MUSIC - THE BANDS STRIKE BACK

Now that the music industry has acknowledged the web's popularity, it must find a way to stop the pirates without making life too difficult for the honest fan. Robert Gray asks how it can strike the balance.

In 1979, The Buggles sang of video killing the radio star. Today, while the soundtrack is provided by Kylie, Will, Gareth and countless boybands, the nagging refrain is of illegal digital duplication slaying the golden goose that is royalties.

The record industry sees itself as under siege, with many senior executives complaining piracy makes it harder to achieve a return on the investment labels make when finding, developing and promoting pop acts. Peer-to-peer file sharing over the internet and the proliferation of CD-burners supplied with PCs has given many the means to make unauthorised copies of tracks.

In Germany, sales of recordable CDs overtook sales of recorded CDs for the first time recently. In the UK, the problem is not as acute, but piracy has reached epidemic proportions none-theless. Younger consumers, in particular, often appear to believe that music is something it is best to avoid paying for.

So how can the record industry hit back? Can a way be found to harness the power of digital media as a marketing tool without giving away too much of the precious content from which the record labels and performers derive their income?

"Everyone needs to understand that record companies are rights owners," says Rob Wells, head of new media at Universal Music Group. "Exploitation of content is what our business is all about. But we can't be too heavy-handed in protecting our rights because the more controls we put in place the more difficult the consumer experience becomes, he explains.

Tony Martin, Sony Music Europe & UK's vice-president of e-media, adds: "The industry has to become more clever about what it sells and must look at what it owns so it can monetise commodities it doesn't currently monetise. We can trade on access to our stars because that is something pirates never have. We own the relationship with the artist."

The balancing act between wooing consumers and making sure they do not rip off the record company is a tough one to carry off. Yet potential digital answers to this question are emerging. One approach is to develop subscription areas on artist's web sites - VIP or club areas, as some are called - which offer exclusive content unavailable elsewhere. Artists taking this route include boybands Westlife (www.westlife.com) and A1 (www.A1-online.com), controversial rappers So Solid Crew (www.sosolid.com) and Irish crooner Ronan Keating (www.ronankeating.com).

To encourage consumers to shell out for legitimate recorded CDs, some record labels have made access to these subscription areas contingent upon having a code that is only available when buying the CD. A pioneer of this approach is Virgin Music Group's French duo Daft Punk, who tried it out for their album Discovery. By buying a non-pirated version of the album, fans became members of Daft Club (www.daftclub.com), which gave them access to exclusive information about the band and new tracks. The club could be accessed via a 'Daft Card' that gave users a unique ID.

DJ Sasha (see panel, p24) is taking a similar approach with his new album, Air Drawn Dagger. Many other artists are likely to follow suit. Effectively, they reward music lovers for investing in the genuine article.

Consumers buying Universal Music Group artist Ronan Keating's new album, Destination, get a digital 'key' to unlock exclusive parts of his web site. As the site puts it: "This exclusive secret area has been put together as a thank you to all of you who have bought the album. We've put together some really cool stuff, including a very special video message from Ronan."

For the keen fan, it's certainly a compelling offer. And from the record company's point of view, not only does it help keep fans honest but it also allows them to capture some very useful data that may be used for marketing purposes. "This is a great way of collecting consumer information, says Universal's Wells. "It allows us to build a database of consumers and carry out email marketing campaigns where we can have properly quantifiable results."

Moreover, Wells adds, giving fans access to extra goodies can create a big buzz around the release of an album, helping it to achieve a high chart position in its first week of availability. Where an album appears on the chart in its first week can be make or break for a release, so any extra push to sales that can be given is worth considering.

Of course, strict rules exist to ensure record companies do not 'buy' their way to the top of the charts by bundling freebies with their musical content. The Official UK Charts Company (www.theofficialcharts.com) keeps an eye on what record companies give away with their releases. A few small 'gifts' are permissible, but if the value of gift is deemed too high, the record becomes ineligible for the chart - a commercial catastrophe.

The rules apply in the same way to the interactive content included on any audio CD. Such content must be directly related to the artist in question and cannot have been previously available for purchase in its entirety as a separate product. These restrictions are another reason why many record companies are looking to drive fans to artist web sites.

Many in the music industry feel the subscription site model only works if genuine added-value content is made available. This is common sense, for if fans come to the conclusion that there is little worthwhile content to be had they will eventually shun such areas. "Sites like this can be a good idea but the record industry needs to be less parasitic," says Adrian Pope, head of digital at record label Independiente. "I'm not a big fan of VIP subscription to a site; I think we need to see more discerning use of e-mail marketing."

Record companies that have set up subscription areas must decide how often to update them and whether they are prepared to make an ongoing investment at times when the artist has no new release. If they do keep updating the site, there has to be enough demand to recoup that investment.

Sony's Martin says he has considered giving CD buyers access to the subscription area of a site for three months as part of their purchase. Continued membership would cost a fee.

Members of the Westlife Platinum site, which is run by BMG, are charged £1.99 a month. Among the benefits are text messages from the boys, behind-the-scenes video footage, weekly video interviews, a 15 per cent discount on merchandise, a special community area for diehard fans and downloads.

For this sort of model to work requires serious commitment from the artists - and some are far more prepared to commit to this sort of thing than others. "Every artist is different, concedes Martin. "Sometimes we have to take up the slack; in other cases we are playing catch-up with them."

Perhaps surprisingly, considering their negative reaction to fans posting their tracks online, a band at the forefront of using digital technology in innovative ways is Oasis. In a much-publicised move in late-June this year, the band teamed up with The Sunday Times to give away a cover-mounted promotional CD. The paper supported the promotion with TV advertising.

