Off the record

In the hunt for extra revenue, the music industry is embracing artist spin-offs.

Off the record

Lady Gaga's decision to team up with Coty to launch a perfume is not altogether surprising. Artists such as J.Lo, Victoria Beckham and even Avril Lavigne have already embraced merchandising and branded fragrances, which provide them with a significant additional source of revenue.

Moreover, the singer has a massive customer base on which to draw, including 4.8m followers on Twitter.

Her uniquely close relationship with her army of fans, whom she refers to as her 'Little Monsters', is illustrated by the fact that Lady Gaga has a tattoo dedicated to them and, at each concert during her recent tour, she chose a member of the audience to join her for a drink after the show.

Coty will have been keen to sign up to a deal that will allow it to exploit the huge demand there will almost certainly be for the product. However, while there is no denying their phenomenal success, it could be argued that there is a risk consumers will tire of these music mini-moguls.

Paul Stokes, news editor of weekly music title NME, believes Lady Gaga is in the enviable position of being able to exploit her public profile as the biggest female pop star since Madonna. 'People are so interested in the cult of her personality,' he says. 'She is not one of these stars boring people with the minute details of her life.'

Wider audience

According to Cameron Day, global business development director at experiential agency Iris, an artist such as Lady Gaga spans the divide between music and fashion.

'She is a cultural entity in her own right and crosses so many different sectors,' he says. 'Historically, a lot of artists have been wary of any kind of commercial activity, but over time that has changed and bands are increasingly seeing how brands can help them to reach a wider audience.'

This raises the issue as to whether brands unrelated to the music industry can effectively target fans with products and services, and sub-groups such as Lady Gaga's Little Monsters can offer a suitable return on investment.

Certainly marketing to the fans can be a tricky balancing act. 'The potential audience for different artists is much broader now,' says Cameron 'The tribes that once held true in music no longer do so, as many people are now into a wider range of things.'

James Layfield, managing director of The Lounge Group, a marketing agency that targets under-35s, says the key to success is to ensure there is a real relevance and synergy between brand and artist.

'In a celebrity-driven era, of course the temptation is to team up with stars to get the column inches and sales,' he says. However, Layfield also warns that the connection must be robust if it is to produce a sustainable commercial return.

With the advent of 360-degree deals, record labels are now laying claim to a share of the proceeds from live events and merchandising. Critics argue that, as a result, the industry has become fixated on wringing as much money as possible from artists within as short a time as possible.

One need look no further than the exposure gained via Duffy's deal to be the face of Diet Coke. Similarly, it could be argued that singer Pixie Lott was signed by Mercury Records as much on the basis of her potential to generate spin-off revenue - she has since designed a clothing range for Lipsy - than her likely longevity as an artist.

Stokes says that, increasingly, record labels are looking not just at the raw talent of an artist but asking whether they can be developed as a brand that sells.

'It hasn't got to the stage where labels are simply asking where the money comes from, but it would be a shame if a great artist doesn't get a deal because they can't sell a board game,' he adds.

Ironically, artists such as Lady Gaga, who have built up their fan base from the grass roots, rather than being packaged and launched as a finished product, are more likely to achieve elusive long-term success. It is unfortunate for record-company bosses that this cannot yet be bottled.

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