No Big Mac for Apple; McDonald’s to give away over 100 million Sony Connect songs

“Hungry for a taste of the online music business, Sony Corp. is aiming to line up McDonald’s Corp. to market the Japanese conglomerate’s new download service, according to people familiar with the deal,” Jeff Leeds reports for The Los Angeles Times. “The two companies have been hammering out the details of a pact in which McDonald’s would provide fast-food diners with free songs from Sony’s online music store, Sony Connect, these people said. The deal is expected to be announced this week.”

“The sources said McDonald’s was expected to commit about $30 million to advertise the program in the U.S. and beef up the launch of Sony Connect, which will charge 99 cents per song when it starts up this spring,” Leeds reports. “The pact would underscore a central strategy of would-be players in the online music world: find major advertisers with the marketing clout to sell alternatives to the illegal downloading of music on unauthorized file-sharing networks such as Kazaa and LimeWire.”

Leeds reports, “Sony has already announced a deal with UAL Corp.’s United Airlines in which travelers, once the Connect service starts, will be able to trade in frequent flier miles for free songs. And Apple Computer Inc. has teamed with PepsiCo Inc. to award buyers of soft drinks downloads from the iTunes Music Store if they find special codes under bottle caps. Pepsi pledged to give away up to 100 million songs in the bottle-cap contest. But Apple Chief Executive Steve Jobs said recently that the redemptions had fallen short of expectations.”

Leeds reports, “One person familiar with the McDonald’s deal said the fast-food company would probably give away more than 100 million Sony Connect songs in the U.S. McDonald’s had been in talks to launch a similar marketing effort with Apple, but switched plans after a last-minute pitch from Sony, sources said.”

Full article here.

MacDailyNews Take: Certain analysts and Anti-Apple “Windows experts” will need to send their pants out to the dry cleaners and Steve Jobs needs to get on the horn to Burger King pronto. Nothing’s worse than word leaking of a huge deal (as was the iTunes and McDonald’s deal) and then having it go to a competitor. At least it’s Sony (the service is doomed, no matter how many giveaways they conduct) and not some WMA outfit. Sony Connect is said to utilize Sony’s “ATRAC 3” format and songs can only be transferred to “secure Sony portable audio products.” Notes to McDonald’s: most people use, have, or want iPods or iPod minis. Your giveaway is incompatible with the market-dominating player. Not a smart choice. And please try to serve hot food, or at least melt the cheese, if you can figure out how to do it, okay?

43 Comments

  1. The Pepsi bottles still haven’t made it to middle Mississippi. I can buy something called Sierra Mist with iTunes caps, but only in sugared form, not diet.

    Shame that Micky D’s is going with Sony, but Stevo still has a lot Pixar movie promotion tie-ins to dangle in front of someone else.

  2. I haven’t seen any Pepsi-iTunes bottles in Brooklyn or Manhattan yet. Sony’s format is AAC but will only work on their own Sony players no one elses. I think this deal is probably in addition to Apple’s deal and not instead of. Especially since each will only play on their own players. I don’t think McD’s is stupid enough to commit to a service and format that hasn’t even launched in the US yet. It’s just another rumor, let’s not get carried away.

  3. A bit of a bummer since there had been some anticipation. The fact that this is yet another proprietary format added to the mix can only help Apple. Kinda like a third candidate for the presidency doesn’t stand a chance of winning but can act as a spoiler. I doubt if this will slow Apple down much, more likely it will just screw with WMA.

  4. Cat Person:

    PepsiCo actually has no beneficial shareholding in YUM! Brands (KFC, Pizza Hut, etc.), as it gave the value to shareholders in a tax-efficient demerger a few years ago.

    The demerged company (Tricon Restaurants) then merged with another fast-food combine to create YUM!

  5. Bad news is bad news, even if it is just one rumor contradicting an earlier one. Assuming that the business terms are reasonable, a promotion with McDonalds is a big thing in anyone’s book. This isn’t going to crush the iTMS, especially since it is for a proprietary Sony audio format and not WMA. But I don’t see any value in trying to spin the situation (Alasdair Scott) and make it sound like a good thing.

  6. ATRAC? Doesn’t that sound a bit too much like 8-Track?!?! ” width=”19″ height=”19″ alt=”wink” style=”border:0;” />

  7. I think this a Great Thing, and wouldn’t be surprised if Steve Jobs actually let this deal go to Sony (rather than matching their lowball bid). More formats creates the impression that there is not just one Windows Compatible option, WMA and Apple is “incompatible.” That’s the MS business plan – it is the one and only “compatible” option and everything else is fringe, weird, unsupported, etc. etc.

    I hope ATRAC-3 takes off. Hell, Sony sells a lot of AV equipment and maybe they will tie this in (imagine a cheap Sony boombox you can connect to the internet and download songs on). Then Apple should strike an interoperability deal with Sony – ATRAC-3 plays on iTunes and iPod. Sony portable players work with iTunes and iTMS.

    Then, out the window, goes MS and the MS drones only “argument” against iTunes (it’s a “closed” system). No, it’s not. It works with Sony’s system.

    On the other hand, Apple should never support Real’s AAC format. They need to die.

  8. Jimbo, I was thinking the same thing…When people hear about this “new” ATRAC technology, they will just laugh and say…”ahh…I remember those days,” and move on buying their songs on the iTMS.
    Anyway, I never thought Apple and McD’s would ever merge in the first place…it’s like having Red Lobster partnering with Gateway. Apple has, and values, it’s name and brand. McDonalds isn’t exactly a high quality brand that Apple strives for. At least with Pepsi, they catured to the young “hip” culture. No one will redeem these Sony songs. Anything competing with iTMS is just a sorry attempt at an over game.

  9. Oh well. I haven’t been to McDonald’s in quite some time, and an iTunes promo would’ve got me back in there, at least during the promo period. Their loss (bad business decision, but McDonald’s hasn’t been all that stellar lately anyway). I’ll go to where ever the iTunes promo is. ” width=”19″ height=”19″ alt=”raspberry” style=”border:0;” />

  10. Stingerman. Any deal will be with one download service only. McD is going with Sony Connect not with iTMS. No big deal in the longrun. These promos tend to have a short term spike but that’s all.

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