Journal of the Music & Entertainment Industry Educators Association

Bruce Ronkin, Editor Northeastern University

Published with Support from

“Selling Out” Taken To New Levels: The Evolving Relationship Between Brands, Artists, and Record Labels

Storm Gloor

University of Colorado Denver

Introduction

As an impressionable toddler in the late 60s, I hardly knew how the music business worked. It didn’t strike me as odd when I got my first LP record at, of all places, a gas station. The attendant at that Gulf station handed me an album put out by Walt Disney Records, Disney’s Merriest Melodies, with the Gulf logo prominently included on the cover. I loved that record and suddenly I was a fan of all things Disney.

In terms of a non-music brand like an oil company partnering to release recordings, Gulf’s partnership with Disney, as a marketing concept, was hardly a first. In fact, I’d later find in my grandmother’s record collection a Trini Lopez single put out by Coca-Cola, as well as a Christmas record sponsored by the tire company Firestone. But those brands and others would likely have had a larger challenge partnering with any superstar artists to release albums in those days. Besides, the business of selling recordings was generally lucrative and hardly an operation with which thriving record labels needed any outside assistance. Though popular, established artists—even in the earlier days of the modern popular music era—had taken part in product endorsements and appeared in commercials, the concept of “selling out” in such a deal was understood to include some risk to reputation and career, and thus had to be managed carefully. British rockers The Who even made reference to the concept on their album The Who Sell Out, which included commercial intros between songs and featured in its artwork band members using popular products.

Nowadays partnering with brands for sponsorships or tie-ins is not only more accepted, it’s common among artists of any stature, some of whom have seen their careers established or reignited by such commercial affiliation. Attitudes have clearly changed toward commercial and brand partnerships with artists through the years. Moreover, given recent shifts in how consumers discover and acquire music, many artists—and even music distribution companies—are recognizing advertisers as a means to more effectively weather the transition. “Selling out” has likely completed the cycle from something artists avoid to something they embrace. Artists may even find it more beneficial to partner with a sponsoring brand than a traditional record company.

As Goes Entertainment, So Goes Advertising

Hardly any electronic entertainment medium has avoided reliance on advertising and sponsorships. Commercial radio is just that: an advertising medium with music as a draw. Though paid, non-commercial options exist (as they do with radio), television is programmed around advertising dollars more than anything. Wherever entertainment media goes, marketing and advertising dollars are known to follow, sometimes determining the medium’s priorities.

Lately, even the rapidly growing video game business is not immune to (what many might call) intrusion by advertising. Though more common as product-placement promotions than direct advertising, a Los Angeles Times report highlighted the fact that “Everquest II players can order from Pizza Hut…skaters in Tony Hawk send text messages on Nokia cell phones…Tiger Woods golfers swing Nike clubs, and billboards promoting a variety of brands adorn the stadium walls in Madden Football.”¹

According to digital entertainment analyst Michael Goodman, “Right now, roughly a quarter of games have ads in them…ultimately, you’ll probably see 60% to 75% of all games having ads.”²

The internet is certainly no exception. The endgame of more and more web startups is simple: traffic. That’s what will convince advertisers to help fund their operations. Many blogs, social networks, video hosting sites, and other destinations with entertainment value on the net are ultimately advertising and marketing plays.

Brand relationships and advertiser sponsorships have been part of the music industry for many years. Rampant piracy and other challenges in recent years, however, have forced a rethinking in most areas of the industry, and such opportunities have taken on new relevance. Where historically much care has been taken in exploring such potentialities, there is now a great deal more acceptance. And though in the past the options were few, there are now many more possibilities for brands to partner more closely with record labels and artists.

