Pepsi Launches Own Music Label in China

Posted by: Frederik Balfour on August 06

Forget Michael Jackson. PepsiCo (PEP) has launched its own music label in China that will enable it to groom, produce and ultimately control its recording stars. So instead of having to pay big bucks to established artists to feature in its ad campaigns, Pepsi can create its own Chinese rock stars. The new recording label is called QMusic, according to a press release from Pepsi’s PR firm, that otherwise provided few details of the venture. My guess is the plan got the blessing of Pepsi CEO Indra Nooyi during her 12 day visit to China last month.

However I do have a well-founded theory of my own on just how this thing will play out. Harry Hui, the brains behind Pepsi’s highly successful marketing effort in China, has strong experience in the recording industry. Before signing on as Chief Marketing Officer for Pepsico in China, Hui headed up Universal Music in Asia, and he also helped launch MTV Asia in the early 1990s. [I also have heard him sing karaoke along with Michelle Yeoh at an Armani party in Shanghai a few years ago, but that’s another story. It’s also my oblique way of showing that I know Hui both socially and professionally.]

When I was in Shanghai two weeks ago, Hui invited me along for the taping of a new reality show that Pepsi is producing. Called the “Battle of the Bands”, it the show is shot in a studio housed in a former cotton mill on the northern outskirts of Shanghai. Following the American Idol format, three judges [one of whom is Hui] rate the bands each week. But unlike other reality shows, Battle of the Bands has a Chinese twist—all 10 bands perform over 10 shows, and the band with the highest score wins first prize—-and a recording contract on the Pepsi label. In the meantime, Pepsi helps create a following for the artists who will also be featured in a Pepsi commercial shot at the end of the season. No doubt it will be featured at the U.S.A. Pavilion in the Shanghai World Expo which Pepsi is sponsoring. Coke, which enjoys higher sales than Pepsi [and clearly outspends it on marketing—the Beijing Olympics alone cost plenty to sponsor], has its own pavilion at the fair.

It’s a pretty nifty business model. Pepsi plucks unknown and promising talent, nurtures it, and can capitalize on the musicians’ talent to help promote its soft drink brands. Of course a huge amount of effort and money has gone into producing battle of the bands. The show is broadcast nationwide by Zhejiang television, but content is entirely Pepsi’s call. In addition, Pepsi has created its own website devoted to the reality show that features backstage interviews, gossip etc, creating a social networking community based on the show. Pepsi has always had a strong tie in with music stars, of course, starting with the Michael Jackson advertising campaign of the 1980s. More recently in China, Pepsi has worked with pan-Asian heartthrob Jay Chou featured on youtube.

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