Super Bowl launch is a free kick for record labels

Amanda Andrews Analysis

From piracy to job cuts, it has been one negative story after the other from the struggling music industry. At first sight, news that Pepsi will offer a billion free downloads through Amazon appears to be another blow for an industry struggling to cope with the challenge of the internet.

Digital downloads are challenging music’s traditional marketplace – but as marketing tools, the potential of downloaded tunes is only just being tapped. Pepsi customers are one click away from a download: imagine the logistical challenge of giving away the same volume of music on CD or vinyl. Pepsi has recognised this potential and the company is expected to announce the promotion at the Super Bowl on February 3.

Super Bowl commercials are watched by more than 90 million viewers. It is an apt choice for kicking off a promotion of such magnitude. The music industry can only beneft from this level of free marketing. Deals such as this are also a free ticket for labels to showcase new artists. If consumers do not have to pay for a download, they are more likely to take a risk and listen to new sounds.

Labels are likely to have control over which artists they put forward for free downloads, as the offer is unlikely to give access to whole catalogues. Through clever negotiation, the industry can make this work in its favour.

Then there are the obvious financial benefits of such a deal. While music companies are unlikely to earn as much as they do from offering their music directly through Amazon or iTunes, this still represents a guaranteed income in an industry struggling to boost profits. A rumoured 40 cents per download will be paid to labels, compared with the 65 to 70 cents received from Amazon and iTunes for digital track sales.

However, offers such as Pepsi’s could turn people off paying for music. In an industry already having difficulty fighting off the threat of piracy, the Pepsi deal could serve to reinforce the notion that it is all right not to pay for music. Illegal download sites are becoming easier to use and are attracting a wider audience, not only tech-savvy youths.
via business.timesonline.co.uk