Customers picking up the latest MP3 players this fall are getting much more than just a device. Increasingly, they're getting free music as well.
To set themselves apart from the pack, manufacturers are preloading content into their players to increase sales and the music industry is only too happy to oblige.
The Zune from Microsoft, expected this fall, will contain up to 30 free tracks donated from major and independent label partners.
While the economics of the deal vary a bit from one manufacturer to another, they're all basically quid pro quo arrangements in which labels provide the free tracks and reap the promotional rewards in distribution and marketing support.
It's a direct promotional situation for labels, Zune head of artist development Richard Winn said. When you can quantify the real estate to them, then they get interested.
Microsoft is still not discussing the number of Zunes it will ship, but it is expected to be in the millions. The company also will launch a marketing campaign equal to that of its Xbox 360 launch, estimated at more than $300 million. Winn says that much of the advertising and promotional materials will contain images and music of the artists whose tracks can be heard on the Zune.
SanDisk is taking the concept even further in its new relationship with Rhapsody. The manufacturer will introduce a line of Sansa digital media players dubbed the Sansa Rhapsody. More than 32 hours of music will be preloaded into the device, most of it major label fare. SanDisk, a supplier of flash data storage products, holds the No. 2 position behind the iPod with 18 percent of the flash based player market.
This initiative is a bit different in that the music is subscription based, meaning that users have to subscribe to Rhapsody and sync their devices, or the preloaded music will stop playing after 30 days.
Label sources say they see great promotional benefit for giving away music on these devices, as long as it's protected in a secure digital rights management system that prohibits sharing that song for free.
This represents a great opportunity for us, said Astralwerks general manager Errol Kolosine, whose company is contributing music from its artist Hot Chip to Zune. The music industry has been giving away music samplers for decades. It's like a pusher we give you the first hit for free.
Interestingly, the concept of preloading came not out of a desire to promote music, but rather a more tactical need.
In March, SanDisk (one of the pioneers of the preloading strategy) began distributing the Sansa e200 with about 20 songs embedded. According to Eric Bone, director of product marketing and audio/video for SanDisk, the idea initially came at the request of consumer electronic retail chains seeking a better try before you buy experience. Without content, there is little opportunity to compare user interfaces, say, or screen resolution. As they put the device out on the shelf displays, if there's no content on it, it's worthless, Bone said.
With 742 Best Buy stores and 632 Circuit City stores nationwide, the music industry saw the advantage of exploiting this need to get its music in front of more eyes and ears. Labels have focused on contributing music by artists who have a new album or tour coinciding with the device's release date.
And manufacturers are planning to increase their retail presence as well. Zune plans to establish a significant in-store experience that includes listening stations and large displays that incorporate the images and music of the embedded artists.
The biggest wild card, of course, is whether anyone purchasing these devices will actually listen to the preloaded music and subsequently buy more of it. But since the concept is relatively new, there's no data yet that suggests whether preloading music has any affect one way or the other.