PepsiCo Inc.'s on-again, off-again plan to ward off a hip-hop boycott with charity dollars is on again. Sort of.
The soft-drink giant signed a $3-million agreement Thursday with hip-hop activists who denounced the company for dumping a commercial by controversial rapper Ludacris.
It was the second time in two weeks that PepsiCo had weathered boycott threats from rap music mogul Russell Simmons and his Hip-Hop Summit Action Network, which demanded that Pepsi apologize to Ludacris, reinstate his commercial and donate $5 million to the Ludacris Foundation -- an Atlanta-based nonprofit group run by the rapper's mother.
Instead, PepsiCo did not apologize, pledge to rerun the ad or pay any funds to the foundation. In fact, the company cut no checks to anyone in the dispute Thursday.
But PepsiCo executives did agree to form a committee with the hip-hop network and the foundation to determine which urban charities would receive $1 million annually for the next three years.
"This whole thing started because Pepsi culturally disrespected hip-hop," said Benjamin Chavis, president of the Hip-Hop Summit Action Network. "Pepsi is going to distribute funds that will positively impact the hip-hop communities. That's a complete turnaround."
A spokesman said PepsiCo does not feel unduly pressured.
"Did we cave? Absolutely not," said PepsiCo spokesman Larry Jabbonsky. "This is not extortion. We're helping kids. This is just an extension of our long-standing commitment to community relations and to urban marketing."
The controversy ignited last year when Fox News Channel commentator Bill O'Reilly blasted PepsiCo as "immoral" for hiring Ludacris. Pepsi immediately yanked the Ludacris ad, contending it had received complaints about Ludacris' obscene rap lyrics.
Last week, Simmons called for a boycott of Pepsi after the company aired a Super Bowl spot by heavy metal rocker Ozzy Osbourne, whose music also contains obscenities.
On Monday, Simmons negotiated a verbal agreement with PepsiCo, which he said required it to donate $5 million to the Ludacris Foundation and other charities. The flap exploded again Wednesday after a Pepsi spokesman told O'Reilly on TV that the company would pay no money to the foundation.
Ludacris is signed to Def Jam, which was founded by Simmons and owned by Vivendi Universal.
"Pepsi has got to choose which constituency they value the most," Chavis said. "Is it O'Reilly? Or is it millions and millions of hip-hoppers?"