Music's comeback mobilises brands

Brands and the music industry have never been closer. As the music industry has scrambled to find new sources of revenue, commercial tie-ups with brands have risen up the agenda.

Key to this process is the rise of online music. Across the region, this is creating new business models and opening up new opportunities for brands to participate. What, then, are these opportunities, and how are brands and music labels co-operating to exploit them?

Ian Stewart, former head of Asia at social network Friendster and before that an executive at MTV, points out that the "flow" of the music industry has been, and is still, discovery of artists, interaction with artists then a commercial relationship with artists. Discovery used to take place on platforms like MTV, interaction via the music press and fan clubs, and the commercial relationship used to be the purchase of an album.

That pattern has now changed. Discovery is driven by YouTube and similar sites around the world, and fans can then interact directly with artists via social media platforms. Given the amount of piracy, especially in Asia, the commercial relationship is then less about purchase of music and more about purchase of concert tickets. This has been helped by the music labels' drive to own more revenue streams around an artist.

"Record labels are starting to own all of their artists rights and are able to offer integrated marketing opportunities, seamlessly weaving brands into the very fabric of their artists and vice versa," says Jasper Donat, co-founder of Branded, which organises the annual Music Matters event in Hong Kong.

Digital channels are clearly at the heart of this process, and music labels now instinctively seek to build their artists' online presence, keeping in mind the concert as the ultimate outcome. "The business now is all about live music," explains Stewart. "Everything leads into this."

The key advantage of digital is its ability to amplify a brand tie-up beyond a one-off concert. Pepsi, for example, included a strong digital element in its 'Voice of the Next Generation' campaign to find a new band for China, as well as a TV show and live concerts. The campaign sought to generate buzz across social platforms and used the internet as a voting platform. Nokia, meanwhile, last year organised a concert in Beijing and streamed it via video platform Youku.

The challenge of diversity
Stewart boils it down to a relatively simple equation for brands to remember. 'What young people want is free tickets and free content. If brands can offer that, it's cool."

While that may sound simple in theory, in practice it can be hugely complicated. The music industry in Asia is extremely diverse. Not only are there different music styles, labels and artists in different markets, but the platforms on which music is discovered and on which artists can interact with their fans are also extremely varied.

In the discovery phase, YouTube is a key platform in many markets, though in China its equivalents Youku and Tudou have become the lead players. "Irrespective of whether a band is Chinese or otherwise, there's a very high chance they'll have a video presence on Youku," says Kaiser Kuo, consultant for international business at Youku.

However, he adds that the site has not necessarily pushed this line of development. "Right now, there's nothing systematic: there's always the serendipity of related videos on the right-hand side of the page from another band that happen to catch your eye as you're watching something on Youku, but we don't have a music recommendation or discovery engine per se."

When it comes to interacting with artists, MySpace is important in Australia, and has a Japanese presence too, but elsewhere its scope as a platform for artist-fan interaction is limited. Facebook and Twitter offer opportunities in a number of markets, while action in Japan and Korea still centres around domestic social network giants Mixi and CyWorld. China, meanwhile, has an array of domestic social media platforms, including fan platforms such as Douban.

Then there's the actual distribution of music. Piracy, of course, is huge. In China, Baidu's MP3 search, which takes browsers straight to pirated music files, has been wildly popular. Google's piracy-free response, launched last year, was a tie-up with Top100.cn. The future of that service, however, is unclear in the wake of Google's departure from mainland China. Other attempts to set up distribution services have had mixed success. Motorola's MotoMusic succeeded initially, but the service was closed outside China last year, and Soundbuzz, a white-label music distribution platform for India and Southeast Asia that Motorola bought in 2008, was recently shut down.

So how have brands tried to fit into this complicated picture? Telcos have been the most active-unsurprisingly so, given the importance of data downloads to their future business model. Apple's iTunes store has limited exposure in Asia outside the most developed markets, allowing several Asian telcos to set up their own music services. Music labels are increasingly keen to cooperate, as any viable alternative to piracy is now welcome.

Mutually beneficial partnership
Universal Music is an example of a music label trying to work closely with third-party brands. It has set up music platforms for telcos around Asia, including SingTel's AMPed. Launched last year, AMPed offers unlimited music downloads from Universal. It also offers value-added services that direct tie-ups with a label can facilitate, including access to videos, entertainment news, pre-album releases and the all-important live experience. AMPed hosted a showcase featuring Lady Gaga last June for its members.

SingTel is now a key partner for Universal. The telco has relationships with a number of big-name operators around Asia, including India's Bharti Airtel, Telkomsel in Indonesia and Globe Telecom in the Philippines.

While consumer attitudes towards brand involvement in music vary (see box), the most important lesson that all parts of the business seem to have learned is that music should always appear free and unlimited, just as it is via pirate platforms. Services like AMPed are bundled in with larger contracts or tariffs, meaning that downloads appear free.

