Hip-Hop Fridays: Campaign Against Pepsi Yields Money But Little Respect

Late last decade I was one of two principals who negotiated the one-of-a-kind endorsement deal with Pepsi Co., on behalf of Wu-Tang Clan. The relationship resulted in Wu-Tang endorsing the Mountain Dew brand in exchange for hundreds of thousands of dollars in compensation, community-development donations, and tour support. While all parties were pleased with the agreement, I learned during the negotiations that Pepsi Co. had very little understanding of Hip-Hop, and subsequent to signing the agreement we learned that the multinational corporation had very little respect for Hip-Hop.

My mind went back to that relationship when I first learned last week that Russell Simmons and the Hip-Hop Summit Action Network (HSAN) had launched a "Campaign For Respect" that threatened a boycott of Pepsi in response to the manner in which the corporation pulled its ads featuring multi-platinum artist Ludacris. The campaign platform was very impressive and clear. It called for three demands to be met by Pepsi if a boycott was to be avoided: 1) A public apology 2) A $5 million donation to the Ludacris Foundation 3) The reinstatement, by Pepsi, of the Ludacris commercial.

My view was that Pepsi would not agree to all of these terms because they are intellectually-challenged when it comes to Hip-Hop and because they would do anything before they would lose face with their older White mainstream audience. But I also believed that if Russell Simmons decided to boycott and got several prominent artists to support his efforts, Pepsi would lose well over $5 million in sales. I also figured that Pepsi might be willing to lose several times the $5 million that was demanded by HSAN because of a few factors. Among other possibilities, I thought that in an odd way, the boycott could have actually helped the Pepsi brand among older White soda drinkers.

To fully explain this would require a much broader discussion of the laws of marketing but in sum I thought that Pepsi would risk a boycott and might even be willing to endure it for a while or at least test the power of the HSAN because Russell Simmons' had never, to my knowledge, specifically threatened Pepsi's Hip-Hop/alternative "category" brand - Mountain Dew. By leaving Mountain Dew out of the discussion I thought that Pepsi was being given a marketing opening. I thought that although his demands were formidable, perhaps Russell Simmons was attacking Pepsi where they were strongest, and not weakest or most vulnerable to bad publicity and the purchasing power of the Hip-Hop community. After all, Pepsi just announced last week that its income climbed by 21% in the fourth quarter of 2002. Its net income rose to $805 million on a sales increase of 7% to $7.46 billion. They certainly weren't going to be crippled by a Hip-Hop boycott so, leveraging the community's power in the right place was essential to making the effort a success.

But with a little bit of marketing ingenuity I thought it possible for Pepsi to use the boycott talk to serve its broader commercial interests in different and more profitable market segments.

My view was that Russell Simmons and some rappers attacking Pepsi could be used by the corporation in a manner similar to how President Bill Clinton used Sister Souljah in the 1992 presidential election. Pepsi, could have actually increased its popularity or brand loyalty and respect among certain market segments of its White consumer base with a public fight with a Hip-Hop community that has been demonized in the media. It is not necessarily a risk that Pepsi wanted to take (it could have handled losing Ludacris' fans but not Eminem's or 50 Cent's if they were to join the boycott) but I am sure that its marketing team discussed it.

Had Russell attacked Pepsi and at the same time overtly threatened Mountain Dew - the company brand that is much more closely identified with the younger White Hip-Hop, skateboard, and snowboard audience - I thought he might have more leverage. I thought this might especially be true since Pepsi just unveiled a new campaign for its new Mountain Dew Code Red drink which is largely aimed at the "streets" - Black and Latino youth in urban areas. Code Red has a major basketball-centered campaign underway that Russell Simmons and the HSAN could have destroyed with a boycott.

We were informed that Mountain Dew was to be a target of the "Campaign For Respect" when and if the boycott occurred, but only after it began. But that wasn't the popular perception. By leaving Mountain Dew "off of the table" in terms of the public perception of the boycott, Pepsi marketers had the opportunity to prepare to shift company resources and dollars previously aimed at connecting Pepsi to segments of the Hip-Hop market toward bolstering the Mountain Dew brand that is already trusted and respected in the market segment. Pepsi Co. could have made up for whatever losses its sufferred to Pepsi revenues derived from the Hip-Hop market with increased gains to Mountain Dew's bottom line. The vast majority of the Hip-Hop market segment is unaware that Pepsi owns Mountain Dew.

