Tour Support

The risk of artist development falls on the financial shoulders of the record label. The label acts as a bank and “advances” the artist monies to jump start the artist’s career with the idea that the label/bank will get paid back once revenue begins to be generated. As awareness of the artist begins to increase through the various marketing activities of the label such as internet marketing, social media, and radio airplay, the artist may have the opportunity to become the opening act for a larger tour that would give the developing act great exposure to a big audience. Often times, the developing artist can “piggy back” on a tour of a much larger act that is on the same label, keeping it “in the family” and growing relationships internally, as well as the potential revenue. Payment for the opening act slot may not cover the expenses of the developing artist so the label often covers these costs associated with going on the road as “tour support” which is recoupable in most record deals. Once revenue begins to be flow, the label will pay itself back prior to paying royalties to the artist.

As noted here by recent research of the International Federation of the Phonographic Industry, investment in an artist’s career can be sizable with no guarantee of success. And if an artist does not have a hit, no tour, no merchandise—and the relationship and contract dissolves, the artist owes no money to the label and walks away from the debt (IFPI.org). The research and development (R&D) is extensive in the music industry. Think about how many artists do not become household names. This is why many music companies are struggling to maintain the current business model.

Figure 17.1

Tour Sponsorship

To aid in offsetting the expenses of touring, many artists look for help from tour sponsors. This relationship tends to be a win-win between artist and sponsor, who is looking for a business relationship to help create a branding opportunity between a company’s product and a target market to which the artist performs. In exchange for access to would-be consumers, the artist receives funds to help pay for touring expenses—everyone wins.

As this band landed on U.S. territory in 2013, Nabisco inked a tour sponsorship deal with One Direction, helping the band brand their image on key products that targeted their consumer—tween and teen consumers … and their moms. The deal included 20,000 in-store displays and 8,000 endcaps at Walmart, Targets, and Walgreens. Over 20 million packages of Oreos, Ritz Bits, Cheese Nips, Honey Maids, and Chips Ahoy snacks were imaged with One Direction music, tour information, and ticket give-away sweepstakes. A VIP artist app was created, branding both band and products that cost nearly “seven figures in investment in social media” spending. The band was also promoted to the 33 million Facebook fans of Oreo cookies—a branding match made in heaven. Uniquely, bloggers were chosen through an online contest to go on the road with the band to report on the various activities of the 35-city tour and were given exclusive tour access, $40,000 and other perks.

Figure 17.2

One Direction continued promotional efforts with Pepsi and the NFL’s Drew Brees, Colgate toothpaste and their singing toothbrush line, Target Stores with an exclusive deluxe release of their album “Take Me Home,” and a 3-D documentary of their tour and their U.S. musical “invasion.” Their U.S. sales have been a phenomena with the lion’s share being mostly albums with over 6 million sold between the albums released: Up All Night, Take Me Home, and Midnight Memories. Four, their fourth album is set to release November 2014 (Hampp, 2013).

This partnership has paid off with this Brit Pop Quintet positioning themselves as the highest grossing tour of all time, earning over $230 million since hitting the road in South America in the spring 2014. This feat tops Beyoncé and Jay-Z’s 2014 “On The Run” tour and exceeds Bruce Springsteen’s “Magic Tour” of 2007–2008.

Targeting a completely different demographic, Citibank sponsored the Rolling Stones’ “50 & Counting” tour of 2013. Citi sponsored the official Rolling Stones app, which offered breaking news, back-stage footage, and the ability for concert-goers to push song requests to the band in real time during concerts, among other features. Instagram photo booths designed to look like the Stones green room from 1971 allowed for uploading of images during concert events as well as custom Instagram prints of their photos.

Special opportunities for Citi card members included pre-sale ticket purchases, backstage tours and other hospitality experiences like access to the vintage-style custom lounges reserved for VIPs and other guests. The sponsorship built on a music platform Citi has worked to build over the past few years, according to Jennifer Breithaupt, Senior Vice President of Entertainment Marketing at Citi. What is unclear is the value of the relationship. How much did Citi pay to become a sponsor of the Rolling Stones? Did card membership go up in order for members to gain access to exclusive packages? No doubt, There is a “cool” factor that is “priceless” when it comes to access to an artist (Kirkpatrick, 2013).