Advertisers Using Music to Reach Consumers

Sponsorships involving non-music brands and the music business existed even in the earliest days of popular recorded music. Beginning in 1935 Lucky Strike cigarettes would present Your Hit Parade, a popular radio show featuring the top tunes each week. Other programming and variety shows would also sometimes be sponsored by brands eager to appeal to music fans. As they still do today, pop stars would sometimes endorse products or appear in commercials during the early days of radio and television, the early days of rock and roll, and even in the rebellious 1960s and throughout the 70s. It was believed that brands could benefit by being associated with hip artists and trendsetters. For many decades, advertisements—particularly those including music—were often influenced by, and sometimes featured, popular tunes and artists of the day. Association with music was an effective way to communicate branding messages to consumers. But these relationships had to be managed carefully by musicians and songwriters to avoid undermining the credibility of the music or the artist.

By the early 1980s artists had warmed more to the idea, especially when corporate sponsors pulled out their wallets. These more visible relationships, though, seemed to revolve more around tour sponsorships than traditional endorsements or song licensing. From the perspective of the marketer it was difficult to ascertain whether there was indeed a benefi t to the bottom line, and there still remained risks. A July 1983 article in Rolling Stone made note of the noticeable increase in the number of sponsorships at the time. Two years earlier perfume maker Jovan had sponsored The Rolling Stones tour, representing a marked shift in thinking regarding the practice.³ In the article, Jay Coleman, president of Rockbill, the company that had orchestrated the Stones-Jovan arrangement, remarked in regard to the move that, “The mood of the country has changed. Rock music has become depoliticized.”⁴ Even The Who, fifteen years after the release of The Who Sell Out, benefited from a sponsorship of its 1982 tour by Schlitz beer. Ironically, writer Michael Goldberg referred in the article to Bob Seger and The Police who, among others, would have nothing to do with corporate tie-ins at the time, though they would in later years benefit immensely from them.

By the late 80s the big-money sponsorships had moved beyond tours alone, with superstars Michael Jackson, Madonna, Whitney Houston, and others famously paired with soft drink companies for commercial tie-ins of various sorts. These weren’t the first artists by any means to lend their images to soft drinks, but the dollar amounts and extent of the relationships were growing at a time when budgets for both music videos and commercials were increasing. In Madonna’s case, reaction to a controversial video for her hit Like A Prayer forced Pepsi to actually pull its sponsorship of her following tour, surely reminding advertisers of the risks involved with artist partnerships. But the rewards of association with the music superstars of the day were apparently worth it.

In the 1990s, tour sponsorship was pretty much a given among many popular artists, as were increased brand relationships. Advertisers continued to use memorable songs to promote their messages. The Stones, for example, were once again open to tie-ins when their classic single Start Me Up was an integral part of the Windows 95 marketing plan. Brands also utilized music by newer, cutting edge artists. One of them, DJ and musician Moby, licensed the use of multiple songs from his 1999 release Play to advertisers (and films as well), greatly increasing his sales, airplay, and audience size.

In the 2000s not only had the extent to which brands would partner with artists advanced, but even veteran rock artists previously noted as holdouts became convinced to make the jump. Many fans likely thought it surprising when a track by heavy metal pioneers Led Zeppelin was used in a Cadillac commercial. Sixties icon Bob Dylan’s appearance in a Vic-toria’s Secret ad might have represented rock bottom to some, especially since legends such as Dylan probably didn’t need the income, and certainly didn’t need the exposure. Dylan was also recently involved in a heavily cross-promoted advertisement with Cadillac. In reference to the tie-in, a posting in Digital Music News perhaps said it best: “…in an earlier era, artists were called sellouts for tying with major brands, even iconic names like Cadillac. Of course, times have changed, and artists like Dylan, Led Zeppelin, and the Rolling Stones are now cashing in.”⁵ Despite the fact some noted classic rockers have allowed their music to be utilized by advertisers, it’s worth noting that some, like Neil Young and Bruce Springsteen, continue to avoid the practice.⁶

In recent years tour sponsorship, one of the more common relationships between brands and artists, has continued to set new levels. IEG, a company that tracks tour-related sponsorship revenues, reported that such branding will hit $1.04 billion in 2008, and has increased seventy-fi ve percent since 2003.⁷ Trends in live music sponsorship have included moves to “bundled” deals for companies. For example, Live Nation recently put together a deal with Citi Cards that included “tour sponsorship, ticketing, venues, and even one-off events like Billy Joel’s summer concerts at Shea Stadium in New York.”⁸ It’s clear that the sponsorship opportunity of on-the-road branding has lost its stigma. Given their increased support, advertisers have obviously found the relationships advantageous.

