Mini CDs Right Under Your Nose

It's amazing that nobody thought of this sooner. That little circular plastic top on every disposable cup in the world has been begging for some sort of advertising. I mean, how many pairs of eyeballs are pointed squarely at one of them every day? And what if you could tuck a little CD -- or even a DVD mini-movie -- in there? How cool would that be?

Way cool, thinks WebMD (Nasdaq: HLTH  ) founder Jeffrey Arnold. So, when he learned about a method of packing circular coupons into soda lids, he formed a private company called LidRock that bought all the applicable patents and began looking for partners in the entertainment industry.

According to The New York Times, the firm has deals with Vivendi's (NYSE: V  ) Universal Music Group, Arista, Virgin, Def Jam and others. Since last spring, LidRock has distributed remixes and sneak previews from Britney Spears, along with mixed discs from lesser-known artists and a mini-movie by Ashanti. This is clearly a promotions venture, despite LidRock's goofy hype about "innovative technology."

Most of the LidRock action seems to be at mall denizen Sbarro, but bigger chains, including McDonald's (NYSE: MCD  ) , are experimenting with the concept and bringing in other media. (Whew, do we really need more Britney?) A February promotion at Atlanta-area McDonald's restaurants offered an advanced peek at a sequel for Electronic Arts' (Nasdaq: ERTS  ) TheSims, and other promotions have included top-seller Medal of Honor. Movie chains are interested, too, since it would be very easy to pass along the cost to a captive audience that is used to paying $5 for a soda.

Given the fact that we are really just looking at an updated Happy Meal tchotchke aimed at an older audience, how long will it be before LidRock's 15 minutes are up? I'm betting quite a while. Food-media cross-promotion is the norm these days, and digital music giveaways are everywhere.

Apple (Nasdaq: AAPL  ) and PepsiCo (NYSE: PEP  ) launched a well-known 100-million song giveaway during the Super Bowl. Just last week, Alyce Lomax passed along rumors that McDonald's was joining Sony (NYSE: SNE  ) for a spring launch of a music-download promotion. If LidRock can cut off even a small slice of that marketing market, you'll be seeing more mini-CDs than AOL installers.

David Gardner picked Electronic Arts forMotley Fool Stock Advisorsubscribers. What else has David highlighted? Check it out, risk-free, for six months.

Fool contributor Seth Jayson has patented a means of distributing 8-tracks in the lid of a Mega-Slurp. He has no stake in any company mentioned above. View his Fool profile here.


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