The brandgym blog

Metallica and the morphing of the music biz

Last week saw a first in the music biz: the simultaneous release of a new album, Metallica's Death Magnetic, in its musical form (CD and digital download) AND for the interactive video game, Guitar Hero. This game allows you to try and play along to a song with your own guitar, following instructions on the screen. Cool eh?

You have to pity the poor old record labels. They are dinosaurs lumbering around, mere spectators of their own demise.

Take Guitar Hero. This is the first game to have annual revenues in the USA of, wait for it, $1billion. The idea is pretty simple when you think about it. Who hasn't played air guitar to a rock song at least once!? The record companies had all the music. But did they come up with the idea? No, it was game company Activision, who license the music.

And what is the response of the record companies? They could create their own gaming division. They could even create a new band, exclusively for Guitar Hero. Or develop music especially adapted to the game. But no, what they do is moan and groan and ask for more royalties. Warner Music Chief Executive Edgar Bronfman recently commented: "The amount being paid to the music industry, even though their games are entirely dependent on the content we own and control, is far too small".

What Bronfman fails to acknowledge is that there is even evidence that Guitar Hero helps stimulate record sales. For example, according to gamesindustry.biz DragonForce's album "Inhuman Rampage" got a 126% week-on-week sales boost following the launch of Guitar Hero III.

Guitar Hero is merely the latest attack on the broken business model of storing and selling music on plastic.We of course have the explosion in digital downloads driven by Apple's iTunes. The latest version, 8.0 came out yesterday. It has a function called "Genius" which creates a playlist based on a single song for you.

And then there is the incredible rise of Live Nation, the concert company. Last year Maddonna left Warner Music to sign up with Live Nation in a $120million deal. Live Nation who will release her records in addition to organising her blockbuster tours, the last one of which grossed $260.1 million.

Who'd want to work in the record biz? One man who does is Elio Leoni-Sceti, who Warner Music recently poached from Reckitt Benkiser, who have powered top-line growth with a stream of product innovation. Could Leono-Sceti be the man to save the industry from extinction?

Madonna's mobile innovation

Distribution. Come on, don't fall asleep. I know it may sound like the most boring bit of the branding mix. But its where a lot of the action is happening. New technology is opening up new routes to market that will transform the way we buy many services.

Take the new Madonna album, Hard Candy. It is available in stores from a week today, 28th April. But buying it that way is so, like, 20th century man.

From today, 21st April, seven of the eleven tracks will be available to Vodafone customers to download for 99p each. Each track will be available to download for 24 hours, before being replaced by the next one. The Times reports that this follows the move last year by Timbaland to be the first artist to release an album exclusively via mobile, this time on the Verizon network.

This is smart on several levels:

- For Madonna: 18 albums and in her 50's, yet she's still innovating

- For Vodafone: a good hook to try and get people into the habit of downloading music, by encouraging them to come back for several days, not just a one-off experience

- For Warner Music: learning about this new route to market for music

It ain't sexy, but it sells

I posted last week about the importance of distribution in the marketing mix and how this may trip up Trident's launch into the UK gum market. I know it ain't sexy, but its a great way of growing your core business.

Another example is Pepsico's trial of hot porridge vending machines for its Quaker Oatso Simple brand. These will be placed in schools and offices and tap into the huge market called "missed breakfast". Over 20% of people in the UK skip what is supposed to be the most important meal of the day, representing billions of pounds of potential spend.

Quaker have already entered into the out-of-home market by linking up with Mc Donalds, part of the burger chains to re-position itself as a provider of healthy food, not just burgers and fries.

I just hope the vending machines are better than me at making porridge. We have to get the girls up half an hour earlier when its on the breakfast menu at our house, as I always bodge it up at least once. And will there be a syrup dispenser as I can only eat porridge with lashings of this on it?

Coke: 21st century distribution

Continuing the theme of distribution as a growth driver from my last post on Vodafone and Carphone Warehouse, I was intrigued by the new vending machines Coke have been trialling in Ireland. These machines, made by a cool company called the Inspired Gaming Group, sell not only Coke, but a range of other services including ringtones and top-up vouchers for mobile phones. The machine also acts as a digital music jukebox, updated remotely to be always up to date and can burn CDs.

The trial of 200 machines has been positive, with revenue per machine twice as high as normal machines. The Sunday Times reported that if these results were repeated on the top 10% of Cokes 2.8m vending machines (accepted this is a bit of a leap), revenue would be boosted by a staggering $1.5 billion.

5-minute workout: what opportunity could you have to use interactive technology to make your distribution channel more of an interesting customer experience, and generate new revenue streams?

Vodafone and Carphone Warehouse: brands bite back

I'm fascinated by the bold move of Vodafone to pull all of its business out of The Carphone Warehouse (CPW), the UK's leading mobile phone retailer. In future, Vodafone will sell only through Phones4U, and its own growing chain of Vodafone stores. CPW said they were not concerned by the move. Investors chose to disagree, sending the company's shares down 10%.

For a long time CPW have had the upper hand in the relationship with the network providers, in the same way that the supermarket chains have do with most consumer goods brands. They even until recently managed customer service and billing for Vodafone. Also, CPW have contributed to the huge "churn" that goes on in mobile, by playing the brands off against one another and encouraging consumers to switch provider for a better deal/phone. Again, there is a parallel in grocery stores where retailers encourage price promotions that make consumers switch brands.

Time will see what happens to Vodafone's business, but hats off to them for the boldness of their move, and for refusing to be "bullied" any more by the retailer. They have made distribution strategic, and tried to take more control of how their brand is sold. There are even rumours that another leading mobile network brand, Orange, will follow the Vodafone example and pull out of CPW.

5-minute workout: who has the power and upper hand in your distribution channels? If you are a product/service brand, what could you do to take more control, such as strategic alliances and developing your own route to market?