A Sign of the Times

Artist partnerships with brands are assuredly here to stay. Bill Wy-man, former arts editor for National Public Radio, not only outlined the wide acceptance of the practice in a recent article for the Washington Post, he also developed a “calculator,” totally tongue-in-cheek, for determining just how much of an offense an artist may have committed for such a relationship.⁹ In fact, the result of the calculation was labeled “The Moby Quotient,” a jab at the aforementioned artist’s multi-licensing spree.¹⁰

The increasing number of marriages between artists and brands may simply reflect the trend of the overall marketing industry. According to a research report by PQ Media, branded entertainment marketing spending grew by 14.7% in 2007, reaching an all-time high of $22.3 billion, twice what it was five years ago.¹¹ Entertainment sponsorship is not limited to the music industry. Golf legend Tiger Woods is heavily funded by such ventures. Tune in to a NASCAR race to find drivers and their cars adorned with more brand images than can easily be seen.

Most artists in the early stages of their careers recognize the power of brand partnerships to increase their exposure, especially in an age where radio and video channels are trimming playlists and are less prone to taking risks. Advertisers also recognize the potential hip factor in introducing consumers to unknown artists. According to Eric Hirshberg, president of advertising firm Deutsch LA, “Everyone has a cool friend that exposes them to new things—the idea is that a brand can become that kind of channel.”¹² At the South by Southwest Conference in March 2008, Trey Shelton, chief executive at Music Interactive, mentioned that he “…would actually rather work with a medium-to-small sized artist. With an up-and-coming act, you are getting a little bit more of a tastemaker crowd.”¹³ Music Interactive’s chief product is Media Promoter, a plug-in “developed to deliver a music download once a customer has completed a designated online marketing action.”¹⁴

Other newer companies are also helping match marketers with mu-sic. Viva La Rock is one such venture. Founded by two former Atlantic Records marketing executives, its specialty is connecting bands with brands. They have partnered Jet (who greatly benefited from exposure in an iTunes ad) with Southwest Airlines, Verizon, and the Hard Rock Hotel and Casino, and also involved Panic! At The Disco with Helio.¹⁵

Ads themselves may have less of a stigma these days, thus benefiting an artist’s exposure even more. Some advertisers have been recognized for their unique creativity in producing particularly interesting spots. Apple, for example, has proven such effectiveness in promoting artists via its iPod ads, with successful campaigns featuring tracks by U2, Mary J. Blige, and others. The advertisements are often so memorable that many viewers seek them out for their content alone. There are even websites dedicated to these ads, for example www.veryfunnyads.com.

Brands continue to enjoy the fruits of promotions involving artists and their music through traditional media. However, there are also increasing possibilities on the web where marketers are aiming to gain from more focused, engaging advertising and promotions—especially when utilizing new technologies. Last year, Sprint had its logo embedded on tracks by a hip-hop artist, which were then distributed through fi le-sharing and P2P sites. Whenever the tracks were played, or were simply displayed, the Sprint logo appeared.¹⁶ The business model of new venture GET Interactive involves music videos on the internet. Products appearing in music videos are “tagged” so that viewers click on them to be taken to a new window where they see product details and can shop in the GET Shop Spot.¹⁷

Clearly, experimentation associating music with brands will continue as marketing priorities shift online. Social networks and music-related sites continue to offer ideal lab space, and they benefit from the traffi c. In 2007, for example, MySpace made the new Pennywise release available for free downloading. Fans could access the profile for Textango, a mobile music distributor, and add it as a “friend”, at which point they could download the entire Pennywise album for free.¹⁸ In regard to the promotion, Textango CEO Shawn Dornian said, “The overarching spirit is breaking new barriers, doing new models, and going against the status quo, which are all things we stand for.”¹⁹

Such acquisition of data and contact information is a common internet objective for online marketers and artists as well. With their highly publicized offerings of content in exchange for potentially nothing (fans could name their own prices), Radiohead and Nine Inch Nails not only gained a great deal of publicity, they also accumulated a valuable expanded database of email addresses. The ability to use content or form partnerships to acquire marketing data is a further incentive for advertisers to become more involved in online music promotions.

