The Pepsi – iTunes Debacle

Remember all the excitement back in January? Apple sites were abuzz with the semi official rumors of a killer promotion involving Pepsi, the ultimate promotion company. The deal was going to become a competition killer. All the lesser online music vendors were going to be over run by the tsunami-size wave of teenagers rushing to purchase Pepsi bottles. Well, a funny thing happened of the way to glory, the promotion fizzled for a lack of carbonation.

On closer examination it was a classic case of Apple hype and Pepsi’s secret penny-pinching. Apple, a company who normally quashes all rumors with legal threats let the promotional rumors fly. After all, the best advertising is always free. Pepsi, looking at theoretically huge financial bill, knew they had to limit their liability. To avoid writing a huge check, Pepsi looked at their slowest-selling bottle product, the 20-ounce single. In addition, they also knew that a lower potential number of iTunes users would purchase this size. The foundation was set by the beverage maker for a controlled promotion that would limit their financial liability over the short term.

The day after the Super Bowl, some of my more musically inclined students were excited by the iTunes commercial, even though none of them had an iPod. Within a few days their excitement turned to puzzlement and frustration. The ads had said 20 ounce bottles, which my students and a vast majority of potential players thought would be available in six-packs. Instead, what they found was that 20-ounce bottles are quite hard to find in regular stores. That particular bottle size is sold in convience stores and gas stations, places that charge too high of a price in comparison to a grocery store, etc. Secondly, most people buy soft drinks in six packs at a savings of fifty percent over individual purchases. Third, schools sell soda out of pop machines, thereby eliminating another potential source of mass winnings. The stage was set for the biggest promotional dud since New Coke.

I even went looking for 20 ounce bottles at the various local grocery chains, Target, Wal-Mart, among others. I failed to find any Pepsi-iTunes bottles, six-pack or single. My intention was to download a few songs that I use in my teaching of poetry, i.e. Janis Ian’s classic, “At Seventeen”. My own frustration turned to disbelief. How could Steve Jobs been so hoodwinked? Was it karma payback for stealing John Sculley all those years ago? This blunder is equal to the tremendous delay in the iPod for Windows rollout.

It is becoming increasingly apparent to me that Apple develops blinders every time it hits a marketing homerun. The iMac had the same sort of effect. Apple dilly-dallied celebrating its success and waited four years to bring out a 17inch version, the eMac. This was two years too late and helped to end any chance of staying with Dell in the education market. The same holds true with the easy access case design of the G3 & G4 towers. As wonderful as that engineering feat was, many users were left hanging while PC’s jumped out in front with CD burners.

The iTunes-Pepsi juggernaut, much like the campaign of Howard Dean imploded by it’s own arrogance of confidence. Apple accepted the idea that Pepsi could do no wrong with Super Bowl advertising, now sits red-faced over the low download numbers. While Pepsi, because its bottom line is healthier, the blame will never show. Yet, within the industry whispers will tell a much different story, that of an opportunity failed between two powerhouse players in merchandising. All because one side looked only at the bottom line, while the other only cared about the initial splash instead of watching the ripples.