Just something to consider.

In order to frame the entire controversy and put it in perspective here is a transcript of a Fox News Network appearance by Russell Simmons on the Hannity and Colmes show on February 5, 2003:


COLMES: We're back on HANNITY & COLMES. Is the hip-hop community being kept out of Pepsi commercials? Last August, Pepsi pulled its ads featuring rap star Ludacris because of his explicit lyrics. But recently Pepsi ran ads featuring Ozzy Osbourne and the rock band Papa Roach.

Some people in the hip-hop community call this a double standard. Here to talk about how he plans to strike back, founder of Def Jam Records, Russell Simmons. Is it a double standard? I mean, you know Ozzy Osbourne they say promotes alcohol on his show.

RUSSELL SIMMONS, RAP MOGUL: Let me tell you a little bit of the history.

(CROSSTALK)

COLMES: ... marijuana.

SIMMONS: When it started, Pepsi decided -- I guess it was because your buddy across town, Bill O'Reilly, said that it was a negative image for children and that Pepsi shouldn't do it. Pepsi got a few e-mails and then decided not to run the Ludacris campaign.. Gave Ludacris his money, sent him home.

COLMES: Did Pepsi cop out?

SIMMONS: Pepsi copped out and that was it. So we thought, if they don't want us, we don't want them. My first response was to run out and buy a beverage company. I was in negotiation with one so they can stop using my name.

COLMES: So you're going to buy...

(CROSSTALK)

SIMMONS: I did that. That's done. And I was in negotiation with Ludacris and we were going about our business and we look up and there's the Osbournes. And that's a tremendous smack in the face for us. It's like the double standard. Yes, they thought that the hip-hop community would take it lying down. What happened when they did what they did to Ludacris, though, is that other artists lost their deals because of Pepsi wavering.

COLMES: But is this racism?

(CROSSTALK)

COLMES: People can say that, because, you know, you have similar baggage regardless of the group.

SIMMONS: Well it has nothing to do with race. It's cultural insensitivity on their part. And this is the most important brand-building community in the world. Eighty percent of it, by the way, is not African-American. And I think they should respect these young people because of their brand-billing power.

COLMES: And you're going to use Ludacris. And what happens when people boycott you when they see Ludacris has all these horrible lyrics? We're going to boycott your beverage company now?

SIMMONS: What I've been trying to do is avoid all conflicts. Like the first thing Pepsi does is call up my record company, Def Jam, and take a million-dollar Lipton Tea deal off the table. Guess what, we don't want your million dollars. Keep your million dollars.

HANNITY: I'll take it.

SIMMONS: All right. Well, that's first. And then the second thing I do is call my advertising agency and they have a discussion with (UNINTELLIGIBLE). I'm the vice chairman over there. Well that's the wrong person to call.
And so then they call me and we start the discussion. And the discussion is really about being sensitive to these people who have built your brand, who reaffirm your space in America. And the fact is, Ludacris, you didn't have to use him. You had every right to back away from him, but what you didn't have the right to do -- or you have every right to do anything you want.
But this is a campaign for respect. That is the name of this campaign. And seven days from now we begin a boycott.

HANNITY: Russell, Ludacris doesn't deserve respect, and neither does Ozzy Osbourne, frankly. And when did you think you'd ever come on this program...

(CROSSTALK)

HANNITY: Ludacris: "Can't turn a hoe into a housewife. Hoes don't act right. I've read a lot of..."

(CROSSTALK)

HANNITY: You know what this is? This is crap. This is garbage. Just like...

(CROSSTALK)

HANNITY: So I don't think Pepsi should use either one of them, and in that sense you're right.

SIMMONS: Well, you know what, if they use Ozzy Osbourne, they certainly should use Ludacris. And let me say this about those lyrics, by the way. It's the language, it's the curse words that are bothering you, because the idea is you can't turn a promiscuous woman into a housewife. Whatever it is he's saying it's not so bad as some of the ideas that come out of Osbourne's mouth. The ideas.

HANNITY: I agree.

SIMMONS: The profanity is not in a couple of words. The profanity is in the attitude.

HANNITY: But I don't like...

(CROSSTALK)

SIMMONS: He sounds like every other college kid in America.

