The news today is that Proctor and Gamble is getting into the music business. Just as Starbucks is going in the opposite direction and exiting the CD sales business, more brands are jumping in to fill the void left by the collapse of the CD retail store business. Music sales in the UK were once again down 11% over the same period in 2007.
For the labels, attention from product companies is a good thing. I see the logic here. CD sales are plummeting and online sales are not filling the void, a company comes along that wants to license the record label’s music to promote a brand and it appears that a match has been made in heaven. Rhianna had a lot of success this way working with Totes Isotoner to help them improve sales of umbrella’s. Umbrella was the title of her hit song, I wrote about her arrangement with Totes here.
Proctor and Gamble, and other companies using music to promote their brands, are jumping in deeper though:
“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.”
I believe all of this extra-curricular activity by these brands may pay off for them in the long term. The music fan has shown her willingness to buy music online although only singles, not albums. Album sales are no longer the preferred format. The labels created this nightmare for themselves when they scrapped the single as a sales format. They blamed their losses on file-sharing online but they ignored their own disastrous moves in the market place. They weren’t listening to their customers. And then they began to sue them. Even Apple can’t persuade music fans to buy albums.
There is a lesson here though and it is one that Starbucks learned the hard way. Brand and product companies should not get too deep into the music sales business. The P&G deal with Def Jam may work well as it is a joint venture where presumably each side does what they do best - Def Jam runs the label side, P&G markets its product with Def Jam music and pays for everything.
I discussed the following issue in a recent post: To the music fan music becomes cheapened by being used as a commodity to sell products. The artists behind the music have their celebrity enhanced and they then go on to use their brand to sell more products. Music fans understand that music is now a commodity and refuse to pay for it. The music industry and the artists both complain that no one pays for music and to account for the decline in sales accuse us of stealing it online. The commodity is over-priced; no one is buying it.
Unless you are a brand with a product to sell.
