2007.10.28 - The New York Times - If It’s Retail, Is It Still Rock? (Duff)

If It’s Retail, Is It Still Rock?

By Janet Morrissey

AS torrents of money streamed into his wallet from multiplatinum albums in the 1980s and 1990s, Duff McKagan, then the bass player for the hard rock band Guns N’ Roses, had little interest in tracking his cash. Instead, he relied on intimidation and his group’s reputation as the “most dangerous band in the world” to prevent managers from ripping him off.

“We knew nothing about money, and so we had this sort of gang mentality toward anybody who worked for us,” he recalls. “It sounds funny now, but that’s all we had to rely on.”

But he didn’t know the difference between a stock and a bond and lost money in real estate. So at the height of his career, he gave up partying and went back to school in 2000 to study business. Today, Mr. McKagan, 43, tightly monitors the finances of his current band, Velvet Revolver.

Like other rockers easing into middle age or seniorhood, Mr. McKagan is also experimenting with new partnerships in response to a music business in flux. Amid plunging record sales and Internet file sharing, rockers are eagerly plastering their names everywhere.

Their “brands” are now found in television commercials, tour sponsorships, and merchandise as diverse as cars, private-label wines and celebrity cruises. The rock band Kiss has been among the most prolific merchandisers, selling products ranging from condoms to the “Kiss Kasket,” a limited-edition coffin. The band’s latest offerings include musical toothbrushes, pool cues, window blinds and baby booties.

“It’s a different ballgame now,” compared with rock’s baby boomer heyday, says Joseph Bongiovi, who handles merchandise and partnerships for the rock group Bon Jovi.

Others concur. “Everyone is in agreement that taking advantage of the appeal music has as a marketing vehicle is in their interest,” says Michael Megalli, a partner at Group 1066, a strategic branding firm. Paul McCartney, in his solo career, made a deal with iTunes and Starbucks to distribute his music. That agreement was “the most radical transformation when you think about how the Beatles were so guarded about their catalog and the idea of using it commercially,” Mr. Megalli says.

Even the rock icon Mick Jagger, whose generation embraced the anti-big-business motto “never trust anyone over 30” in the 1960s, toots the corporate horn. The Rolling Stones have teamed up with the likes of Sprint and Budweiser for concert tours, and the band hawks everything from bras and panties to leather bomber jackets.

To be sure, some rockers, like Bruce Springsteen, still refuse to form corporate partnerships. “Bruce made a decision a long time ago that he didn’t want to rent his name or stage out,” says Jon Landau, Mr. Springsteen’s manager. “It just wasn’t something that was in his comfort zone.”

But others who don’t share that point of view say partnerships and branding have to be part of their musical portfolios, especially for little-known bands.

“The barriers are changing and we as artists are making less and less money, and we have to get creative,” notes Mr. McKagan, whose new band has licensed its music to a Victoria’s Secret commercial and movie soundtracks, formed partnerships with entities like the music video simulation game Guitar Hero, and appeared in ads for the clothing designer John Varvatos. “Fifteen years ago, it would have been totally not cool. You would have been selling out.”

BAND branding appears to know no bounds. The Black Crowes market rolling papers, Bon Jovi offers $1,000 signed canvas art prints and Mötley Crüe peddled Mötley Brüe, a carbonated drink. Celebration Cellars, a California winemaker, teamed up with several rockers, including Bon Jovi, Kiss, Madonna and the Rolling Stones, to issue special-edition wines that feature band logos and sell for $100 or more a bottle.

All of this has been set in motion by a well-known reality: record sales “fell off a cliff,” says Jonathan Daniel, a former musician and now a partner at Crush, a management company that represents such bands as Panic! at The Disco and Fall Out Boy. Shipments of CDs were $9.16 billion in 2006, down 31 percent from their peak of $13.21 billion in 2000, according to the Recording Industry Association of America.

The branding wave makes some rockers wince. Nikki Sixx of Mötley Crüe recalls feeling let down as a teenager when he saw Kiss on a lunchbox. “I was devastated because all of a sudden they were like Shaun Cassidy and the Partridge Family,” he says. Even though it might be hard to distinguish branded lunchboxes from Mötley Brüe, Nikki Sixx rolls his eyes when he sees some of the products that musicians are endorsing. He says he drew the line at baby bottles, even after his advisers pointed out that his fans were becoming parents.

“I think you can go too far,” he says.

Jack Rovner, Bon Jovi’s manager, says commercial partners should complement musicians’ vibe, lifestyle and message. Mr. McKagan agrees, saying that there are plenty of companies he would not want as partners. He says he often consults with his two young daughters before signing up, to see if an item is “cool.”

The right commercials, television shows and movie soundtracks can make or break a band.

In 1999, the “Brand New Day” album from Sting was collecting dust until he appeared in a Jaguar commercial with his song “Desert Rose” playing in the background. The move raised eyebrows, considering that Sting was an avid environmentalist who was endorsing a gas-guzzling vehicle, but the commercial helped to sell records. The album won several Grammys in 2000 and sold more than three million copies by January 2001.

