Thursday, August 6, 2009

Pepsi now one degree from Chinese government, via music partner

Couple of interesting announcements today involving PepsiCo, China and music.

First, Pepsi is launching a music venture in China called QMusic, which is based around an Idol-style TV contest show for “aspiring bands and singers to record, market and merchandise their music.” Essentially Pepsi hopes to grow some cheap talent in China that they can then use to sell soda there. The venture’s Chinese boss, “music industry executive” Tony Yapp, sez: “This is like music label 3.0.”

Coke reportedly has a stronger hold in China, but Pepsi is working hard to catch up. The Eye on Asia blog at Business Week sees this as an attempt to compete with Coke’s efforts at the Shanghai World Expo next year, where Pepsi is spending $5 million to sponsor the U.S. pavilion. (Coke will have its own pavilion there.)

But for Western companies to do big business in China, they are generally required to partner with a Chinese company, which takes the majority position. For QMusic, Pepsi’s partner will be A8 Digital Music, which last year claimed profit of $38 million on revenues of $103 million. (Conversion rate: US$1 = 6.83527 RMB.)

And who is this A8 Digital Music? A separate announcement today reveals that A8 is “the exclusive music partner” for a mobile media thing by Xinhua, the Chinese state news agency and official propagandist.

So the majority partner of Pepsi’s new Chinese venture, which will do all of its legwork and palm-greasing — sorry, “government relations” — and whatnot, is itself one short step from the state censor. And what does this mean? Well, I doubt Pepsi would ever care about issuing reports on Tibet or Falun Gong, but let’s just say that Björk is now definitely never going to do an ad like this:

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