HANNITY: But you know what? They degrade women.

SIMMONS: You degrade women.

HANNITY: I do not degrade women. You are making your money degrading women.

SIMMONS: Let me make my point. What rappers say in the public, there is certainly no male rapper that I know who is nearly as sexist as his father who might have been a deacon.

HANNITY: Do you want your girlfriend referred to as a "hoe?"

SIMMONS: It's the language you're offended to, not the ideas.

COLMES: We have to take a quick break. We'll pick it up in just a second. And on the other side of the break we'll talk about it.

Hey, don't forget...

(CROSSTALK)

COLMES: While you're there, take a look at the (UNINTELLIGIBLE). We'll be right back.

(COMMERCIAL BREAK)

HANNITY: We continue now with Russell Simmons. All right. So let's come to this point of agreement. We agree that Pepsi should be consistent. Ozzy Osbourne, he has crummy lyrics, garbage, vulgarity in his stuff, and so does your guy. Now my question for you is, why do you make your money -- you can go out and buy soda companies.

SIMMONS: I didn't buy a soda company.

HANNITY: Let me ask a question.

SIMMONS: Soda is (UNINTELLIGIBLE). I didn't buy soda.

HANNITY: You're making your money off people like Ludacris, who appeal to the lowest common denominator with the most vulgar music and lyrics out there. Don't you feel ashamed?

SIMMONS: I don't think you listen to Ludacris well enough to make a judgment. You're reading one...

HANNITY: No, not one.

SIMMONS: ... one part of a verse out of context.

HANNITY: It's laced with vulgarity.

SIMMONS: It's a language issue. But Ludacris talks about the American dream in a way that your rock 'n' roll, your jazz, or your blues artists never did. He talks about higher aspirations for himself and his community in a way that young people in general have never...

HANNITY: You're picking out the best parts of his stuff.

SIMMONS: No. I'm talking about all of Ludicris' image and what he represents. But let me just make a point.

HANNITY: Let me get this question out. Rap in general, which you're making a lot of money off of...

SIMMONS: I'm not making any money off of it. I'm the chairman. I make a million bucks a year.

HANNITY: All right. You're lucky. So you make a million bucks a year.

SIMMONS: Just so you know, I'm the chairman because I care about the community.

HANNITY: But the point is (UNINTELLIGIBLE) degrades women as bitches and hoes. Kids look up to that.

SIMMONS: Jay (ph) died the other day. Do you know what happened? Jay (ph) was another example of the violence and the poverty and ignorance that exists in...

(CROSSTALK)

COLMES: We only have a second here.

SIMMONS: They don't know who murdered Tupac, who murdered Biggie, who murdered E Money Bags (ph), who murdered Jam Master Jay. But they don't know who murdered any of the kids who got killed -- every single day someone gets killed in Baltimore. They can't find any of those murderers either. They're not famous.

(CROSSTALK)

COLMES: Russell, we've got a second here. Hold on. They want to take an entire genre...

SIMMONS: Should we talk about the settlement? What I would like Pepsi to do, pay $5 million to the Ludacris foundation. They should apologize to Ludacris publicly, and they should -- the Ludacris foundation, $5 million, and they should reinstate his commercial.

COLMES: Do you want to do an interview or do you want to make a statement? I'm on your side, but I wish you'd be respectful and deal with me here when I want to ask you a question.

SIMMONS: I'm sorry.

COLMES: It seems they want to demonize an entire genre of music because they don't like one or two things Ludacris says or one or two things a particular rap artist says, the entire genre gets demonized here.

SIMMONS: Well I don't know that that's what they want to do. I think that they want to make amends and I'm hopeful that we can go to the Ludacris foundation, work with Pepsi and become partners with them, identify charities, grassroots charities that Ludacris liked and he can bring their Pepsi check and promote their brand in the neighborhood. But they must...

HANNITY: You know what, Russell, we have to run.

SIMMONS: They must reinstate his commercial, pay $5 million to the Ludacris foundation.

HANNITY: We've got to pray just to make it today. I've got to go.

(CROSSTALK)

HANNITY: That's all the time we have left this evening.

