Pepsi/Amazon Promotion, Wal-Mart Ultimatum Represents Tipping Point for MP3s
New York, NY (November 30, 2007) – If thievery wasn’t already forcing the major labels’ hands, news today from Billboard Biz surely will.
Pepsi and Amazon.com have joined forces to provide soda-drinkers with the opportunity to earn MP3 downloads for free, sources told Billboard. The official announcement will likely come during the Superbowl on February 3rd, but it clearly shows the demand for physical product has been usurped by the ease and flexibility of the MP3 format. Sources iterated that for every five bottle caps collected, fans would get one free download. For office staffs or chronic caffeiners, it’s the perfect opportunity to cash in.
…”In the new Pepsi promotion, sources say, Amazon will serve as the supplier for the downloads, and customers will need to visit a specific redemption store on the Amazon site to access music from participating labels. While all majors have been approached about participating in the offer, the price that Amazon is willing to pay appears to still be a sticking point for some labels.
“Sources say that Amazon will pay labels in the area of 40 cents per track. This compares to the 65 cents-70 cents labels currently receive from Amazon for digital track sales and the 70 cents they get from Apple.”
News of this promotion coincides nicely with Wal-Mart’s announcement that they have officially asked the Big Four to provide walmart.com with MP3 versions of their catalog. Read more:
“Another factor driving the labels’ decisions (to go MP3), sources say, involves mass merchant Wal-Mart alerting WMG and Sony BMG that it will pull their music files in the Windows Media Audio format from walmart.com some time between mid-December and mid-January, if the labels haven’t yet provided the music in MP3 format.
“…Though Wal-Mart maintains a modest 2% market share in the digital download arena, its market share for physical CDs is considerably larger: about 22%, Billboard estimates. A senior executive at one of the other majors says that if Sony BMG or WMG resist the merchant’s digital requests, they may be concerned about risking such consequences as losing out on prime in-store real estate or smaller buy-ins on new releases in the physical world.”
While it was always inevitable, the news out of Wal-Mart Land has seemingly given finality to the discussion, and it reverberates like a punch to the gut. I’d suspect that Warner and Sony will have to follow suit unless they have something left up their sleeves. Read more about why it’s do-or-die time for the CD in the NY Post here.