Saturday, February 07, 2009 2:48:57 PM
If the ailing music business can't find strong medicine to offset a seven-year slide in sales, maybe a stiff drink will do.
Drinks Americas Holdings Ltd., the company behind a Donald Trump vodka, Willie Nelson's "Old Whiskey River" bourbon and a line of Paul Newman-branded juice drinks, is set to announce today an agreement with Universal Music Group's Interscope Geffen A&M label group. Universal Music Group is owned by French media conglomerate Vivendi SA.
The idea of the deal, executives of both companies said, is to come up with brands of drinks -- both alcoholic and nonalcoholic -- that bear the imprimatur of artists on Interscope's roster, which includes Eminem, producer Dr. Dre and Sting.
One of the most intriguing aspects of the deal is that record labels, including Interscope, nearly never control the rights to name and likeness rights like those needed to slap a celebrity's face or name on a bottle. One exception is the Pussycat Dolls, a female pop group; in that case, from the group's inception Interscope has been a participant in all kinds of licensing and merchandising deals.
The companies specified that it is Interscope's obligation to negotiate drinks deals with artists. Drinks Americas, of Wilton, Conn., will then create the beverages, while Interscope will kick in marketing support for both the newly minted products and its partner's existing line of drinks.
Steve Berman, president of sales and marketing at Interscope Geffen A&M, said the deal was a response to "the rapidly changing landscape of the record business," in which many record labels are scrambling to diversify their revenue streams. Warner Music Group Corp. recently struck a deal with manager Chris Lighty to find branding-and-endorsement opportunities in which Warner is to participate. One of Mr. Lighty's biggest clients is 50 Cent, who records for Interscope. Interscope doesn't as a rule participate in the rap star's many lucrative outside business ventures; Warner, a rival, now will, at least in some instances.
Drinks Americas Chief Executive Patrick Kenny acknowledged in an interview that a familiar name gets a product only so far. "They get trials from the consumer," Mr. Kenny said. "But you still have to deliver a product that pleases the consumer"
Mr. Kenny knows from experience how difficult it can be to integrate drinks and the music business. He was a marketing executive at Seagram Co. in 1995 when that liquor giant acquired MCA Inc., whose music division was later renamed Universal Music Group.
That relationship created little synergy. "I saw Seagrams struggle to leverage the Universal Music Group assets," Mr. Kenny said.
Source: Wall Street Journal
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