Synergy and Secondary Licening case studies

These are two out of many examples of synergy and secondary licensing relating to the Universal Group.

Secondary Licensing

Cadburys Gorilla Advert - Don't wanna miss a thing by Aerosmith

Cadbury plc is British confectioner company, the industry's second-largest globally after Mars-Wrigly. Cadbury was then bought by Kraft Foods in February 2010, hence becoming the largest confectionery company in the world again. Cadbury's would have bought the secondary licensing from UMG as Aerosmith is signed to them, then was able to use the song ''Don't wanna miss a thing'' in their advert.

Synergy 

Scot Pilgrim VS The World soundtrack Black Sheep - originally sang by Metric

click here to view song - unavailable to embed...

Scott Pilgrim VS The World is a Universal Pictures distributed movie. This film has an extreme amount of songs compared to normal films (because of its story plot) and being distributed by Universal gave them massive advantage of using their own signed artists such as Metric's Black Sheep and Rolling Stones' Under My Thumb. Even though Metric did not appear in the film as the actors in the film sang the song, there was no problem to licensing and copyright as Metric belongs to Universal already. This allowed Universal to control the majority of the music soundtracks, how it was to be merchandised, sold, which all goes back to Universal only rather than splitting money between other companies.

Synergy and Synergistic Practises

Synergy - another word for cross-promotion

Synergistic Practises

A film may be released at the same time as an associated CD soundtrack to produze maximum revenue.

i.e. no one knew of 'The Rembrandts' before 'Friends' cross-promoted the song as they used the song as their opening theme.

Internal Synergy - cross-promotion inside one company/conglomerate.

i.e. Girls' Aloud - produced by Polydor Records, a subsidiary of Universal Records. 

^ Sang soundtrack music to St. Trinians produced by Universal Pictures.

Duffy signed with UMG also in an advert for Diet coke.

The potential for internal synergy is enormous:

• Universal has a franchise in the music and film industry.
• It is easier for them to use synergistic practises to promote and sell their products because they are vertically integrated.

The music is more saleable because the audience is attracted to elements they recognise from the films. The film is advertised by the music.

Universal Music Publishing and Secondary Licensing

A music publisher owns the copyright for music and lyrics and can license them for use in film, TV, advertising, mobiles etc. as well as for other artists to cover. UMPG is the largest in the world, with over 1 million copyrights.

i.e. Sugarbabes

• UK, Europe, Asian and US tours for new album
• Theme song for Powerpuff Girls Movie
• ITV teen drama Girls in Love theme song
• Tracks on soundtracks for Love Actually and Sex in the City
• Boots Christmas TV advert - Girls
• Images licensed to Mattell for Barbie dolls.

Universal Music Group

Key facts:

• The largest of the 'big four' labels
• Responsible for 30% of the world's music sales
• Based in the US with offices worldwide
• Owned by Vivdendi (French media conglomerate)
• Merged with BMG Music Publishing in 2007
• Many subsidiary companies including: Island Records Group, Decca, Polydor and Mercury.
• Revenie $5.87billion in 2010
• Has access to a global market - targets international audiences and manages artists with global appeal.

How do majors operate?
Major labels operate a vertically integrated business model, where the owner has acquired companies which play different roles in the process of creating, promoting and selling music.

Universal Music Group: a veritcally integrated company

Vertical integration is a business model in which a large company owns smaller companies which play different roles in the promotion and sale of he product.
The company can therefore generate large revenues from each product by using different branches of the business to make and promote it.

Make notes in the boxes to show what role each part of UMG takes in the process of selling muic. What do you think each company does?

Music publishing - Universal Music Publishing Group
UMG owns their own publishing company which gives them great advantage because they can copyright their own released music hence having all the power and control. UMPG the industry's largest global music publishing operation.

Finding artists, recording and producing music - subsidiary record labels

Promotion - Twenty-First Artists management/All The Worlds live promotion and booking

Merchandising  - Bravado
The absolute service: Bravado, is a part of UMG and is in charge of all the merchandise marketing for the UMG. The company works closely with new and established media clients, making creative products specifically to the artist featured. Products are sold on live tours, through retail outlets and through online stores. Bravado also licenses rights to an extensive network of third party licensees around the world.
Bravado offices are London, Los Angeles, New York, San Francisco and Stockholm, and partners with companies in Germany, France, Japan, Australia and South America.
Licensing - Universal Music Enterprises/Universal Film and Television licensing. Also Vivendi Games and Mobile, Universal Pictures, NBC Universal TV

Distribution - Universal Music Group Distribution

 Record Labels

What does a record label do?
A record labels are companies who are the main investors and developers of musicians across the UK and globally. Record labels allow artists, that are signed with them, to engage with marketing and sales support, treating their music production as a full-time career. They market and show the world the work of the artist as well as collecting and paying the resulting royalties on their behalf. Most of the time, record labels pays for the recording and mixing of albums, assuming they know that the music will sell and hence gain the profits back from doing so.

Gives four examples of services a record label provide for an artist

• Pays for mixing and recording the music for the artist
• Pays for the touring costs, raising the artists' profile and sales
• Provides an important promotional and marketing role - developing and executing ads & promoting campaigns.
• Promotes and 'plugs' the artists to the media industry.

Why might an artist want to be signed to a record label?
To be signed with a well-known record label gives many advantages to the perhaps, new and green artist as the label gives the artist experienced aspects of a label such as promotions, marketing and recording. In addition to such, the label (if they see potential within the artist) will take care of the additional costs when touring or the recording fees. Well-known labels will also have strong media connections with other media giants which will allow good, confident support to the artist.


Give four examples of ways in which record labels make money

• A percentage of the revenue the artist makes
• Merchandise of the artist
• Gig concerts of artists
• Artists' songwriting

Name the 'big four' record labels and name two well-known artists who are signed to each one
EMI - Blur
         - Coldplay
BMG/Sony - The Fray
                    - Foo Fighters
Universal - Lady Gaga
                 - Taylor Swift
Warner - Biffy Clyro
              - Armor for Sleep