr Dre did with Beats.”

Beats has been a huge success since its launch achieving estimated valuations of over $1bn. Even with all the success that Dr Dre has had in the music industry he could not have fathomed making that kind of revenue simply from music sales alone.

Rapper Curtis Jackson (AKA 50 Cent) invested seemingly randomly in Glaceau, a parent company of Vitaminwater. In return they created a grape-flavoured product labelled ‘Formula 50’ and marketed the product in his name.

Just two years later the company was purchased by Coca-Cola for $1.4bn, personally netting Curtis $400 million in the process. That same year his music sales only accumulated $40 million.

Bring Me The Horizon (BMTH) frontman Oli Sykes picked up on this trend aged 16, leveraging his relatively new bands cool to launch clothing line Drop Dead Clothing, which is now estimated to be worth around £2 million.

Oli rarely talks about the brand in music interviews saying “I don’t want to promote it. I’m just weird about it. There’s a lot of people that [have something similar] and they would want to talk about it and promote it, but I don’t.”

DropDead

But in truth, he has never needed to as the 15 – 18 year old audience attending BMTH shows see Oli wearing his own products and automatically want to emulate that. They head to the Drop Dead website and the vast majority of the product line is modelled by Oli himself.

“As download prices leave very little in the pot for the artist,” said Ruth Simmons, MD at soundlounge “and streaming sites pay an absolute pittance per play, it seems logical that the most successful artists in the future will be those who leverage the ‘cool’ of their music and align with the right brands and products.”

“If executed correctly, these artists can stand to make ten times what they would from music sales and touring anyway, something perfectly exemplified by the likes of 50 Cent, Dr Dre and, I’m sure in the future, Neil Young. “

Unilever harnesses power of Bollywood to raise brand awareness

Unilever

 

Unilever is harnessing the power of music to advertise a new skincare range to 350 million villagers in remote areas of India, giving away Bollywood music streams via mobile devises.

The streaming platform offers users the chance to listen to free Bollywood music content in exchange for occasional advertising content.

But this is not a service that is as advanced as the likes of Spotify or Pandora. Users place a call to a free number that then cuts out. The system calls the user back and plays them 15-minutes of Bollywood music interspersed with advertising.

Users of the service sign-up with a limited amount of personal data, which in turn can be used for future advertising opportunities and every week a new piece of music becomes available.

“Mobile advertising has the reach, the power to measure, and the power of constant engagement,” said Girish Nair, Chief Executive of Unilever advertising agency Netcore, “You now have the opportunity to get data on each subscriber.”

The advertising industry is heavily invested in mobile platforms in areas of the world that lack access to other broadcast media.

But in terms of brands taking ownership of streaming platforms, this may be the first in a long line of interesting music and brand partnerships.

“The proliferation of streaming services such as Spotify is concerning given the low level of royalties that end up with the artist,” said Ruth Simmons, MD at soundlounge.

“The idea of brands creating streaming systems could make really interesting revenue streams for artists balanced with a positive listening experience for consumers.“

“Unlike most streaming platforms a brand would be more willing to pay a higher one-off licensing fee for use of music in this scenario as they are then able to subtly tie products into the music on offer.”

Unilever’s service was rolled out in Bihar last year before being pushed into neighbouring Jharkhand, Goenka wracking up eight million listens along the way. The company has of course declined to comment how much the campaign and music licensing cost.

 

What musicians can learn about their fans

Psy

 

Whilst there are numerous negative connotations connected to the modern digital music era, it is fair to say that the music industry has never been so privy to information about their customers.

Online music streaming sites including Spotify, Pandora Radio, YouTube and social networks all tell labels an enormous amount about their audience and how they engage with the music they love.

Traditionally, sales of physical music were recorded but the industry could not tell which age-range of people made the purchases, how often the music was listened to and other artists that the same listener was buying into.

It is estimated that analytics behind music is now a £1.8 billion per year industry. Analytics are allowing the industry to predict which artists are worth investing in based on their YouTube views, streams and social media following.

Networks such as MusicMetric allow labels to rank artists based on their following and online engagement figures long before a single track is bought to market. As the technology develops it is likely to increasingly replace the need for A&R’s in the music industry.

For globally recognised pop artists like Lady Gaga, Katy Perry and Adele it is thought that there are 19,000 different analytics that, when combined, can tell artists a lot about their audience and listening figures.

This includes streaming figures, digital purchases, official and unofficial plays on YouTube and of course piracy and torrenting – which is harder to track.

On top of this it is now much easier to see the location of fans of particular artists. This can of course help when planning touring dates. In the licensing world these metrics can all be used to align the audience of particular artists with the target market of brands.

Ruth Simmons, MD of soundlounge said: “We’re increasingly using social media, streaming information and hype in the digital press to help with the music licensing process.”

“Bringing together brands and bands that share the same market is a big part of what we do. The tools at our disposal to help with this process are ever-expanding.”

Brands allegedly paid celebs to attend Coachella

Coachella

California is the celeb-capital of the world and the increasingly popular music festival Coachella, it has been revealed, is being frequented by celebrities being paid to attend the event.

