Brands put musical spin on marketing

The way music fans listen to and access their favourite tunes has evolved dramatically since the wax cylinder and wind-up gramophone, and the revolution rolls on. If industry experts and forecasters are to be believed, a seismic shift is taking place as increasing numbers of consumers access music by downloading it in digital format from the internet.

The record companies have been slow to realise the profit potential in downloads after a plethora of filesharing sites, Napster being the most infamous, offered their artists’ music free of charge, infringing their copyright. But in the past few years the record companies have started backing or launching sites that offer downloadable music for a fee.

In the US, these sites include MusicMatch, a now legal Napster, and Apple’s iTunes Music Store, while Sony announced last week it was also entering the market with a service called Connect. In the UK, retailers such as HMV, Virgin Retail and Woolworths offer legal digital music downloads.

Now global consumer brands are jumping on the bandwagon: these include Coca-Cola Great Britain, which is launching a branded website on January 19 (MW December 11, 2003).

Mycokemusic.com will offer consumers the opportunity to download up to 250,000 tracks from major record labels for a fee, a small portion of which goes to a charity. The site will be supported by a major promotion on Coke cans that starts in February.

Coca-Cola has also developed links with the British Phonographic Industry and intends to create an official download music chart in the next few months, which will be recognised by the music industry. Coke hopes it will also add weight to its sponsorship of the UK record chart made through a deal with the Official UK Charts Company.

Coca-Cola GB marketing director Julia Goldin says the strategy has been devised in response to the fact that traditional marketing methods are no longer as effective as they were. She adds: “We are creating marketing around big compelling ideas…and music is a key passion.”

But the strategy suffered a set-back when the BBC decided the soft drinks giant’s sponsorship of the Official UK Singles Chart will not get a mention on its Top of the Pops programme or on Radio 1’s chart show (MW last week). Coca-Cola is due to meet the BBC this week to discuss how the issue might be resolved.

In the US, retailer Wal-Mart is also getting in on the act. It is test-marketing a branded download site that undercuts the 99-cents-a-track standard fee that was established by Apple’s iTunes Music Store. For Wal-Mart, which accounts for 20 per cent of CD sales in North America, it is essential to remain at the forefront of music distribution.

Consumer brands’ efforts to be at the forefront of music access are in tandem with developments in the digital music player market. Last week Apple, which launched the latest must-have technological gadget the iPod last year, unveiled an iPod Mini in the US costing $249 (&£138). In the UK, the price of iPods start at &£250, and Apple says its Mini will cost &£199 when it launches here in April. Hewlett-Packard has also announced it will sell a HP-branded digital music player, based on iPod technology, this year.

At present UK iPod owners cannot buy downloadable music, but Apple plans to launch its iTunes Music Shop across Europe in the first half of this year.

However, more cautious observers say the music revolution is still some way off and the size and value of the legal download market is minute compared with the conventional CD market. The retail sales value of packaged music in the UK was &£2.02bn in 2002, down from &£2.1bn in 2001, but volumes were up, according to the British Phonographic Industry.

The trade body has no collated figures for download sales and best indications come from OD2, an operation founded by musician Peter Gabriel that services some 30 pan-European download sites, including HMV’s and Coca-Cola’s, through deals with record companies. It reports 380,000 registered European music download users for the third quarter last year, although there is no indication of the number of downloads.

Although downloading music is still in its infancy, a download-only single by rock band Muse has reached 8,000 sales since its release. Had downloads been recognised in Singles Chart, it would have put it at number 24.

But there are a number of hurdles to overcome before digital music becomes mass market in the UK. HMV head of e-commerce Stuart Rowe points out the numerous compatibility issues between different players and platforms. For instance, Wal-Mart’s service is only compatible with Microsoft Windows and music players operating on the WMA (Windows Media Audio) format. And the iPod has recently been criticised for having a short battery life.

Rowe adds that music fans in the UK have a unique relationship with the long-established vinyl and CD formats that is linked to browsing for music as a social activity. This is not replicated across Europe, where in certain markets such as Germany there are few specialist music outlets.

Others point to the fact that the bulk of downloads are for individual tracks and will have little impact on album sales.

Adam Turner, managing director of Virtual Music System, which offers a system, test-marketed in Tesco, that enables customers to download and burn their own CDs, believes specialist retailers and supermarkets will hold their ground, while middle-market retailers, such as WH Smith and Woolworths, will be squeezed out on price and choice as alternative ways of accessing music take off. But he adds that people will still want to listen to music in the home and in the car on their CD systems.There is also the fact that the average consumer may be deterred by the “geeky technophile” image that still surrounds the internet, although Coca-Cola believes that as a trusted household brand it can demystify downloadable music and bring it to the masses.

The music industry is still concerned about illegal file-sharing sites, such as KaZaA, that have sprung up in place of the original Napster (which was shut down in July 2001) and plans to target individuals who use them through the courts.

At the same time the music companies will continue to develop their own digital download music interests and look for opportunities to team up with well-known consumer brands. A spokesman for Universal Music International says: “I think a lot more brands will be wanting to get involved in digital music because it is hot and exciting.”