Kevin Federline, often painted in the press negatively in the breakup of his marriage to Britney Spears, helped to soften his image when he appeared in a Nationwide insurance commercial during this year’s Super Bowl. The ad poked fun at Mr. Federline, opening with him donning a fur coat and bling as a hotshot rapper before his daydream is interrupted by a boss at a fast-food restaurant barking at him to get fries.

An unusual recent pairing involved the appearance of Bob Dylan as a shadowy figure in a Victoria’s Secret lingerie commercial as a supermodel in angel wings paraded around in stiletto heels with Mr. Dylan’s song “Love Sick” playing in the background.

“That’s one of the weirdest of them all,” says Jim Guerinot, president of Rebel Waltz, a management company that represents Nine Inch Nails, among others.

Sometimes, though, fans push back.

“When Wilco did the Volkswagen commercial, their fans shredded them” on Internet message boards, says Mr. Daniel at Crush, the management company. The band tried to do damage control by issuing a statement on its Web site, explaining it was becoming tough to get commercial radio airplay and the ad offered a way to promote their music. “We feel O.K. about VWs,” Wilco’s band members said in a statement. “Several of us even drive them.”

In addition to Mr. Springsteen, other performers and bands, including Tool and Nine Inch Nails, refuse to form corporate partnerships. Mr. Guerinot says the Nine Inch Nails frontman Trent Reznor is a “purist” who puts the music and art first. Mr. Reznor even refuses to license his music for cellphone ringtones because he thinks that the 10-second snippets compromise the music’s integrity.

With branding lucre rolling in for those who do choose to indulge, some record labels are pressuring artists to share their promotional and merchandising income as a condition of getting record contracts — so-called 360 deals. Monte Lipman, president of Universal Republic Records, says labels, just like artists, are struggling with thinner profit margins, declining record sales and smaller rosters, making it tougher for them to recoup the costs of funding new talent.

“I don’t think there’s a deal being made today where the 360 model doesn’t come up,” Mr. Lipman says.

Some artists, aware of dwindling revenue from album sales, are quitting the big labels and working directly with experts in merchandise, touring and digital downloading.

Madonna recently ended a 25-year relationship with the Warner Music Group to sign a $120 million deal with Live Nation. Under the agreement, Live Nation will handle all of her touring, merchandising, an official Web site, DVDs, sponsorships and television and film projects. Her deal also gives her a 1.6 percent ownership stake in Live Nation, which positions her to share in partnerships that Live Nation strikes with other artists.

“The paradigm in the music business has shifted and as an artist and a businesswoman, I have to move with that shift,” Madonna said in a statement at the time of the deal. “Live Nation has offered me a true partnership and after 25 years in the business, I feel I deserve that.”

Madonna, known as the Material Girl in one of her earlier musical incarnations, said the partnership was necessary today. “I’ve never wanted to think in a limited way, and with this new partnership, the possibilities are endless,” she said. “Who knows how my albums will be distributed in the future?”

For his part, Mr. McKagan still has a business manager and financial planner, but he personally reviews music and merchandise contracts and is in daily contact with his advisers. While most musicians have not gone to business school as Mr. McKagan did, many now take a more hands-on approach to their finances, particularly artists who came of age in the Internet era.

“New artists coming up really understand business. They’re inquisitive, they read things, and they ask questions,” says David H. Chidekel, a principal at the law firm Fish & Richardson in New York. “Back in the hairband days, the bands didn’t really care. They just wanted to get a record deal, get on the road and get going. Now, these kids are looking at everything. They read voraciously, they’re all over the Internet, and they don’t get fooled very easily.”

HIP-HOP artists always understood branding, Mr. Chidekel says. As soon as they had a successful album, they started clothing lines, endorsed sneakers and jumped into Champagne commercials.

For corporations, the deals have both benefits and risks.

Bernd Beetz, the chief executive of the fragrance giant Coty, began seeking partnerships with musicians, including Jennifer Lopez and Gwen Stefani, as part of a strategic plan to turn around his company. And it worked.

“We got into a part of the music world which had not been buying fragrance before,” he says, before cautioning that he scrutinizes each potential partner because what causes buzz can sometimes generate scorn. “We’ve turned down more than we’ve accepted.”

It is precisely because so much money is being raked in through partnerships and merchandising that corporate sponsors tread lightly when signing up with musicians — regardless of whether they are aging baby boomers or digitally up-to-date new acts.

“Good managers will not work with a band or an artist that doesn’t have their head screwed on straight,” Mr. Chidekel says. “There’s too much money involved. They’ll reject them — no matter how talented they are.”

The antics of Mr. McKagan and a fellow band member, drinks in hand, during an acceptance speech at the American Music Awards 17 years ago helped lead to taped delays for the live television show. Now, Mr. McKagan says that it pays to be business savvy.

“I’m in extra innings in rock ’n’ roll right now — extra innings as far as me earning money, writing and performing music,” he says. “I live a good lifestyle and I’d like to continue that lifestyle, and I’m doing everything I can do to ensure that.”

https://www.nytimes.com/2007/10/28/business/28rockers.html?ref=business