@NARM - Ready or Not, Brands and Music Are Best Friends Forever
-- Brands are getting more involved with music. That may not always be a good thing, but it's a trend that isn't going to reverse course.
"Bands and Brands 20
: Who's in Charge?" may have been one of the most important panels at NARM, a conference typically associated with retailers and record labels. Brands represent much of the growth and innovation in today's music business, from releasing (Red Bull Records, Green Label Sound) and recording (Converse) music to a range of uses in TV advertising and Web marketing. The tiny Encino room at the Hyatt Regency Century Plaza in Los Angeles was standing room only as executives showed off some of their recent music-brand deals.
Brands can have a big impact on artist development -- really move the needle. One of the more recognizable uses of music by a brand is the Outasight song "Tonight is the Night" in a Pepsi commercial. "This song really broke the artist's career," Warner Bros. Records director of brand partnerships and commercial licensing Michelle Edgar said. "Tonight is the Night" has reached 10.2 million YouTube views, 1 million track sales, become a success at radio and led to a debut TV performance on "X Factor," Edgar said.
Deals are getting more creative, too. Will.i.am did not want a typical sponsorship deal with Intel. So the two parties agreed on a deal that made Will.i.am an actual employee of Intel who gets together with the CTO once a month and works with people around the world on projects, said Ken Hertz of Goldring, Hertz & Lichenstein LLP. "It's really a remarkable project."
Peterzell and his team were also behind the now-famous Doritos vending machine at this year's SXSW music festival in Austin. It was an idea that people didn't think could work, but even seemingly uncool activations can work if done right, Peterzell argued. "You can be credible, you can be cool. It's all about how you do it."
The giant Doritos vending machine was a hit, but there is a growing feeling -- perhaps not in the branding community -- that SXSW is becoming too heavily branded. SXSW now gets nearly as much attention for its brand activations as it does for its musicians, entrepreneurs, actors, filmmakers and thought leaders. Not all of that attention is positive -- the Washington Post called the presence of brands at SXSW "oppressive" and "exponentially yuckier" than the 2011 edition.
But the panelists did a good job reminding people that not all pairings of music and brands is part of the arms race exemplified by SXSW. Moderator Marcus Peterzell, executive VP of entertainment at Ketchum Sports & Entertainment, showed off a clip of a Jon Bon Jovi endorsement he secured for Advil. Katrina McMullan, senior counsel of music & entertainment at Mattel, walked the audience through two songs that were licensed for worldwide TV ad campaigns. All three examples were sensible and tasteful uses of music in consumer product commercials and were reminders that brands don't always overshadow the music.
Live Nation Q1 Standout: Revenue Per Concert
-- One metric stands out in Live Nation's first-quarter results released Wednesday: revenue per concert (Live Nation doesn't provide this metric, but you can do the math yourself). Revenue from concerts declined 0.1% to $448.7 million from $449.3 million in the first quarter of 2011. At the same time, the number of concert events rose 6.1% to 4,867 from 4,600. That works out to a 5.9% decline in revenue per concert, to $137,300 from $145,900. A similar concert metric showed improvement, however. Even though revenue per concert dropped, adjusted operating income (AOI) per concert increased because AOI improved to a loss of $25 million from a loss of $41.3 million last year.
The number of concert tickets sold by Ticketmaster also dropped to 16.73 million from 17 million. All other event categories, from sports to family, showed a year-over-year improvement. It's difficult to read too much into any single quarter, but these declines in concert numbers are worth mentioning since Live Nation and Ticketmaster now focus on music much more than they did in the past. Live Nation sold its theater and sports assets, and Ticketmaster merged with Front Line to combine ticketing and artist management. As goes music, so goes the company.
Net income, which some people feel is the most important metric, deepened to $70.3 million from $54.3 million. If you like to look at cash, you should note the company significantly grew its cash from operating activities to $264.7 million from $127.7 million. Investors were pleased with whatever metrics they were watching. After-hours trading had shares of Live Nation up 5.9% to $8.80.
( Live Nation 10-Q)
Mobile Backstage Raises $1.29 Million
-- Interactive fan club service Mobile Backstage has raised €1 million ($1.29 million at Wednesday's exchange rate) in bridge funding. The funding round was led by Finnvera Ltd, the financing vehicle of the Finnish government, privately owned investment company Miston Ltd., members of Mobile Backstage's management team and angel investors.
According to the company, the proceeds will be used "to facilitate the growth of the company, further develop its technology, extend its international presence and scale its operations to address growing demand." A San Francisco office will open this summer. The company already has offices in New York, London and Helsinki. The company also announced that Johannes Milén, former chief information officer of Finnish corporation Kesko, has been hired as chief operating officer.
Fan clubs are an old part of the music business. Mobile Backstage is different because it provides a turnkey solution and the platform is owned by the client. And because it's interactive, Mobile Backstage lets fans post messages, photos and video. Mobile Backstage apps work on iOS and Android devices in addition to other, Java-supported phones.