Brands are always looking for ways to get a small piece of the ‘cool’ around music festivals and apparently Coachella has been an opportunity to do so.

Glee’s Lea Michele (pictured above) was reportedly paid $20,000 to turn up at the weekend wearing Lacoste clothing, Gimme Shelter’s Vanessa Hudgens, it is claimed in the US media, accepted $15,000 from McDonald’s and Aaron Paul was allegedly seeking $15,000 and at least two VIP passes to attend the event.

McDonald’s has denied that it paid any appearance fees to anyone to attend Coachella 2014. There has been some outcry of the allegations, given that public admission for Coachella this year is $375.

Even bloggers are getting in on the action with fashion blogger Louise Roe asking for $5,000 and three tickets to attend.

Celebrity Talent International (who manages many of the previously mentioned stars) has been quick to defend the idea of paid appearances at the festival.

They said that paid appearances happen on a regular basis and that product placement is simply another form of advertising that acts as an important revenue stream for their clients.

It is interesting to see the extend that brands go to in order to tie their products into the music industry but at the same time want these tie-ups to seem wholly natural.

RECORD BREAKING INTERNATIONAL MUSIC SALES

PPLPPL, the UK music licensing and royalties body, has announced that it collected record revenues on behalf of British artists for the overseas use of their music during the first quarter of 2014.

Every quarter PPL collects revenues on behalf of artists who are registered to receive royalties from international licensing deals.

This quarter has been the strongest to date with over £13 million collected, a rise of 20% over the last record.

This is partially down to the ease of international digital distribution in the form of platforms such as iTunes.

A recent report from the International Federation of the Phonographic Industry (IFPI) stated that rights income has exceeded $1 billion for the first time last year, an increase of more than 19%.

But it is also because PPL has created better systems and links to international Collective Management Organisation’s (CMO’s) to monitor and collect royalties for the use of tracks.

PPL now holds 68 reciprocal agreements with CMO’s in 34 countries. PPL also reports that there has been an 18% rise in the number of its members receiving revenues from international sources.

US royalties are now collected without being subjected to a 30% tax rate due to having Qualified Intermediary (QI) status.

Peter Leathem, CEO at PPL said: “We are actively working collaboratively with our international counterparts to help transform the licensing and distribution process to maximise revenues for all those involved in creating recorded music across the globe.”

BRANDS ENJOY CONVERGENCE OF LISTENER TASTES

Springsteen

 

In the last 20 years the music industry has seen a steady increase in sales by over-40’s of pop and rock music with less emphasis on the classical genre.

In the late 90’s over 90% of music purchased by people aged 20 – 29 was rock and pop, but this accounted for only 51% of over 60’s.

By 2004 that figure had increased to 72% and is thought to be consistently rising. It gives brands an opportunity to appeal to multiple different consumer age brackets without creating separate advertising campaigns that create mixed messages.

A track that is enjoyed by people aged 20 – 29 may be as equally well regarded by the over 60’s audience now.

For supermarket chains, banks and car manufacturers, which are forced to create advertising campaigns that appeal to a vast audience, this can be very helpful.

Digital distribution, social media and multiple marketing channels for music are creating an older listener who is not stuck in the music of their youth but instead surrounded by opportunities to listen to fresh, new music.

This convergence in music tastes can also be seen in the popularity of older artists like Bruce Springsteen, who is now being listened to by a younger audience as well as his old fans.

“There’s a real opportunity for big brands who have a very wide target audience to use music to align themselves with multiple generations of listeners without making their advertising campaigns alienate any one group of people” said Ruth Simmons, MD at soundlounge.

“As radio is becoming less of a social tastemaker we’re increasingly seeing audiences of all ages tapping into the same channels to listen to music and thus increasingly enjoying similar music, which is great news for advertising agencies and brands.”

POP MUSIC BLAMED FOR YOUTH BINGE DRINKING

Jay-Z

A study by scholars from the University of Pittsburgh and the Dartmouth-Hitchcock Norris Cotton Cancer Centre have implicated pop music as a possible cause for adolescent binge drinking.

The national, random study of over 2,500 people aged between fifteen and twenty-three asked participants if they could identify music containing references to certain brands of alcohol and asked them about the amount they drink.

59 percent of those tested said they had drunk an alcoholic drink before, 18% admitted to binging and 37 percent had sustained injury due to intoxication.

Participants in the study were also given the titles of popular songs with mentions of alcohol and asked if they liked or owned the tracks being asked if they could recall the various brands of alcohol that were mentioned.

The study found that those who could recall the brands of alcohol mentioned in song lyrics were more than twice as likely to have had an alcoholic drink at least once. They also had a drastically increased chance of regularly binge-drinking.

“Brand references may serve as advertising, even if they are not paid for by the industry,” said James D. Sargent, co-director of the Cancer Control Research Program at Norris Cotton Cancer Center.

“Every year, the average adolescent is exposed to about 3,000 references to alcohol brands while listening to music,” added co-author Brian A. Primack, MD, PhD, “It is important that we understand the impact of these references to alcohol brands in an age group that can be negatively impacted by alcohol consumption.”