A different kind of sponsorship is the tour or festival scene where multiple sponsors are involved with a multi-artist/multi-day event. The Vans Warped Tour has been running for over 20 years. Starting as a punk rock and ska music fest, this daylong, multi-stage jam now attracts very young rockers to the twenty-something that can bring their folks who can hang in the “parent day-care,” if necessary. The reasonable $60 average ticket affords the ticket buyer music from 9:00 a.m. to 9:00 p.m. with various stages being sponsored by over 80 national brands including Vans, Kia, Journeys, Monster, and Beatport. Most of the artists performing are on the brink a national prominence, but the alignment to the age demographic is the payoff to the sponsor with an average of 16,000 to 20,000 in attendance at every concert stop (Vans Warped Tour).

The trend in brand sponsorship continues to grow, according to IEG Sponsorship Consultants. Sponsorship in music venues, festivals, and tours for 2014 will top $1.34 billion, an increase of 4.4% from 2013, according to IEG, LLC (Sponsorship.com). Many top corporations have a keen interest in EDM: Anheuser-Busch InBev in 2013 landed a multi-million dollar deal with SFX Entertainment, Motorola partnered with Live Nation EDM festivals, and Heineken aligned with trance DJ Armin van Buuren to support its “Dance Fast, Drink Slow” campaign.

The Coca-Cola Co. is the most active sponsor of music with 27% of properties reporting a partnership with the beverage giant.

Beer companies are 10 times more likely to sponsor music than the average of all sponsors with spirits and banks in close pursuit.

Anheuser-Busch is by far the most active sponsor of music festivals with 31% of properties reporting a partnership with the company (Sponsorship.com).

Figure 17.3

Figure 17.4

Figure 17.5

Figure 17.6

Products in the Music

So which comes first: the chicken or the egg? The success of Fireball Whiskey is quite suspect, considering its origins in marketing. According to the drink’s “plan,” the marketing strategy was to focus on college markets, specifically Nashville and Austin—only the two biggest songwriting towns in America, and give “free” rounds of the liquor to entire local bars. Next was to enlist celebrities to use their social media and post about the drink. And the third initiative was to create drinking contest, encouraging bars to post pictures to Twitter and Facebook accounts. No wonder Fireball has made it into countless country songs, specifically one by the leading 2013 country duo Florida Georgia Line. The single “Round Here” has been viewed over 19 million times on YouTube with their album containing the same single “Here’s To The Good Times” selling way over 2 million units. The drink’s revenues increased from $1.9 million in 2011 to $61 million in 2013, about to become the number one whiskey in the U.S., overtaking Jaegermeister. So is it the drink, the social media strategy, or the song that made the whiskey a success? The “stars” aligned and put this liquor on the map (Lutz, 2014).

As part of the launch of this song, Jennifer Lopez’s “On The Floor” video featuring Pitbull highlighted several products including BMW, Swarovski Jewelry, and Crown Royal liquor. These were not afterthoughts, but deliberate product placements with the hope that targeted demographics would see these items. Over 798 million viewers have streamed the VEVO video of “On The Floor,” being one of the fastest viral videos of 2011 to be watched. The cache of these product “endorsements” for the brands is invaluable but the cash exchange for these placements is not readily known.

Branded Music

There was a time in the not-so-distant past when music companies had departments known as “Special Products and Special Markets.” The efforts of these staffs were to look for opportunities and projects that were not attached to traditional sales and whose profits were considered “gravy” to the label and not projected funds to the bottom line. But with record sales still on the decline, labels look for these products and markets to make up for revenue that has since been lost in the traditional market place.

Lifestyle

With the emergence of lifestyle and specialty product retailers, a new outlet for music has evolved. When grabbing a cup of coffee from Starbucks, it’s hard to ignore the “cool” music playing and CD display right under your nose. A visit to Pottery Barn or Restoration Hardware elicits more than just home décor, but a ambience that is enhanced by the music playing—which you can replicate in your own home via the purchase of the “branded” CD.