Supporting Music Distribution With Advertising

As the music industry transitions, simply selling digital downloads has not yet proven to be the revenue source it was hoped to be. Labels and distributors in search of additional revenue streams are looking at entirely new advertiser-supported models for supplemental revenue streams in a digital-download business environment where consumers are apparently warming to the idea of exposing themselves to ads in exchange for free content. According to a study by INTENT Mediaworks, seventy-five percent of respondents aged sixteen to forty were open to viewing ads in exchange for free or discounted downloads.²⁰ In fact, such an arrangement is one potential solution to monetizing at least some portion of the lost revenue from music consumers who have grown accustomed to not paying for music. Startup We7 has recently entered the race toward a profitable ad-supported digital download business. But less-than-stellar signups and prolonged negotiations for content by early entrants Qtrax and Spiral Frog seem to have soured the optimism for the model. At the Digital Music Forum held in Los Angeles in October of 2007, other concerns abounded. One such dilemma involved the fact that many music fans are typically doing something else while listening to music. Albhy Galuten, vice president of Digital Media Technology Strategy at Sony Corporation, offered that, “People generally don’t look at their screens when they listen to music, they are doing something else.”²¹ We7 addresses this by adding audio ads, based on user demographics, at the front of downloads. The willingness of record labels and distributors to license content to such models indicates an openness to at least testing the concept of supporting music distribution with advertising, thus creating a new revenue stream.

In terms of downloads, streaming video, etc., what’s more likely to gain traction, and traffic, from the advertiser’s perspective, is to provide such content from its own site. A recent survey of more than 300 brand marketers and agencies by Promo Magazine and Hip Digital Media found that “44 percent of the respondents already offer music downloads to customers as part of their brand campaigns.”²² RCRD LBL, a website with an intentionally misspelled moniker, is a sort of hybrid record label and blog that offers free downloads. It generates revenues from sponsors including Virgin America Airlines, Nikon, and Puma, while also creating a sort of community through blogs, articles, and social networking features in order to introduce artists to the marketplace.²³ Imeem.com is a destination where visitors can stream all the music they want, while advertiser support keeps the site operating, thus providing another avenue for fans to discover new music.

By offering downloads or streaming content, the marketing options abound. For example, consumers could opt in to receive emails or notification of special promotions. From a brand’s perspective, sponsoring a tour or featuring an artist’s music and image in commercials is an ideal opportunity to build brand recognition. Additionally, delivery of content presents opportunities to gain valuable traffic, interactivity, and engagement so vital to successful marketing initiatives.

One risk to artists and labels in delivering content through advertisements or promotions with brands is the reduction in perceived value of the recordings themselves. Rampant piracy has certainly already done its damage in those terms. But the perception of recordings—works of art— as promotional pieces is a dilemma for the entire industry.

The power of advertisements to “break” artists and take them to new levels of popularity has been demonstrated in many commercials through the years by brands from Apple (Jet, Feist, CSS) to Volkswagen (Nick Drake). Young singer/songwriter Ingrid Michaelson’s story is intriguing. When the Creative Director at Old Navy found her music on MySpace and arranged to use it in an ad for the company, the exposure contributed to noteworthy record sales, touring, and selection as a VH1 “You Oughta Know” artist.²⁴

While music companies have recognized for many years the power of ads to expose an artist to new audiences, at least one company has increased its efforts in this direction. Warner Music International has recently formed a brand partnerships division.²⁵ One of its first pairings was a Puma sportswear campaign featuring Scottish singer/songwriter Paolo Nutini. He has appeared in Puma ads performing his song New Shoes and was scheduled to make personal appearances and even a documentary for the popular brand.²⁶

Advertisers continue to seek to use the music of newer artists in their productions, and the exposure for both can be lucrative—a real incentive for artists who are finding it increasingly difficult to introduce new music through traditional avenues.

