The Cool Kids and other popular musicians at SXSW are signed to a new kind of record label-Mountain Dew’s Green Label Sound. In my opinion, this trend will grow in the world of music and move into the world of indie film distribution as well.

This phenomenon is happening because of the combined economic challenges of record labels and the decreased reach of branded television advertising. Traditional record labels have been struggling to earn enough money through record sales because of piracy. Therefore, record labels are now insisting on 360 deals, in which musicians give labels a percentage of all their income. Many artists aren’t happy with this arrangement. Simultaneously, the reach of branded television advertisements are decreasing due to TiVo and Netflix. “Interrupting TV shows is ‘not something most people will tolerate,’ says TiVo CEO Tom Rogers. In the 40% of all households that have a DVR ‘the amount of commercial avoidance is huge.’” (Source David Lieberman at Deadline Hollywood.com) Netflix has over 23 million members on their ad free platform (Source Netflix Investor Relations), some of whom are beginning to cut their cable cords. In response, some brands are finding a new way to reach an audience.

Remember the music industry isn’t struggling because people don’t love music. Social networks allow artists to have more reach and powerful connections with their listeners. Green Label Sound signed The Cool Kids to be part of their relationship with fans (consumers). I think that is a good investment when you consider the depth and duration of the relationship the fans have with the rap crew. This combined with (last time I checked) 3,370,297 views for their Black Mage music video on Youtube, 4,850,369 plays and 423,384 listeners on Lastfm,  187,861 Likes on their Facebook page, and they have 12,878 followers on Twitter. At SXSW The Cool Kids performed at the Green Label Sound  Showcase and many top music blogs mentioned their label.

In exchange, the Cool Kids get to keep all of their income from iTunes album sales, except for processing fees (Source Billboard). They are promoted by a marketing budget much larger than most record labels, since Green Label Sound is owned by PepsiCo, a Fortune 500 company that has sold billions of dollars worth of soft drinks vs relying on album sales. “Labels suck,” the Cool Kids’ Chuck Inglish said, “What can they do that Pepsi can’t do? We had a good experience with Green Label Sound — we got more from that single than we got from our previous album. I was tired of the album sitting around and just wanted to get it out.”(Source Billboard)

Here’s where indie film distribution fits in. Sponsors at prestigious film festivals might evolve into distributors: starting to acquire titles that make sense for the brand’s identity, focusing on marketing themselves as patrons of the arts, distributing films to theaters where their target demographic lives e.g. college towns. This strategy increases brand loyalty by adding value to people’s lives.

Content producers will win because all of the typical costs associated with theatrical film distribution will be covered by the brand. So, creators are going to be able to keep more money. Filmmakers will still own the digital rights for their project and the buzz from screenings will increase the projects’ value. “Theatrical will drive awareness of the film,” WME agent Liesl Copland said regarding distribution for Blue Valentine (Source Eugene Hernande at IndieWire).

What are your thoughts on branded distribution?