1. The Beatles’ mismanaged merchandising rights
The first artist to make a mint off selling his likeness was Elvis Presley in the late ’50s. And the artists who quickly pissed away what was calculated to be over $100 million dollars in 1963 money from licensing deals of their likeness were the Beatles. Granted, likeness licenses — in which an artist grants marketers the right to reproduce his image as a bobblehead doll or on T-shirts — were an untapped market at the time, and only hugely successful artists could earn much money by selling them. In the early ’60s, very few people would have understood what a massive potential revenue source these licenses could have been for the Beatles.
At the time that their manager, Brian Epstein, signed their rights away, the Beatles were just starting to get an overwhelming amount of requests. Even though Epstein notoriously insisted on making all major decisions about their affairs personally, he handed licensing rights off, on the advice of the band’s lawyer David Jacobs, to Nicky Byrne as a subsidiary of his NEMS management company. Foolishly, both Epstein and Jacobs signed off on a 90/10 split, giving the Beatles only 10% of the earnings from every Woolworth’s lunch box with the band’s faces on it when the industry standard was closer to a 20/80 split in favor of the band.
Within six months, Epstein and Jacobs sued to get the split changed to 49/51, still far below the standard but somewhat improved. All the ensuing lawsuits and underhanded direct licensing that happened in the wake of Nicky Byrne’s little caper, however, turned off all credible retailers, and hundreds of millions of dollars in Beatles merchandise was dropped off the floor of major retail outlets until 1967, when the final court verdicts were handed down over who was to be paid what. Unfortunately, by then John Lennon had let drop that notorious bon mot about the Beatles being more famous than Jesus, and the heartland of America was not so into buying Beatles memorabilia as they were into burning it — thus rendering them less than desirable faces on a coffee mug in the local department store.
2. “I’d Like to Buy the World a Coke”
These days, we’re perfectly used to the idea that all of our commercials should be scored by pop music, but in the pre-John Hughes world, this was a much less common phenomenon. So, in 1971, when Coca-Cola’s ad agency, McCann-Erickson, commissioned a jingle and got back the insanely catchy “I’d Like to Buy the World A Coke,” everyone was surprised to find they had a real earwig on their hands. Radio programmers started reporting requests from listeners to play the commercial, as if it were actually a hit record.
In short order, the song was rewritten, dropping brand references, and rerecorded by The Hilltop Singers as “I’d Like to Teach the World to Sing (In Perfect Harmony)” and became a hit pop song. It was also re-recorded by The New Seekers, who had done the commercial vocals, and their version became a top 10 radio smash. The sheet music for the song was reported to be the biggest selling item of sheet music in 10 years. Magnanimously, the Coca-Cola company not only allowed the commercial use of its jingle (as it clearly created a free and positive association with Coke) but donated the first $80,000 earned from the track to UNICEF. The good publicity itself was enough to earn Coke a huge win.
3. Pepsi learns the perils of coolness by association
It only took them a decade to nail down the idea, but after Coke’s big pop culture moment in 1971, Pepsi hired the first in a series of musicians as pitchmen. The #1 draft choice was Michael Jackson and the Jackson 5, who in 1984 became the company’s first pop-star spokespeople. They also became the first in a series of embarrassments suffered by Pepsi at the hands of their celebrity ambassadors, when Michael was badly burnt on the set of a commercial. In 1987, Pepsi tapped and then untapped David Bowie after some sexual assault charges popped up. They did the same in 1989 with Madonna, after her controversial video for “Like A Prayer” debuted. Pepsi didn’t quite have the stomach to hang in long enough to get the “cool by association” bump from most of their pop-star pitchmen and in the ’90s went with a series of safe choices like Ray Charles and Aretha Franklin.
By the 2000s, Pepsi mastered the art of managing the volatile spokesperson and made it successfully through runs with Britney Spears, Beyoncé, and Pink. They even managed to stand by Kanye West after his infamous “George Bush does not care about black people” verbal bomb at a Hurricane Katrina fundraiser.
4. Moby licenses Play 500 times over
Nike, Nissan, Rolling Rock, Maxwell House, Galaxy chocolates. The Beach, Freddy Got Fingered, Saving Silverman. Cold Case, Hype, Charmed. These are a few of the places you probably first heard the music from Moby’s 1999 album Play. Moby was the first artist to license every single song on his album to various films, TV shows and commercials (granted, some of the licenses were to tiny films no one saw). Play became the first multi-million selling record that could directly point to licensing for its familiarity and mainstream success — after Hollywood came calling, radio and MTV followed by popular demand.