Figure 17.7

Retailers are creating “branded” CDs as product extensions of their retail offerings. Pottery Barn has offered over 70 CD compilations which have sold millions of units (“Case Studies: Pottery Barn,” 2014), all of which are an “easy way to put lifestyle in a home,” according to Patricia Sellman, marketing vice-president at Williams-Sonoma (Strassburg, 2003). The Gap fashion retailer wanted to drive sales of their merchandise through the use of music. In-store play, as well as exclusive music and video CDs and DVD offers were enhanced by using the artists as part of the overall advertising campaigns. The initial Madonna and Missy Elliott combo spawned several other creations that included Jason Mraz, John Legend, Joss Stone, and Keith Urban—all that included high visibility promotions with TV and print ad campaigns that Gap attributes to a 30% rise in sales for their fashion line alone (“Case Studies: The Gap”).

Rock River Music, the compilation company that created the Gap CD, has evolved with the times and now delivers pre-loaded USBs, mp3 players, as well as digital programming where consumers are consuming. Ford brought the challenge to connect with younger females as they introduced the new Ford Focus. Rock River targeted consumers via musical lifestyles through a streaming webradio player and a music to-go section based on lifestyle activities. This widget was anchored on the Focus website but also syndicated on all Ford websites including MySpace and Facebook, logging thousands of hours of streaming and tens of thousands of downloaded playlists, making the connection to the targeted demographic.

CustomChannels.net helps various outlets “brand” their environments with a musical ambiance while managing the musical licensing for the business. This resource is yet another example of connecting musical “style” with the consumer. CustomChannels created the Bonn-aroo Festival Channel that is a downloadable app, streaming content from festival artists who participated in most recent event while providing information on ticket sourcing, accommodations, shuttle services, social media links, and most importantly artist line-up for concert series. This “channel” exists long after the Bonnoaroo Festival is over so that festival-goers can continue to re-enjoy their experience. Custom-Channels marries the sound recording and artist image with the right outlet to enhance the “experience” with consumers (Custom Channels, 2014).

The Benefits

Why, then, are artists and music companies aligning themselves with retailers? What is the benefit to them and their existing record label partners? Initial response would be money. The licensing of existing recordings from labels can be very lucrative. Because labels never know the value of their recordings long term, record companies have found it hard to calculate the value of licensed product. Historically, the licensing of music has been considered “gravy”—monies generated beyond the “meat and potatoes” of the business. But to address the burgeoning market, as well as sagging record sales, segments of marketing departments are devoted to mining the catalog of their holdings and finding new, innovative homes beyond traditional music channels.

Soundtracks and Compilations

Since moving pictures became “talkies,” music has been an integral element to the success of the movie business. Early in the evolution of movies, the industry would hire actual singers to play a part, integrating music and story on-screen. Often, the music from these movies would become nationwide hits and the popularity of the singing stars would explode, making many of them classic voices of the genre. Movie soundtracks have continued to evolve, with the 1960s delivering the Beatles Hard Day’s Night, and The Graduate with its hits “Mrs. Robinson” and “Scarborough Fair.” by Simon and Garfunkel. The 70s included Urban Cowboy, Grease, and Saturday Night Fever, all containing a common thread of one very hot actor, John Travolta. The 1980s brought about Footloose, Dirty Dancing, and Roy Orbison famed Pretty Woman. The 1990s elevated Whitney Houston to a new level of superstardom with her film debut in The Bodyguard. And Celine Dion reached new heights with her mega-hit “My Heart Will Go On” from the epic Titanic. All of these soundtracks contained songs that would eventually become huge pop hits, selling millions of units and igniting a new kind of consumer to purchase music. And in some cases, a single song has helped to launch a career and create a mega-star.

Soundtracks have learned the lessons of the past while keeping up with the purchasing practices of today’s music consumers. Many music purchasers have become their own disc jockeys, curating their “personal soundtracks” containing the individual songs that they want to hear. By compiling songs that capture this spirit while representing the theme of a movie, soundtrack managers have fashioned a “genre” of music that has produced sales.