This idea has been taken on by Nokia's Comes With Music service, which bundles the cost of the downloads into the cost of the handset. Comes With Music made its Asian debut last year in Singapore. When it launched in China in April, it dropped DRM (digital rights management) protection from its songs for the first time, allowing consumers to transfer their music across devices. That move shows just how keen the music industry is to introduce some form of legitimate online music model to the market.

Ken Cheung, regional VP for digital at Warner Music, says that models like these are now key for the labels in Asia. "For the more regulated markets, pay as you go and subscription models would still be the most common way to access to artists and their music. In the less regulated markets, hard bundling models like Nokia Comes with Music and ad-supported models like Google Music will be more commonly deployed."

The potential to become involved in music distribution is not limited to telcos and handset brands. One of the most interesting areas of growth is tie-ups between labels and brands to offer consumers music as part of a reward programme or eCRM drive.

But Sandy Monteiro, VP digital for Southeast Asia at Universal Music, argues that this model is limited to certain markets at the moment. He divides Asia's internet scene into mobile-based markets such as India and much of Southeast Asia, and PC-based markets such as Hong Kong, China, Taiwan and Korea.

In mobile-based markets, telcos are dominant players in music because they are key to the mobile relationship. In PC-based markets, however, there are opportunities for other brands to use music.

A new vehicle for brands
Universal has provided redemption-based music services for brands like HP, which in October offered buyers of certain products access to free music via a Universal platform. The promotion took place across South and Southeast Asia.

"In these cases, consumers are involved with the brand in some way, then Universal provides the carrot," says Monteiro.
He has talked to brands in sectors such as banking, fashion, soft drinks and alcohol. Universal's revenues from this source have increased by 400 per cent in the last two years, and Monteiro expects this growth to continue. "Everyone is interested, but many haven't figured out how to fit it into their programmes yet," he says. "They're worried it might dilute the current strategies."

Monteiro believes alcohol brands will use this strategy, particularly in strictly regulated Muslim countries. "Companies which no longer have the ability to use paid-for media find these direct-to-consumer platforms interesting. Alcohol brands in some countries can't use a poster but there are still lots of drinkers. They can use music to go straight to the customer."

From discovery to interaction to distribution and live performances, there is plenty for brands using music in their marketing strategies to keep in mind.

The first, says Adam Schokora, founder of NeochaEDGE, a consultancy that links brands to China's creative community, is to put as much content generated by the tie-up in as many online places as possible. This should be tagged appropriately to boost search engine optimisation. Brands should co-operate with the leading video platforms to ensure the content is grouped together and easy to embed in people's blogs or in discussion forums. A 'brought to you live and online by...' approach in this arena is, according to Schokora, highly compelling.

Brands should also co-operate with the key social networks to encourage syndication of content. "Such co-operation should consider building in some sort of reward system for users who re-post, share or bookmark campaign content. This will increase awareness and visibility of the campaign," he says.

Finally, there is mobile, which remains a very powerful tool for voting, downloading and sharing.

There is clearly a lot to manage, and success will require a long-term approach. In the past, tie-ups between brands and music have all too often relied on short-term celebrity endorsements.

While the transition to online models continues to be problematic for the labels, the beauty of it from a brand's point of view is that it offers so many more opportunities to get involved. Those willing to invest time and energy in all areas of music consumption now have the chance to give consumers something that they genuinely value.

ARE BRANDS WELCOME ONLINE?

Data from Synovate shows very mixed attitudes towards commercial involvement in the distribution of music. A global study by the research firm asked whether consumers would be willing to watch ads or provide personal data in return for free streaming or downloading of music.

Globally, an average of 53 per cent of respondents said they would not watch ads in return for free streaming, and 50 per cent would not do so for free downloading. What's more, 71 per cent would not provide personal information for streaming, and 69 per cent would not do so for downloading.

In Asia, the figures vary wildly by market. In China, the figures are close to the global averages: 57 per cent and 53 per cent would not watch ads for streaming or downloading respectively; 68 per cent and 72 per cent would not hand over personal information. Meanwhile, Indian consumers are more relaxed than the global average: less than 50 per cent expressed unwillingness to watch ads for either or streaming or downloading, and around 60 per cent were unwilling to hand over personal data for either.

Hong Kong consumers, however, are much warier. 78 per cent and 75 per cent would not watch ads for streaming/downloading, and 88 per cent and 89 per cent would not hand over personal information.

Consumers in Korea, meanwhile, were extraordinarily relaxed about advertising (25 per cent and 19 per cent opposed it for streaming/downloading) but were far warier about handing over personal details (66 per cent and 57 per cent).

There's a similar pattern in the Philippines, where 30 per cent (streaming) and 33 per cent (downloading) would not watch ads, but 64 per cent and 62 per cent would not hand over personal information.

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This article was originally published in the 3 June 2010 issue of Media.