The “Rights Stuff” Key to the Future of Online Ads

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While the interactive revolution is here, the effective use of iconic media content on the web remains in its adolescence.

Over the past decade, we’ve seen the type of content used in online ad campaigns rapidly evolve from mostly static copy with a few graphics or images, to include more dynamic media such as flash animation and most recently, pop music and video. But it’s all just the beginning.

Brands are increasingly looking for ways to break through a cluttered online environment and to figure out how to attract consumers to their message rather than the traditional model of simply pushing the message out to them. As brands focus on drawing people in, iconic content – most notably music and celebrity content – is playing a significant role.

Music in particular, is starting to make noise online.  Music has the power to move, inspire and excite, and thus advertisers are harnessing pop’s powerful potential more frequently than ever. While the commissioning of original jingles for ads is plummeting, licensing music from established and emerging artists is soaring.

‘Synchronisation’ licence income – that is, income from the use of music in advertisements, films and games – is a growing revenue stream for the recording industry.  For example, in the UK, the home of some major record labels, income from sync licensing has grown by 20.1% over the past year according to the BPI (previously the British Phonographic Industry) – and this is a figure that looks set to continue rising. 

In the digital era, this is the result of several factors, including the music industry seeking new revenue streams and the fact that broadband and better technologies make it easier than ever to add music to an online ad campaign.

These days, the recording industry’s main concern with music
licensing is related to the financial challenges of a rapidly changing
market.  CD sales have declined steadily over the past several years
and labels are in search of new revenue streams. As a result, there has
been a sea change in the attitude of record labels and artists towards
using their material in a commercial arena.  Not so long ago, this
might have been considered “selling out.”

Today, however, the commercial realities are such that artists are
savvy to the idea that exposure through advertising can be the
breakthrough they need to go stratospheric. One of the best early
examples was in 2000 when Vodafone used the Dandy Warhol’s “Bohemian
Like You” track.  The previously low-key band went global, and while
the record had previously charted at number 41, it quickly climbed to
number five following the release of the ad.

These days, advertisers are not only increasingly licensing music
rights for traditional media, but also for Internet add-ons for wider
use; ads created specifically for television are increasingly being
used online and in viral campaigns. This practice impacts the length of
licensing agreements as longer terms for website use are sought.

All well and good. However, navigating the murky waters of licensing
and rights clearances on the web continues to be a challenge. The law
has not evolved to keep up with demands for using content online, as
demonstrated by a slew of lawsuits – for example, against YouTube for
its redistributing TV and film clips. 

Although the recording industry is keen to capitalize on emerging
online opportunities, it sometimes has limits in place regarding
digital ad sales. And so it’s still rare for an Internet-only ad,
exhibited in a viral format or a banner ad format, to include the use
of licensed pop music. The recording industry, namely the publishers,
will often deny such types of use because ads that exist in a viral
world are seen as uses in perpetuity.

Add to this the “old fashioned” belief that a user could enjoy the
song at will and without having paid for it, and you get a clearer view
of the challenges involved. Additionally, uses in a viral world remove
the publisher’s ability to monitor the number of performances, which
can further reduce income.  And so, it’s not always so easy.

However, thinking is changing as the recording industry begins to
see the web as an opportunity.  For example, Canadian ad agency
Publicis recently licensed the song “Souvenirs” for a 30 second
commercial for Canada Post; the spot aired on television for 13 weeks
and appeared on the company’s website for a year.

As record companies open up further, they will look to add value in
other areas of the music business, such as new multiple-rights deals
(also dubbed “360 degree deals”).  Such deals may generate income from
a range of activities – from merchandise such as greeting cards, the
use of artist logos, digital products such as mobile phone wallpaper,
video games, or sponsorship deals.

Thinking of using an artist’s music in your next online campaign? Here are some of basics you’ll need to know to get started:

  • Start early and with a budget – give yourself enough time and resource to make it work without making it a minefield
  • Compile a list of artists (and/or tracks) that fit within the
    budget and that are available (budgets are one thing, creative
    agreement / alignment is another)
  • Have a Plan B (and a Plan C) as these things are dynamic and fluid
  • If you’re not sure about any of the above, call an expert

The need and opportunity for online advertising to use iconic media
content like music and video has never been greater. The music and
advertising industries increasingly have a symbiotic relationship,
working to make sure they attract the most eyes and ears for both their
products and their music. Figuring out the licensing arrangements,
however, remains a challenge that often requires a bit of expert advice.

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