Overall sales for the soundtrack genre have maintained in recent years, holding about a 4%–5% market share of all album sold between 2010 and 2013, according to SoundScan. But the holiday season of 2013 launched a game-changer for Disney and what started as a flurry has become an avalanche. Frozen was introduced to young audiences but has been embraced by movie goers of all ages. And as only Disney can generate, are all the accouterments that adorn their movie flicks that include memorable characters singing songs that have movie goers humming the tunes as they exit the theater. The Frozen soundtrack has topped the top 200 Billboard chart for most of 2014, generating sales of over 3.4 million, which is just the tip of the iceberg. Frozen has spawned several spin-offs for the entertainment giant including a Broadway version of the show, a television series, oodles of character-themed products from stuffed animals to pajamas, and entire sections of the Disney theme parks are being planned and retrofitted to resemble Arendelle—the land of Frozen.

But Disney didn’t stop there, and their soundtrack domination continued with Guardians of the Galaxy, driving the soundtrack market share to5.4% and comprising 39% of all soundtrack sales in 2014. The Guardians soundtrack is unique in that all the tracks have been previously released. Although the movie is targeted for young viewers, the music resonates with the parents who brought the younger audience to the theater, thus driving a double-fisted purchase. Pitch Perfect is another recent movie hit with a great original soundtrack documenting the a capella lives of university choirs. This movie helped to highlight the musical prowess of actress Anna Kenrick while creating a national phenomena among school kids of stacking cups. The Pitch Perfect soundtrack has sold nearly 1.2 million units.

Soundtracks are not restricted to the movie theaters. The “Glee” television series has been singing all the way to the bank since 2009. As the story line has evolved and as characters have come and gone, the “soundtrack” of their lives have been documented and released for consumers to purchase to the tune of 7.8 million albums sold. And of course, Disney doesn’t seem to sign a child actor who doesn’t sing. Several of the television shows have spun off record releases including Ross Lynch of “Austin and Ally” who has released several records under the television title as well as his family band name R5. Together, his releases have sold over 500,000 units for Hollywood/Disney Buena Vista Records.

Enhancing Careers

“Matching music to an automobile’s image is essential to developing a consistent and credible message,” says Rich Stoddart, Ford Division’s marketing communications manager. In recent years, car advertisers have paired Led Zepplin with the new generation of Cadillac, Aerosmith’s “Dream On” with Buick LaCrosse, and Jimi Hendrix’s rendition of the “Star-Spangled Banner” with the 2005 Ford Mustang. While music “won’t sell the car,” says Gordan Wangers, president of AMCI Inc., an automotive consulting firm in Marina Del Rey, California, “it is capable of grabbing the attention of the right audience to say, ‘Here’s my new car and here’s my message’” (LaReau, 2004).

Alicia Keys used the deep pockets of Citibank to help launch her November 2012 Girl on Fire release. With a tour and single of the same name, Citi-bank aired a national commercial featuring Keys as the anchor artist with her music as the bed prior to album release date, helping consumers connect the dots that a new single and album were available from this quintessential artist. The album is approaching platinum in over-the-counter sales, according to SoundScan.

Placement of music in national ad campaigns can put an artist on the map, but may not always convert to mega-sales. The band American Authors, landed a robust ad campaign with Lowes Home Improvement Stores where their neat “Best Day Of My Life” single scored the soundtrack to a 30-second commercial. Consumers resonated with the song, seeking repeat hits to the band’s Sound Cloud with 10 million streams and 36 million views on their VEVO video, but sadly, the album only sold 85,000 units. While the band did not realize big sales, this connection with consumers could set them up for a major release with their next studio album.

Product Extensions and Retail Exclusives

Many labels are attempting to capture more of the same consumer’s dollar by creating product extensions of a specific artist’s release. The concept is to cover the losses being generated by file-swapping or streaming by creating “super-size” versions of the bigger releases and targeting hard-core fans that are willing to dig deeper into their pockets in order to have the “special” release. According to research done by the Handleman Company, a former rack jobber to mass merchants Walmart and Kmart, “23 percent of music buyers account for an estimated 62 percent of album sales, buying an average single CD every month.” (Leeds, 2004). More recent research conducted for South By Southwest 2014 Nielsen presentation stated similar findings. The “aficionado fan,” identified as the top-tier music consumer, is willing to spend their money on all formats of music including artist merchandise, concerts, and online streaming services. The “aficionado fan” is noted as being 14% of the total music population and yet they consume 34% of the total music sold. Also revealed was that 68% of aficionado fans are very likely or likely to contribute to a campaign for exclusive content (Nielsen, 2013).