****

OK. It is clear that Russell's tone is one of seriousness, focus and defiance and it appeared to me and to others who observed, throughout the matter, that it was actually more respect than money that mattered in what Russell presented. In every article that we at BlackElectorate.com have read wherein Russell is quoted concerning the "Campaign For Respect" it really is the disrespect of Hip-Hop and one of its leading artists that seems to matter to him the most - more than Ludacris' personal loss; more than respect for the Hip-Hop dollar; and more than any racial overtones that may have been involved.

Opposite Russell's passionate defense of Hip-Hop has been Pepsi's political double-speak and non-apologies. In typical politically-correct and pr-driven language, Pepsi has expressed its "regrets" over "the unfortunate matter". We searched and combed through hundreds of articles pertaining to this matter and not once from the time that Ludacris was let go to yesterday evening had Pepsi apologized for dropping Ludacris or the disrespect that the Hip-Hop community, Russell and others were interpreting from the matter. Pepsi repeatedly went out of its way to say it respected Russell Simmons but it never, not once in public, apologized to the Hip-Hop community or Ludacris or said that it should have never let him go or followed his campaign with one featuring another artist who is viewed to be just as vulgar (or more), by millions of people more than those who currently hold that view of Ludacris.

On February 11, 2003 the following statement was released by the HSAN:


PEPSI, THE LUDACRIS FOUNDATION AND THE HIP-HOP SUMMIT ACTION NETWORK AGREE

NEW YORK, N.Y. FEBRUARY 11, 2003 On the eve of when the "Campaign For Respect" was to be launched, an agreement was reached between Pepsi, the
Hip-Hop Summit Action Network and the Ludacris Foundation. Pepsi and the
Ludacris Foundation having entered into an agreement that will distribute million of dollars in charitable contributions from Pepsi to grass-roots, nonprofit organizations serving the needs of disadvantaged youth throughout the United States. This is a multi-million dollar, multi-year agreement reached late yesterday between the Hip-Hop Summit Action Network, Pepsi, and the Ludacris Foundation.

According to Pepsi Public Affairs person Bart Casabona, Pepsi released the
following statement today, "We've come to an agreement where the common
ground is young people. We're working together on a multi-year, multi-city
effort that will encourage kids to express their creativity in the visual and performing arts.

"What we're planning will be an extension of our longstanding community relations and urban marketing programs. We will focus particularly on young people who would not otherwise have the opportunity to get involved in art and music."

Ms. Roberta Fields, the mother of Ludacris and Chair of the Ludacris Foundation, responded: "This agreement with Pepsi will help us help others. We are committed to the empowerment of youth through helping youth help themselves."

Russell Simmons, Chairman of the Hip-Hop Summit Action Network, stated: "Pepsi's commitment should be followed by others in corporate America who desire to empower youth."

Dr. Benjamin Chavis, President of the Hip-Hop Summit Action Network, commented: "The agreement is a victory because it shows that the respect of hip-hop culture must be taken seriously, and the generation of youth today are taking leadership responsibly. Lastly, I'm going to emphasize that the Hip-Hop Summit Action Network will closely monitor the implementation of this agreement."

Other specific details of the agreement will be released at a later date.

It was obvious to us by the above statement that Pepsi, as of the end of Tuesday of this week had gotten what they wanted. The boycott was "called off". But what wasn't clear in the statement was whether or not the HSAN and Ludacris and for that matter, the Hip-Hop community, had gotten what they wanted. We learned from Russell Simmons' camp that the details were still being worked out but that Pepsi had been handling itself with humility, respect and acting in good faith seeking to work out an agreement. But specifically, we were told that no public apology was forthcoming from Pepsi and that no plans were being offered by the corporation by which the Ludacris commercial would be reinstated. We were told that Ludacris, himself, was not interested in being reinstated as a Pepsi representative. We did not doubt this and did receive from Ludacris' camp a statement where an inference can be made that Ludacris was not interested in picking up where he left off as a Pepsi spokesperson. On Wednesday February 12th we received the following statement:

STATEMENT:

The Ludacris Foundation and PepsiCo entered into a multi-million dollar agreement to provide funding to grass-roots, nonprofit organizations serving the needs of youth throughout the United States. This multi-year agreement was reached late Monday between the Hip-Hop Summit Action Network, The Ludacris Foundation and Pepsi.