The CD included three previously unreleased tracks from new album Heathen Chemistry. These could only be accessed using a PC. From the CD, users were taken online to register and obtain a digital key that unlocked the new tracks.

The promotional CD featured BigTime multimedia player technology developed by Spero Communications using IBM's Electronic Media Management System.

This technology ensured that users were only able to play each of the new tracks a maximum of four times. The objective was to bring Oasis' music to new audiences without sacrificing rights.

Once they had previewed the tracks, consumers could link directly through to HMV's web site (www.hmv.co.uk) to pre-order the album.

The technology allowed users to distribute the tracks to others via the internet; they could register themselves and hear the tracks in the same 'managed environment'.

"It worked well for us on the level of data capture more than anything else, says Emma Greengrass, general manager of Oasis' label, Big Brother Recordings. "The link-up with The Sunday Times was vital because it would have been prohibitive for us to advertise as much as they did. Activity like this will help us all to protect the artists' rights."

Spero Communications managing director Ian Spero says: "Oasis opened the door, but we will be asking new artists to come through. To say 'no, we will not give away music' restricts sampling - and sampling is an important part of marketing.

"Everyone is working on how best to protect content, but that's not helping from a marketing point of view. The record industry can sit around waiting for a perfect digital rights management (DRM) system to come along, but some hacker will do their damnedest to break it. We need to make buying music a more attractive proposition than stealing it."

There's no denying that BigTime is a neat compromise, allowing consumers access to music without giving it away entirely. Yet even limiting the number of times a track can be played makes some in the music business uneasy. "There's a trade-off with cover-mounted CDs, says Wells. "The content is protected by a sophisticated DRM tool, but you're still giving away content. The Universal line is that it devalues the market."

Carlos Rodrigues, head of new media at Telstar, which includes Southampton garage star Craig David among its artists, adds: "It will be a while before there is some kind of industry standard about piracy."

The arrival of 'virtual' bands such as the animated group Gorillaz (www.gorillaz.com), which have exploited new media intelligently to promote themselves, further illustrates the opportunities for smart digital marketing. As well as 'living' in its own web site, the band also has a presence on interactive TV. It launched a game on Sky digital's PlayJam channel last February.

"Interactive TV is an area that completely appeals to Gorillaz, as it is the world's first truly interactive multimedia rock band, says Gareth Currie, Gorillaz' marketing manager.

But some in the business aren't sure whether digital technology is a blessing or a curse. Things are changing fast, but in many ways they are the same as they ever were: piracy has long been a problem and Elvis can still secure a number one hit.

DJ SASHA CREATES SECTION ONLINE FOR CD PURCHASERS

"A lot of young people have no understanding of money going to an artist. They think music is free, reckons Guy Ornadel, director of Ornadel Management.

Ornadel manages DJ Sasha, whose new album, Air Drawn Dagger, was released on 5 August.

To encourage consumers to buy original copies of the album, Ornadel, Sasha and record company BMG have created a members-only section of the artist's web site (www.djsasha.com) developed by de-construct.

Each original CD comes with a reply card containing a unique access code.

Purchasers can use this to log on to the site, which issues an IP-specific access code unique to their PC.

The members-only section of the site includes an interview with Sasha, exclusive mixes and a competition to remix a track, with an Apple G4 computer going to the winner.

"Sasha's idea is to try to add value to the album and make it more worth getting, says Paul Bursche, BMG new media marketing manager. "We're trying to get the purchaser of the CD to go online. This really was done with Sasha's involvement. We are entering an age where artists are much more interested in what's going on."

Bursche concedes that producing CDs with a unique identifying number is "laborious and costly", adding a "couple of thousand pounds to production costs when manufacturing about 100,000 CDs.

Of course, this is worth it if it encourages consumers to buy an original copy of the album.

"Sasha hopes potential customers will see the value in owning an original copy, says de-construct business development director Dan Douglas. "Each album will give customers full access to the members' section, where they'll get content above and beyond the album's cost. Sasha plans to do webcasts and chats - and make some music available to remix online. In turn, this could become a talent search."

HYPNOSIS MEDIA TAKES ARTIST PROMOTION STRAIGHT TO FANS

Hypnosis Media has designed numerous acclaimed music web sites, including nme.com and Worldpop, as well as artist-specific sites for Pink Floyd, Craig David and Blur, among others. But it is also behind some innovative online marketing and viral tools that have helped promote new material.

For Robbie Williams, Hypnosis developed the 'Robster' desktop application, designed to promote the Swing When You're Winning album. The downloadable application (from www.robbiewilliams.co.uk) sits on the fan's desktop, pumping updated news straight to the user.

The application also provides a live chat facility - again on the user's desktop - and a Windows Media Skin, all branded in line with the artwork for the album.

"The exciting thing about this application is that it takes the music, the chat, and other value-added stuff to the user, says Hypnosis head of account management Scott Muir.

"It is also highly visible branding."

Hypnosis has also produced numerous e-cards. A good example of the genre is one Warners commissioned to promote Madonna - it is still active (www.madonnaghv2.co.uk).

Once the card has been sent, Warners can update the content, thus expanding the shelf-life of the card.

The Madonna card has other features, including a special stamp collection viral incentive.

Other techniques used by Hypnosis include skins - branded designs for Windows Media Players created for clients including animated band Gorillaz - and viral games. Three games have been developed for Travis, including the 'Sing Fling' game (available on www.travisonline.com), which generated 100,000 game plays and was even mentioned on Radio 1.

Last year, Hypnosis created an online game for ex-Spice Girl Geri Halliwell based on her Scream If You Wanna Go Faster video.

The game allowed players worldwide to play against each other online by racing a 'Geri' avatar.