Despite the fact that partnering with a brand is becoming more common it is still potentially detrimental. An artist discovered through a commercial may always carry the distinction of association with that brand. Deutsch executive Hirshberg mentioned that, “A band’s brand might suffer if they do the wrong kind of commercials, or if their fans think they’re more focused on advertising than on making music…if viewers come away from the ad wondering how much money changed hands, the ad probably didn’t work.”²⁷ In fact, there are blog sites, such as AdRants, where people comment on such missteps by artists and advertisers. Possibly for those reasons there are newer artists that have been reluctant to license their music to advertisers, much like the veteran artists mentioned earlier. The Arcade Fire, for example, refused such opportunities despite the buzz that developed around its debut release. But risk is something that can be managed effectively by artists and their representatives as they negotiate and engage in opportunities with brands. Exposure and the extent of the relationship can be managed. The visibility and context of a brand’s portrayal in ads featuring an artist can be controlled. An artist’s music or videos could be made available on a brand’s website, or they could be obtained from an artist’s website following the streaming of a short commercial. There could even be little or no mention of the artist in the ad. In a T-Mobile ad that ran during the 2008 Grammy telecast, hip British rockers Art Brut appear, but are only referred to by name briefly and indirectly in the dialogue and nowhere else.²⁸

Brands as Record Labels

Generating revenues by allowing their content to be used by advertisers is but one of several moves by record labels and distribution companies to address the ailing business of selling recordings. But even the business of selling records is under question as we experience a shift toward digital distribution. Given the potentials of new media, the common goals of non-music marketers and artists, and this shifting role, some brands are building more direct relationships with artists.

The record label has traditionally, through its arrangement with a distribution company, maintained a great deal of control over its ability to manufacture and ship physical product to retailers. Ownership of warehousing and distribution systems provided an economy of scale and capability that kept barriers to entry into distribution fairly high. In a digi-tal distribution system such barriers, to an extent, come crashing down. Distribution of digital content is no longer a limited capability. British Airways, for example, has recently entered the digital download business by making available through its website a song tied to its marketing cam-paign.²⁹ Some argue that many other functions of a record label (marketing and sales expertise, recording capabilities, etc.) can also be undertaken by non-traditional players.

Brands have already begun to play the role of record label to varying extents. Live Nation’s deals with Madonna and Jay-Z, and Paul Mc-Cartney’s deal with Starbucks, argue that artists don’t need a traditional record label to market themselves. At least Live Nation is a music business entity—and a huge player with major influence in the overall industry. Starbucks, with its vast retail footprint as a coffee retailer, was banking on the huge visibility it could provide for McCartney and other artists.

Live Nation could at least draw upon its music industry expertise, and Starbucks its retail experience. Mountain Dew, on the other hand, a brand clearly without an existing retail storefront or an infrastructure similar to the traditional music industry, recently started its own digital, singles-only record label, Green Label Sound. One of its first offerings was a single by The Cool Kids. According to Cool Kid Chuck Inglish, “…with us trying to set up our new record without a record company, Mountain Dew gives us an unexpected helping hand to get up those steps.”³⁰

The reality is that it may be more than just record labels that can sign artist deals. And major consumer brands are perhaps in a good position to do so. A recent deal between deejay duo Groove Armada and liquor company Bacardi might offer a peek into the future. Group member Andy Cato said that, “Working alongside Bacardi, we have got the chance to take the GA traveling circus to new people and places, and fi nd innovative ways of getting our music out there.”³¹ Bacardi global brand director Jeff Macdonald referred to the deal as “an evolution of the standard artist endorsement model.”³²