QUOTES:

Ludacris: "Despite my personal challenges with Pepsi, I am excited about this agreement. The only thing I was willing to accept from Pepsi is money for our communities. This commitment from Pepsi helps The Ludacris Foundation broaden its support for helping youth help themselves in communities across the country. I thank Russell, the Hip-Hop Summit Hip Action Network and my fans for their support and for keeping it real."

Ms. Roberta Shields, mother of Ludacris and President of the Ludacris
Foundation, stated: "This is a victory, Pepsi can help us to help young people. The Ludacris Foundation is committed to improving the lives of our youth. The Foundation will use these new funds to respond to the needs of youth-related organizations."

****

The above was dated February 11, 2003.

Reading the HSAN and Ludacris Foundation statements, it is clear that those two parties are satisfied. But there was no Pepsi release that we know of that said the same things that the Ludacris and HSAN statements said.

Then, something else happened.

Yesterday, Thursday February 13th we received the following statement from the HSAN:

PRESS CONFERENCE ANNOUCEMENT FOR THURSDAY FEB, 13


RUSSELL SIMMONS AND THE HIP-HOP SUMMIT ACTION NETWORK HOLDS PRESS CONFERENCE TO ANNOUNCE IMMEDIATE BOYCOTT OF PEPSI


WHO: Russell Simmons, Chairman and Dr. Benjamin Chavis, President of the
Hip-Hop Summit Action Network



WHAT: The immediate boycott of Pepsi



WHERE: The Sheraton New York Hotel & Towers, 7th Avenue between 52-53 Sts.;
The Riverside Suite, 3rd floor



WHEN: February 13; 2pm est


****

Obviously something had happened on February 12th that very few people knew about because Russell's boycott was back on. We looked into and found out what had set things off. We learned that a Pepsi spokesperson had spoken to the Bill O'Reilly show on Wednesday and - although out of context in the way the comments appeared on the show - had indicated that the Ludacris Foundation wasn't part of the agreement and would not be involved in handling or distributing any money that was coming from Pepsi. The quote attributed to the Pepsi spokperson by O'Reilly was, "We've agreed to work together to help the kids. Funding is not being administered by the Ludacris Foundation. We are not letting Ludacris back on the air." Russell Simmons, we learned, went ballistic over what he saw on O'Reilly and felt betrayed by Pepsi. He immediately demanded that the previously only verbal agreement be formalized and put in writing by Pepsi. He also decided that the boycott, short of that document, must now go on. The next morning, Thursday, February 13th Russell was on the Star and Bucwild show, as a guest of the DJ pair on New York City's highly-rated Hot 97 - blasting Pepsi. It was the second time in days that the Hip-Hop mogul had appeared with the Hip-Hop kings of morning time.

As late as ten minutes before yesterday's press conference to announce the boycott, the HSAN received, in writing, from Pepsi, what it had previously only received verbally - in meetings and phone conversation - a promise, written as a memorandum of understanding, to provide $3 million over three years to be distributed to social groups in the Hip-Hop community throughout America, at the discretion of a six member committee selected by the Hip-Hop Summit Action Network, the Ludacris Foundation and Pepsi. It was this memorandum of understanding from Pepsi that stayed the boycott.

At this very moment, we know of no Pepsi release that boldly announces the agreement. Nor has there been any press conference trumpeting Pepsi's new partnership with Ludacris and the HSAN. And Pepsi has done nothing to disavow the comments made by its spokesperson and reported on O'Reilly that made Russell Simmons decide to reestablish the boycott threat after a verbal agreement had been reached. According to sources the Pepsi spokesperson's comments were inconsistent with the private discussions between Russell Simmons and Dawn Hudson, President Of Pepsi North America. Even if the O'Reilly producers spliced the comments and put them on-air out of context, shouldn't Pepsi make that known, in public, in order to clarify the record and show respect to its new "partners" the HSAN and the Ludacris Foundation?

With its continued silence and unresponsive stance what respect has Pepsi shown for Hip-Hop in all of this?

To me, it is indisputable that in terms of demonstrated ability only Russell Simmons has the power, influence and relationships to obtain $3 million from Pepsi in response to a sovereign decision the company made - to fire a multi-platinum Hip-Hop artist. Ludacris was let go months ago and not a single activist or organization was able to get Pepsi to respond to the Hip-Hop community over the matter. And certainly 3 million dollars can do quite a bit of good work in struggling communities and within the Hip-Hop community. In addition, it is hard to argue that other corporations won't be looking over their shoulders the next time they consider firing or hiring a Hip-Hop spokesperson. Russell Simmons and the HSAN have made their presence felt.

