Coca-Cola is buying a minority stake in independent music licensing firm Music Dealers as part of a three-year nonexclusive deal under which Coke soft-drink brands will incorporate music by Music Dealer artists into their marketing campaigns.

Neither company would disclose financial details of the deal. Music Dealers operates as a music licensing website where emerging artists can license and put up their work for use in commercials, movies, TV shows and more. The company makes sure all the music on its site is cleared for use and easily found by music supervisors through a searchable database.

For their first campaign under the new partnership, three bands that have licensed music to Music Dealers have each recorded a version of Taio Cruz's 2010 hit single, "Higher." Coca-Cola will run a contest that will ask fans to pick their favorite of the three. The winning group's recording will be remixed for a TV commercial, featuring Cruz singing Coke's five-note jingle.

For Music Dealers, Coke will give the company and its artists the potential to reach a vast global audience, according to Music Dealers president Eric Sheinkop.
"It's a massive platform that really goes beyond putting some music in an ad," Sheinkop says.

The deal won't preclude Music Dealers from working with other companies. And Coke still plans to work with major labels and established artists.

Music Dealers has dealt with top consumer brands like McDonald's, Nike and Kellogg's, but has never entered a partnership of this extent or with a brand that acquired an ownership stake.

For Coke, working with Music Dealers will allow it to cut through layers of red tape involved in licensing music. It also gives the beverage giant direct access to new music, which the company sees as vital to reaching teens as it aims to double daily servings of its beverages by 2020, according to Emmanuel Seuge, Coke worldwide group director of sports and entertainment marketing.

As part of this growth push, the company launched its teen-targeted "Coca-Cola Music" campaign, which will make music a major element in its campaigns for all of its brands, including Sprite, Fanta and Coke Zero.

Coke and Music Dealers partnered in March on a campaign in which the beverage maker licensed a song through Music Dealers by Swedish band You Say France & I Whistle and had Universal Music-signed English rock band One Night Only record it. Coke featured the track in a TV ad that aired during "American Idol" and during other programs in about 60 other countries, giving both bands more exposure than they could've otherwise hoped for.

You Say France & I Whistle was able to use its earnings from the Coke campaign to release an EP and tour in Germany and Austria to support it, Sheinkop says.

"The quality was so good, the speed was so good, the personal relationship with [Music Dealers] made us feel comfortable," says Seuge, who adds that the experience prompted the company to take "a calculated bet to use Music Dealers in years to come and formalize that relationship."

Seuge says that while the initial deal is for three years, he's hoping Music Dealers will be a long-term platform for Coke.

Music Dealer artists who license a song to Coke retain worldwide publishing rights and receive all publishing royalties. If an artist writes a song used by the brand, he or she receives all writer royalties. Coke will pay acts a fee to use their master recordings and performing rights royalties every time a song airs.

Music Dealers takes a 50% cut of upfront fees and master fees paid to the artists and a 25% cut of publishing royalties, except for writer royalties, which all go to the artists.

Coke will get access to music as soon as unsigned artists put it on the Music Dealers site and be able to work closer with those acts to tie into record releases, concerts and other events. Seuge says the brand will also use Music Dealers' global reach to partner with bands on regional campaigns.

"Music Dealers doesn't just have great technology-they actually have relationships with artists and can tip Coke off, saying, 'This artist has something coming out,' so we can find new ways to create partnerships," he says.