With the itunes contest in Pepsi right now, who pays who? On one hand, Pepsi is giving away itunes product for free, so you might think that they would have to pay for the songs. On the other hand, you will probably get a lot of people who are not on itunes who will sign up because they have a free song and then purchase more once the barrier to entry is removed.
Sure does work though. I am a die-hard coke fan and was using Napster, but I started buying Pepsi for the free tunes and then bought some more once I was signed up. Damn those marketing geniouses.
Well, Apple is contractually obligated to pay the record companies for songs they’re offering, so they are going to need to see some money. Most likely, Pepsi is paying Apple, though there may be some sort of discount that Apple is willing to give them.
They are going to need to provide some money. Just because they have obligations to the labels does not necessarily mean that the money flows in their direction from pepsi. I really doubt that apple would be paying pepsi, but it doesn’t seem quite out of the question that the entire funds for paying off those obligations are coming out of some ipod promotional budget within apple.
Pepsi gets a free gimmick to include with their drinks. Ipod, hopefully, gets a bunch of new customers who will actually pay for other songs.
This isn’t to say that pepsi isn’t paying at a discounted rate, but I don’t think it’s impossible that it’s a freebie to them.
My understanding is that Pepsi is paying for the music. All the business reports I’ve seen about the deal talk about Pepsi’s costs for running the promotion. Not sure if there are any discounts, though. Given that iTunes has more brand popularity than Pepsi at the moment, it’s entirely plausible IMO.
Apple probably incurs some costs as well, such as the bandwidth for the web site, but those probably get accredited to “overhead”.