But we can't help but conclude that Pepsi got off easy in the matter, if it is to be judged by the level of respect that the corporation (that arguably has made billions off of the Hip-Hop community and generation) was made to show to the Hip-Hop community. Throughout the matter, Pepsi was allowed to perform its double-speak - making statements that could be interpreted both ways by White and Black consuming audiences and by young and old White consumers along "Hip-Hop" and "mainstream" lines. Pepsi was never forced by Russell Simmons to speak with one voice to all of its market segments, admit that it had made a mistake and express regret, not just for sparking the controversy, but for specifically dropping Ludacris and subsequently featuring an equally "foul-mouthed" rock star in prominent ads. Pepsi has gotten away with the non-answer answers that would make Bush press secretary Ari Fleischer proud.

Russell Simmons and the HSAN went out of their way, bending over backwards to frame the boycott as a non-racial matter. But it is hard to imagine that race was not a factor in Pepsi's double standard and hypocrisy - which virtually everyone recognized. We remember Sister Souljah and see a lot of her in how Ludacris was handled. Of course the quest for profits was also involved. Ozzy Osbourne means more money than Ludacris does to Pepsi's bottom line, we are sure the corporate giant has figured.

Russell should be commended for not seeking to inflame racial tensions, recognizing that Hip-Hop cultural products are consumed by a rainbow coalition of youth, but if race wasn't involved it should be Pepsi and not the HSAN that is foremost in stating that.

Pepsi was supposed to have been held accountable to the Hip-Hop community and the last time we checked, Russell Simmons was not their lawyer or PR firm. Unfortunately, it does appear that the HSAN did assume some of those roles in the manner in which it shielded Pepsi from having to deal with the most offended parties in all of this, not the HSAN or Ludacris, but members deep from within the entire Hip-Hop community. It would have been nice if the HSAN had forced Pepsi representatives to sit down with numerous Hip-Hop activists, politicians, entrepreneurs, artists, intellectuals, fans and reporters in private meetings and at least one public press conference to answer the hardest of questions in public and in front of all of Pepsi's market segments. The way the matter was handled, in my view, it allowed Pepsi to speak one language on O'Reilly and the mainstream media in front of White viewers and readers while Russell Simmons handled the real rainbow coalition closer to the grassroots and streets. Pepsi never had to come out from behind a telephone from where it could "comfortably" make vague and ambiguous statements that above all, never offended Ozzy Osbourne, his fans or Bill O'Reilly.

Certainly anyone trained in negotiation will tell you that initial demands are usually only a launching point for a settlement. But Russell Simmons has to be careful in negotiating anything in the name of Hip-Hop. Certainly Ludacris and he had the right to discuss what they would "settle" for, short of the initial three demands. But the Hip-Hop community and Russell Simmons never had that dialogue. From what I know of, from those in my circle and among many of the BlackElectorate.com viewers who expressed an opinion, the apology and reinstatement of Ludacris were at least as important as the money.

The HSAN is banking on making Pepsi accountable through the process of dialogue, partnership and how the $3 million is distributed. That may happen. If anyone has the resources to make Pepsi keep their word and be sensitized to an important segment of its consumers, it is Russell Simmons and the growing HSAN. But if Russell Simmons is not able to generate the ultimate in compounded returns from the new "partnership" between the Ludacris Foundation, the HSAN and Pepsi, $3,000,000 was a bargain basement price for the multi-billion company to pay in the form of cash reparations for disrespecting an entire culture. Like America for slavery, it did not even cost them an apology.

So, if the handling of Ludacris and a Pepsi check for $3 million has pushed the Hip-Hop respect meter into the level of diminishing returns the question from the scriptures can appropriately be raised to both Russell Simmons (for his handling of the affair) and the entire Hip-Hop community (for doing nothing before Russell responded) - "For what shall it profit a man, if he shall gain the whole world, and lose his own soul?"

For all of the money, endorsement deals and popularity that Hip-Hop culture has garnered and generated for others, what is it really worth if it doesn't translate into a basic form of human respect?

Cedric Muhammad

Friday, February 14, 2003

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