“A surprising result of our analysis was that the association between recalling alcohol brands in popular music and alcohol drinking in adolescents was as strong as the influence of parental and peer drinking, and an adolescent’s tendency toward sensation-seeking. This may illustrate the value that this age group places in the perceived opinions and actions of music stars.”

It has caused a political debate about whether the use of alcohol brand names should be ban from commercial music in the future. Another recent study found that teenagers who were familiar with songs that reference Jack Daniels, Tanqueray and Jamesons were far more likely to drink these particular brands.

PRINCE DITCHES UNIVERSAL & LAUNCHES OWN PUBLISHING COMPANY

Prince

Only last month we were heaping praise on Prince for the recent promotional stunts he pulled in order to promote his comeback tour around London. Now he’s dropped Universal as his publisher and instead launched his own company.

Dubbed NPG Music Publishing, Prince set the company up simply as a licensing entity to control his own music. Tracks on NPG include Kiss,” “When Doves Cry,” “Little Red Corvette,” “Let’s Go Crazy,” “U Got the Look,” “Purple Rain,” and “Diamonds and Pearls”.

It will be the first time in over 20 years that independent control has been taken of Prince’s catalogue. The move comes after his in-house team recently managed to secure a placement for ‘FALLINLOVE2NITE’ on an episode of New Girl, which aired directly after the Super Bowl in America.

It’s reignited the independently spirited debate of, ‘do you really need a publishing company?’ in an era where the major label is becoming much less essential to artists promotion and revenue.

For an artist with the vast revenue streams that Prince is privy to, taking publishing in house seems like a very smart move, as he regains control over his catalogue but will not lose the quality advertising and television placements that create some huge paycheques for him.

However, from the point of view of an independent artist it may be too easy to see Prince’s new company as a ‘sign of the times’. Without a reputable publishing company backing an artist’s music it is incredibly difficult to gain placements in large-scale advertising campaigns.

It also means that the artist has to take charge of negotiations on fees and may be all too tempted to settle for little or no payment for use of their work.

Why Bob Dylan fell in love with corporate America

bobDylan

In the 60′s, the synchronisation of popular music used in advertising were seen by bands as ‘selling out’ or ‘getting into bed with the man’. But this perception and moral positioning has changed beyond all recognition in recent years as musicians realise both the promotional and financial benefits of advertising partnerships.

Boy Dylan is a man who has always managed to move with the times. His interactive video for ‘Like A Rolling Stone’ has wracked up over 70 million views on the network Interlude, which allows users to choose what happens next as music videos progresses encouraging them not to snowball through content as they may do on YouTube.

A 1990’s Richie Havens’ cover of “The Time They Are A Changin’” helped to advertise a bank and Apple used numerous images of Bob in their ‘Think Different’ campaigns during the late 60’s. Many music fans were disgusted by this.

Dylan’s music spans decades and yet he did not properly couple his music with any brands until 2004, when it really became acceptable for reputable artists to do so.

He once said that if he were going to do any advertising work, he would endorse ‘ladies garments’.

Ironically that is exactly what he did in this 2004 Victoria’s Secret commercial, which flicks between Dylan and a Victoria’s Secret model, backed perfectly by his track Love Sick that ends with the line “I see silhouettes in the window. I’m sick of love, I wish I’d never met you.”

After its release Bob said: “Was I not supposed to do that?” in an interview with Rolling Stone “I wish I had seen it. Maybe I’d have something to say about it. I don’t see that kind of stuff. That’s for other people to see and make up what they will.”

In 2006 he was one of the iconic faces of Apple’s iPod, with the singer sat playing guitar on a stool whilst a dancer sways in the almost silhouetted style that the company were obsessed with in their advertising at the time.

This may have been a more obvious brand tie-up for Dylan, firstly because he was helping to push his music to a younger generation but also because Steve Jobs was a life-long fan.

In 2007 Dylan brought his musty brand to the desert where he shot an advert with Cadillac asking “What’s life without the occasional detour?”

Some called it ‘too ironic for words’ that a man who said: “Advertising signs that con you into thinking you’re the one” to be advertising a $75,000 car.

Despite this criticism there quickly followed an advert in which Dylan allowed Pepsi to mix ‘Forever Young’ with the vocal styling’s of Will.I.Am under the strap line “every generation refreshes the world.”

By this point even the greatest naysayers of the 60’s were beginning to understand the necessary financial benefits to brand partnerships and how older music can be reinvented for a new generation of music listeners.

Just a matter of months ago Dylan featured in a series of Chrysler adverts during the Super Bowl (viewed by 111 million people) that focused around encouraging people to buy American cars.

“You can’t import the heart and soul of every man and woman working on the line,” he said in the two-minute monologue.  At the same time he had also allowed the use of his 1966 single “I Want You” to be used by Chobani Yoghurt in a separate advert. Both saw a jump in sales on iTunes.

There will always be sceptical (generally older) fans that neglect the idea of their idols partnering with brands, but in an age where music royalties are being squeezed, piracy is prominent and tracks are digital, music licensing is the last place that artists like Bob Dylan can earn true revenue outside of touring.