So far, 2008 hasn’t been good to the music industry – not that the year before was, or even the year before that.

Copyright law reform and anti-piracy issues are being debated by Canadian politicians and music industry leaders. Just days into 2008, Nielsen SoundScan Canada confirmed that modest digital music sales in Canada (1.98 million out of a total 44.4 million albums sold last year) won’t likely make up for the long-term decline of the CD. Piracy aside, there are more options than ever for consumers looking to get their music for free, and eat it too.

But in the spirit of a sponsor-packed Canadian Music Week (March 5-8, www.cmw.net), MiC is staying positive on the issue. Websites are appearing that let fans act as investors for their favourite bands (slicethepie.com) or download music for free – with advertising attached (Airtist and Spiralfrog). Amid the gloomy industry headlines and talk about how music industry sellers could compete in a marketplace dominated by Apple’s iTunes, there was an interesting ad that aired during the Super Bowl. Amazon.com promo’d its relatively new MP3 service by offering a billion free downloads, courtesy of Justin Timberlake and Pepsi.

Adrian Capobianco, VP interactive marketing for Toronto’s FUSE Marketing Group, is one of many marketers planning to attend Canadian Music Week events with ideas on how brands can save the day. Capobianco brought a marketer’s perspective to Vancouver’s invite-only music industry conference, Transmission (www.transmitnow.com), in December. This week, he will moderate a panel at the Millennials Conference on Wednesday. Then he’ll sit on a Canadian Music Week panel called ‘I’m with the Brand: Building Audiences Through Sponsorships’ on Friday. Here we are on Tuesday with Capobianco – On the MiC.

Why should brand marketers and advertisers care about the music industry’s woes?

‘The music industry is in a world of pain right now. Everybody knows that. Six or eight years ago, I think it was a $40-billion industry in North America; in terms of revenue, I think it’s now projected to be a $20-billion industry. But music consumption is at an all-time high. There are far more places for consumers to get far more music. The problem is that a lot of people aren’t paying for it.

‘From a marketing perspective, what we’ve found over the last couple of years is a lot of opportunity to use branded entertainment. Music has kind of led in youth entertainment. We’ve worked with some pretty progressive labels in Canada and North America to get access to content under different models.’

How is the model changing for music labels, and how can marketers save the day?

‘The traditional model is, ‘I am the music exec or the musician, and as the creator of content, I want to charge for the content.’ We’ve done some pretty cool programs with brands like Tetley, where the labels are looking at it in a totally different sense. They are willing to look at content differently and say, ‘How can we sample our product like a traditional consumer goods firm, in an exclusive way?’

‘We created the Tetley Music Lounge (www.tetley.ca/musiclounge). Consumers register and get free monthly music downloads – everything from never-before-released Sarah McLachlan songs to artists they’ve never heard of – and we get the consumer data for our client. The label, Nettwerk Music Group, gets to sample their product and promote their artists (Sarah McLachlan, Avril Lavigne, Barenaked Ladies) through an exclusive channel for them. That’s been in market for over two years now, and we have some strong metrics behind it. We rolled it out on a North American base just a little while ago. We’ve seen time spent on the site go up an average of 300-400% by doing this. We’ve created a destination that people want to visit.’

Can you give another example?

‘We distributed 1.5 million CDs in Canadian Tire stores across the country, custom CDs created with Canadian Tire around the holidays. We worked with various labels, got the content and distributed them with the perceived value of a CD with great musicians that would usually cost $15 or so for no cost – and tied it to a holiday promotion with other tactics.

‘We’ve also done live performance with Second Cup and Rogers, launching their products in Newfoundland with live concerts. We did a lot of the marketing for One Night Live (www.OneNightLive.ca), the fundraiser last Thursday for Sunnybrook (Sunnybrook.ca), where we had Sarah McLachlan, Bryan Adams and a bunch of Canadian artists. We’ve probably done about a dozen campaigns over the last year using either digital, live or physical music and entertainment content for our clients.

‘At the end of the day, what are the brands and how can we use entertainment content to connect with their consumers? Quite frankly, a lot of the challenges the music industry is going through are about changing their traditional revenue streams. How do we create new models of accessing content in a way that makes sense for the brand? By ‘access,’ I really mean ‘pay’ for the content. You can use content in a way that makes sense for the brand and its customers. The music industry has been really warming up to this in the last year or two.’

So what brands are getting it right in music delivery? What models are working?

‘It gets interesting with content creation. Bodog did a battle of the bands with some pretty big money and marketing around it. That was kind of interesting in terms of re-creating where talent is sourced. The thing about music is that everyone consumes it. And depending on how you package it, you can hit any demographic and really engage them. You can find talent that will work well for that brand. There’s everything from the large campaign stuff to the micro-economic model. For example, buy a product, get a free music download.

‘We have a business out of the US called Promotional Currency (www.promotionalcurrency.com), which is mostly retail and service oriented. So you can buy a product at a grocery store and get a free music download. And they have a proprietary financial model where instead of paying the retail value of $1 per song download, they’re paying a fraction of that, based on the estimated redemption that limits the marketer’s risk. You can get very small scale or very large scale.

‘The largest program in market right now is giving away 17 million songs in the US, so the retail value of that distribution is $17-million worth of music. The actual redemption won’t be close to that, but if you’re able to get a $1 value when you purchase that, it allows you to stand out at point-of-sale in retail. There are a ton of different models emerging in the digital distribution side, with Puretracks.com, Hip Digital (hipdigitalmedia.com), etc.’

What labels are becoming more progressive in terms of this approach?

‘We’ve done a lot of work with Nettwerk Music Group. They’re fairly progressive. EMI has been a bit more progressive. Strategy just did a story on Universal and what they’re doing (click here for that article). All labels have to take a look at this and ask themselves, ‘How much do we really love our traditional model versus these new models?”