In this era, it seems that every artist has some sort of exclusive “give-away with pre-sale” purchase through the artist’s website, but a big amount of buzz has been granted to indie artist DeadMau5 with his AllAccess website. An “aficionado fan” dream, access to DeadMau5 has taken on three tiers: free, $4.99/month, and $44.99/year. With these various levels of subscription, fans have been given access to rare cuts of music, photos, videos postings, message “boreds,” live streams of the artist creating, and even chat time with the creator (www.deadmau5.com).

As an example of upsizing, who can forget the “special” release of Interscopes landmark 2004 release of U2’s How To Dismantle An Atomic Bomb? This record had three versions: the 11-track, $10 basic version, or for $32, a fan could purchase the “collector’s edition” including a DVD and 50-page hardcover book. The mid-priced version had the DVD but no book. But if a consumer bought a new “U2” Apple iPod, they got the pre-loaded version of “How To Dismantle An Atomic Bomb” for free.

Figure 17.8

Ten years later, U2 and Apple have continued their relationship. On the street date of September 9, 2014, iTunes downloaded U2’s 13th studio album, Songs of Innocence to half a billion iTunes subscribers—for free. U2 fans were happy but a huge push back from non-U2 fans, as well as privacy protectionists began, since the download was not initially delete-able. As predicted, older U2 albums began to sell, as noted on the iTunes album charts, but Apple had to issue an app to disgruntled iTunes customers that allowed for the removal of the newly acquired tracks that had not asked for permission to “come aboard.”

So what’s in exchange? U2 realized a need to be relevant in an age that rewards the young and relentless. The band and Apple are betting on the future, with a transference in interest for their music to an experience. They’re no dummies—the band sees that sale of traditional music sales continue to slide, but U2’s 360 Tour is one of the all-time top-grossing tours worldwide. So to attract attention to their latest musical effort, as well as bring new followers into the fold, U2 partnered with Apple who agreed to market their newest effort for $100 million (the band won’t say how much Apple paid for Songs of Innocence itself), which included a retail release later scheduled for October 13, 2014 containing an acoustic version of the September download with bonus tracks. Its first week sales debuted the album in the Top 10 at #9 with over 28,000 units sold, even after the album was automatically loaded to 500 million iTunes user accounts. Although 2 million downloaded the entire album, others were not pleased and asked for iTunes to either remove the album or give them a way to remove the album from their devices. Although somewhat controversial, these efforts cued up for the holiday selling season along with the 2015 U2 World Tour. Additionally, Songs of Innocence is a companion album to its secondary release called Songs of Experience, to come out in 2016. This release is a partnership with Apple, showcasing a new format of audiovisual interaction that can’t be pirated. (Catherine Mayer, 2014)

Brand Partnerships

Taking a page out of the soundtrack playbook, non-movie compilations have emerged as powerful sales items as well as marketing tools. The Now! Series is considered the most successful compilation collection in the history of music sales. Initially, the U.S. participating collaborators included EMI Recorded Music, Universal Music Group, Sony Music Entertainment, and the Zomba Group, with the albums rotating among Sony, Universal, and EMI for marketing and distribution. The U.S. series is now released under its own imprint and distributed by Universal and has distributed 51 compilations selling an estimated 50 million U.S. units since its inception in 1998. The key to its success has been the hits—since the brand relies on the top singles to drive sales.

Intangible is the impact on sales of participating artists. Someone purchasing a Now! CD might know three or four of the artists on the package, but the consumer most likely is introduced to a new act that they might also enjoy. The residual purchase of the full-length product of that new act is the result of this cross-promotional item.

Figure 17.9

The KidzBop series has picked up on the Now! phenomena, but realized that some “prime time” singles contained language that many parents would not find suitable for children. So creating a “clean” version with kids at the microphone, these “sound alikes” of current-day hits have marketed their way home nearly 15 million times. (SoundScan, 2014)