Bacardi and Mountain Dew are not alone in the pursuit of signing artists in order to promote brands. Proctor and Gamble recently partnered with storied label Island Def Jam in a joint venture, Tag Records, named after a body spray product.³³ Star producer Jermaine Dupri, named president of the venture, remarked, “I’ve never seen someone wanting to devote this much money to breaking new artists…nobody in the music business has the marketing budget I have.”³⁴

As more and more acts follow an independent path, and avoid the commitment of signing to a traditional record label, partnering with a brand could become more attractive. In fact, it may be argued that while record labels certainly have the marketing connections, one weakness they may have is adequate knowledge of the consumers they attempt to reach. “The music industry is not the best industry at understanding its consumers, but the advertising industry is all about understanding who is buying, where to reach them, and how to target them,” according to Dominic Hodge, senior strategist at Frukt, a music strategy and communications agency.³⁵

A direct relationship with a brand might also afford an artist better terms than generally obtained from a label recording contract. Ownership of recordings and lengthy commitments are deal points that an advertiser would likely find less desirable than a traditional record label. In such a relationship, artists may have more control over their business. However, before non-music brands and advertisers are proclaimed to be the record labels and distributors of the future, it must be noted that none has as yet demonstrated substantial gold or platinum results. Also, indications are that the Starbucks experiment has all but ceased. It recently ceded control of its Hear Music label to Concord Music Group, an established player in the industry.³⁶ It’s also increasingly possible for new artists to raise funds, promote themselves, and release recordings independently—thus eliminating the risk of the stigma of brand tie-ups.

Conclusion

In the years since I obtained that Disney record sponsored by Gulf, I learned that what I received that day was not only a collection of great songs, but also a marketing piece that was part of a broader branding plan for both parties. Recordings and live performances, though clearly works of art, are also marketing tools. The funding to create them should logically be transparent, but there are always fans who will take the funding source into account. Whatever the medium, the most important thing artists can do is to reach as many existing and new fans as possible in order to ensure, at minimum, a decent living and a continued ability to create and share their art. They now have more options than ever before to make that happen; aligning with an advertiser is one of them.

In the digital age, labels and distribution companies that support and promote artists are in a precarious position. While no one knows just what will happen to their respective business models, most would agree that the traditional models for finding and keeping more fans are no longer as meaningful. Recordings, an important revenue stream, are now nearly commoditized, widely available through other means and devalued as a result. A change is underway and a myriad of solutions have been put forth. Promoting artists and delivering content through advertising is one of them.

Advertisers have also found themselves in a position where they must change. Whereas for many years they could push their message to consumers as a mass audience, fragmentation of markets and new technologies have put the controls in the hands of consumers, who may pull from the media of their choice the messages they want to receive. As Scott Donaton, author of Madison & Vine: Why the Entertainment and Advertising Industries Must Converge To Survive puts it:

The key change is a transfer of power from those who make and distribute entertainment products to those who consume them…Entertainment and advertising have historically been based on an invasive model…the networks, local stations, and advertisers scheduled what consumers were going to see and when…decided, effectively, how viewers would consume their messages…But this is the age of the empowered consumer…if the consumer doesn’t want your message, it’s gone.³⁷

Tie-ins with advertisers and their products will continue to be viewed at some level as “selling out.” Partnering with brands might alienate fans of some artists, while it may be effective in gaining fans for others. As Danny Goldberg, once the Chairman and CEO of the Mercury Records Group, recently put it, “In another era there was a stigma attached to this… now it’s just another way to expose your music.”³⁸ Even if we reach the point where, on a large scale, advertisers sponsor and distribute artists’ recordings, or downloads become bartered for experiencing commercials or submitting data, consumers will continue to have the option to support such a relationship or not.

Commercial tie-ins have a long history, are increasingly accepted, and will likely be more prevalent in the coming years. But the relationships between advertisers, artists, and the music industry, for better or for worse, will continue to evolve as each party pursues the same goal: to reach and build a relationship with the people who will enjoy and support their products.