In July of last year, the Coca-Cola Company formalized a partnership with full service licensing company Music Dealers. The deal narrows the gap between artists and brands. It also opens up a new avenue for unsigned and emerging talent to break onto the global music stage.
Music Dealers was founded in 2008 to help new talented artists worldwide gain equal access to professional opportunities in film, brands, TV, video games, and other media outlets that require a license for the use of music. Music Dealers now controls one of the largest pre-cleared catalogs of emerging artists from around the world. In the first half of 2011, for instance, it completed over 600 licensing agreements in 24 countries and placed 1,500 songs from its catalogue in every major market.
Music Dealers has made licensing quick and convenient by going directly to artists who own their music—as well as engaging talent as work-for-hire. Eric Sheinkop, its CEO and Co-Founder, has nevertheless long wished to do more than trade in syncs and simplify the business. He is known for connecting artists and clients through brand partnerships, event promotions, and for creating a special proprietary platform subscribed by hundreds of bands and producers from around the world that wish to engage brands. In fact, Music Dealers appears to have streamlined both the back-end placement of music in brands and the front-end: its songs are also delivered ready for web, mobile, or other media applications.
A brand, of course, may not be looking for the next superstar or care much about building a valuable music catalog—these are concerns for record labels and publishers. Instead, Music Dealers becomes the go-between that spots up-and-coming talent to serve the specific needs and modus operandi of consumer brands. However, Music Dealers is not replacing the traditional music business; its practice, rather, is based on an inherent market advantage. Newer and unsigned artists want exposure and seem to welcome any means to achieve that end, so a licensing or work-for-hire agreement with Music Dealers is, from their perspective, entirely justified.
At first sight, it may seem odd that Coca-Cola would consider an equity stake in a music licensing start-up. The beverage company, however, is hardly a novice when it comes to using music. In fact, it has a long history of leveraging the power of popular tunes as a way to engage its consumers. Back in the 1960’s Coca-Cola commissioned Ray Charles to write and perform all of its radio spots. The company’s best-known contribution to pop music may be the 1971 song “I’d Like To Teach The World To Sing (In Perfect Harmony)”. The song was originally used as a jingle first, before it was reworded and became a pop hit. Coca-Cola used the Elvis Presley song “A Little Less Conversation” in one of its Japanese commercials. Other artists such as The Beatles, David Bowie, George Michael, Elton John, and Whitney Houston, who appeared in a Diet Coca-Cola commercial, have promoted the company throughout the years. More recently, Coca-Cola’s involvement in music has included sponsorship of the talent show “American Idol”.
In 2010, the beverage giant announced its “2020 Vision” aiming to target more than 3 billion servings per day and double revenue to $200 billion. For this, the company has to attract the teenage demographic concentrated, for the most part, in the emerging markets. “Every six years there is a new population of teens in the world,” says Coca-Cola’s SVP, Shay Drohan, and the company is moving forward with its largest teen-targeted campaign ever.
China, India, Indonesia, Nigeria, Pakistan, and the U.S. will contain half of the teen population by 2020, and that is where Coca-Cola wants to be (as well as ninety other growing markets). Emmanuel Seuge, number 16 on Billboard’s “Power 100” list and head of Global Sports and Entertainment Marketing for Coca-Cola, says that music is a part of everyday life and acts as an amazing vehicle for the brand to connect emotionally. “As the world of communication becomes so cluttered,” he adds, “relevancy is key: it’s about the right message at the right time and music allows us to do that.”
Leveraging and using music to amplify Coca-Cola’s biggest sale platforms, i.e the FIFA World Cup and the Olympics, allows the beverage company to connect well with younger consumers. Most recently, and in the same vein, Maroon 5 did a 24-hour studio session for Coca-Cola in which the band worked on a song from scratch on the theme of ‘happiness’.
Clearly, today music can be patronized in many ways. Coca-Cola invested about $200 million in Music Dealers, likely the largest ever example of a consumer brand buying into a music service company. If Music Dealers had been a new startup, it would have raised twenty times less with venture financing than it got from Coca-Cola. Music Dealers did very well. But to keep its campaign moving, Coca Cola needed to acquire music legally, more efficiently, and internationally. Partnering exclusively with Music Dealers gave them that ability.
Eric Sheinkop, Emmanuel Seuge, and Peter Wesslander, the latter the drummer for the Swedish band ‘You Say France and I Whistle’, recently sat down at MIDEM 2012 to discuss their experience working together. A year earlier, Coca-Cola was looking for a song with strong teen appeal for its global Coca-Cola Music program. Music Dealers prepared a brief for Coca-Cola at short notice and immediately proceeded to crowd-source, from all over the world, twenty-two demos. It delivered them within a couple of days. Then, working together, Coke and Music Dealers selected and perfected “Can You Feel It” as the song that would be performed by British band “One Night Only” for the global ad campaign created for the “Coca-Cola Music” program.
The ad has since aired in 60 countries, including a high profile airing during American Idol in the US. “You Say France & I Whistle,” the band that wrote the song, used the opportunity to start a new record label, book tours in Europe, and hire a PR firm. They have earned tons of media exposure in Sweden and internationally and have increased their bookings and revenue. They continue to receive writer royalties whenever the commercial runs.
Wesslander credits much of the band’s success to the deal between Coca-Cola and Music Dealers. They knew they had good songs and used the Internet as a platform to get their music out there with MySpace, which was popular at the time, as well as playing live shows locally in Stockholm. They discovered Music Dealers, registered online, uploaded their music, and expected very little. The immediate response from Music Dealers was positive. Soon afterwards Music Dealers started providing the band with opportunities. ‘You Say France and I Whistle’ has had several other songs placed in commercials of other companies such as Gap, Orbit/Wrigley, and McDonalds.
The agreement between the two companies includes a commitment on Coca-Cola’s part to only use the services of Music Dealers when finding music to license from trending artists. In return, Coca-Cola now holds a minority stake in the Chicago-based company. Most significantly, the deal highlights a new model of sourcing and licensing music for globally branded advertising campaigns. Coca-Cola now benefits from Music Dealers’ industry knowledge and access, while Music Dealers and their network of artists will continue to benefit from the scale and marketing abilities of the Coca-Cola Company. Coca-Cola oversees 500 brands (fifteen of which are worth more than $1 billion) and currently runs advertisements in and distributes to over 200 countries worldwide. “Our values are perfectly aligned…we aim to promote independent artists and share their music with fans around the world,” said Music Dealers’ Sheinkop in the press release on the deal. “Coca-Cola is a great partner who offers solid support to our artists. When artists record a track for Coke, they (Coca-Cola) put significant marketing leverage behind it. The song gets more exposure worldwide than even big artists get from a record label. This arrangement has literally helped artists launch their careers.”
By Aaron Gottlieb and Zosia Boczanowski