What’s really amazing is that Moby didn’t say yes to every single licensing request he got. Brands that offended his sensibilities, especially with regard to animal rights, like McDonald’s or cosmetics brands that tested on animals, were declined. All of this licensing was done thoughtfully, and it also heralded a new payment structure between the artist, publisher, and label. Along with the normal album sales revenue, which heavily favors the label, much of Play‘s earnings were through licensing. That income was split between the label and the artist, with a nice chunk going to the publisher and causing a huge shift in the way artists strategize in the wake of Clear Channel’s radio monopoly.
5. Starbucks hears music
In 1999, Starbucks bought the Hear Music concept from a Massachusetts catalog company, and a generation of coffeehouse-appropriate music began to be marketed. Everyone from Alanis Morissette to Beck to Sonic Youth started offering Starbucks exclusive CDs or the option to sell their new albums in Starbucks before traditional music stores. Retail outlets went full-on batshit and responded by either breaking street date on these exclusives or kicking artists’ entire catalogs out of their stores. Interestingly enough, Hear Music became less influential as they formed their own record label in conjunction with Concord Music, issuing well-known adult contemporary flops by Paul McCartney and Carly Simon. By 2008, Starbucks had shut down the label.
6. The Bacardi record label
In 2008, dance act Groove Armada became one of the first bands to sign a one-year contract with a brand — Bacardi, who agreed to fund a four-track EP from the duo and book them to play a series of Bacardi-branded events. The deal also allowed Bacardi to commission tracks from Groove Armada for ads, while the band retained full ownership of the songs and creative control of the use of their music.
7. The Nike Original Run series
Nike commissions a mix from LCD Soundsystem (via Cornerstone) meant to accompany your run. It’s called 45:33, the length of the DJ mix, and available via iTunes. Never mind that James Murphy has clearly never run a day in his life, outlets like Pitchfork reviewed this commissioned work as a serious album. While the revenue and rights split between Nike and LCD Soundsystem, or any of the other artists they commissioned for similar mixes, were not disclosed, it seems safe to assume there was a hefty up-front payment plus a percentage of sales revenue allotted to the artists. Nike reaped the benefits of the coolness by association to both the iPod and LCD Soundsystem.
8. Of Montreal take it to the Outback
Of Montreal decided in 2006 allowed Outback Steakhouse to use their song “Wraith Pinned To The Mist and Other Games” as a jingle. Except they didn’t just license the song, they let Outback’s ad agency rewrite it with new lyrics to the tune of “Let’s Go Outback Tonight.” The blogosphere responded with an incredulous snort while singer/songwriter Kevin Barnes defended his decision, claiming he was curious about what sort of jingle they’d write and arguing that the concept of selling out was dead. Shortly after, the band would play themselves in a T-Mobile commercial and then promptly begin issuing glam rock/Prince tribute albums to fly in the face of the sensibilities of corporate, music-licensing America.
9. Mountain Dew’s Green Label Sound
Mountain Dew used to spend their ad money with MTV, to sponsor the yearly Dew Circuit Breakout contest, where the companies got together to try and find the next Fall Out Boy. Then, in 2008, Mountain Dew launched the Green Label Sound project instead and decided to give all their money to nice indie artists, like Neon Indian and Wavves, who would record one-off tracks that Mountain Dew could then give away for free. While this content shift may not be garnering Mountain Dew a lot of soda sales in Williamsburg, it is generating them a lot more write-ups in Ad Age.
10. The Converse recording studio
And, of course, as covered by the New York Times, Converse sneakers are getting into the music game with plans to open a recording studio called Rubber Tracks in Williamsburg. Generously, Converse will underwrite the cost of recording for bands tapped by the sneaker company as a good brand match and offer no creative input into the music, no requirement to use them in Converse ads, and allowing the bands to retain complete ownership over the recordings. It is basically a nirvana of label obsolescence.
While record companies have started to expect 360 deals from bands to get a cut of everything, brands seem to be able to offer a lot more money and freedom. The trade-off is that your iPod will soon be sponsored by corporations. Which option do you prefer?
-Courtney E. Smith
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