I am reprinting an interview that
FMQB did with Peter Rojas. It sounds like the principal advertising opportunity is sponsored widgets. Nice, but this ad format doesn't begin to take advantage of the creative opportunities that are possible with ad-supported music.
Up Close: RCRD LBL Co-Founder And CEO Peter Rojas
While the record industry is constantly searching for new ways to distribute and monetize music, online blogs that focus on celebrities and music are becoming a more integral part of pop culture life each day. This is why Internet entrepreneur and Engadget co-founder Peter Rojas, along with Downtown Records co-founder and CEO Josh Deutsch, decided to start a company that integrates both of those worlds. In November, the duo launched RCRD LBL, an online, blog-driven label offering free, sponsor-supported MP3s from established and emerging artists across a variety of genres. Puma, Virgin America airlines and Nikon were among the first brands to sign on as sponsors, and imprints such as Dim Mak Records, Warp Records, Modular Records, Drowned In Sound, Turntable Lab and more have agreed to offer their wares on the network. As of today (2/14), even Moby is offering a free sampler of his upcoming album via RCRD LBL. “I love the fact that as the old/traditional infrastructure of the music business is breaking down it's being replaced by new and more compelling institutions like RCRD LBL,” wrote Moby on his Web site. “The vice-grip hegemony of the corporate labels and corporate radio stations is loosening every day, which can only be seen as a good thing for music and listeners.” Furthermore, every element of RCRD LBL, such as streaming radio, photos and tour dates, is offered as a sponsor-branded widget which can be embedded on other Web sites or on a user's desktop. This gives the sponsors a way to integrate themselves into the experience of using the site as RCRD LBL unleashes new music every day. To get a better understanding of how this new business model works, FMQB spoke to Peter Rojas about how the idea was borne.
How did you get the idea to do this?
I come out of the blog world. I started a bunch of pretty popular sites. I’m someone who was involved with music when I was younger, but by the time I graduated college in the late ’90s it didn’t seem like an industry that I really wanted to go into. I’d learned a lot of lessons about what made a successful blog, and it was really this idea of creating a site – a niche media site – where you try to connect with a very specific audience, and you try to do that by being very authentic or real with that audience. When I thought about what was wrong with the music industry, it seemed there was all this excitement and interest in music now, but it wasn’t being monetized through the selling of CDs or even digital downloads. It seemed like the real excitement, energy and passion was all taking place online in various forms, whether it was music blogs or social networks. I thought, “What if you could take a lot of these lessons I’ve learned from what makes a great blog, and apply that to the music industry?” I recognized that there is a lot of interesting overlap between what a label is really good at, which is identifying and cultivating talent, and what a music blog is really great at, which is identifying and sharing music from artists that the blogger is really excited about. I thought with the places where they overlap, you could create a really interesting business. You could create a site that gives away the music, just like a music blog does, but do it legally like a label does, and then monetize everything through advertising like a blog does. It all fit together nicely, and it seemed like one of those rare opportunities where you can align the interests of everyone involved. The artists that are participating are getting compensated and they get to build their audience. The fans get great music for free, and the brands that are partnering with us and supporting what we’re doing get a chance to be seen as actively being part of the solution to some of the problems that the music industry is having. It’s a win all around.
How exactly does the online community of RCRD LBL work?
We work with a network of labels. It’s a very curated experience right now. You don’t have to sign up to download or enjoy music from the site. We work with a network of about a dozen labels, like Warp, Modular, Dim Mak and Fools Gold. They give away their music, and we sign a lot of artists directly to the site. The whole idea is to create a place where people can go and can make it part of their daily media diet.
All the music on your site is DRM-free. Do you think DRM is a thing of the past? Was it part of the reason a lot of people downloaded music illegally in the first place?I think it was initially. Now the labels have gotten to the point where even if they take off the DRM, people have gotten so used to getting it for free that it’s going to be hard to turn that around. Think about how long it’s been since Napster came out – it’s been almost 10 years. There are kids who are starting college now who, ever since they’ve been interested in music, they’ve always been able to get it for free off the Internet. If you were nine-years-old when Napster started, you don’t even know a world where you have to pay for music. You certainly don’t know anyone your age that pays for music, and maybe you never even owned a CD. That’s the reality of it. That’s what the industry is up against. Patterns of consumption have changed dramatically over the past five to 10 years. Consumers are used to enjoying music in a different way now. It’s more of a social media experience than a retail experience. You go online and you have your blogs that you read. You’re sharing that music with your network of people. We decided to build something that was in tune with that, and that’s why the widgets are a really big part of what we do. It’s a way for us to brand the utility of the site and the experience of the site in a way that people can take the functionality with them and embed it on their site or put it on their desktop. So if you’re a fan of Warp Records, for example, you can take their widgets and embed them and share them with your audience. The Web is a distributive experience at heart, so you have to accommodate that. You really have to offer people something that is in tune with the way that they want to consume things.
What kind of sponsors have signed on and how can they extend their brand through RCRD LBL?
The widgets are a big part of that. The sponsors we have right now are Puma, Nikon, Virgin America, BMW and Nokia. We work primarily with blue chip lifestyle brands. We thought it was important to work with people that would partner with us and who were forward-thinking enough to really get what we’re doing, to recognize that it’s a slightly different model than just buying a bunch of banner ads. There’s a time and a place for that stuff too, but we wanted to take things deeper so we’re actually integrating the brands directly into the widgets. For Puma for example, we built a custom holiday mix for them and built a widget around that. That widget actually lived at Puma’s Web site and is available at our Web site, and we are doing a different “mix widget” every quarter to coincide with their seasonal campaign. With Virgin America, they’re branding and sponsoring the tour dates widget on the site. We’re also programming an in-flight entertainment channel for them. We’re doing interesting things that overlap between doing stuff online and also offering an offline component. This is the critical thing that I think is really important. We’re not trying to sell the music. It has to be good, otherwise people won’t pay attention. With most marketing related to music, like Coca-Cola sponsoring a Jay-Z video, you have to wonder as a brand: are you helping sell more cans of soda, or are you helping Jay-Z sell more CDs? With us there’s no conflict. It sounds kind of crass, but this is the reality of it. There’s more of a halo effect so to speak, because the music’s free and the sponsor is enabling the consumer to enjoy it. And for the sponsors there’s no conflict between: are you helping further your own brand, or are you helping an artist sell more CDs? All we care about is that we offer something that is really good and credible, and resonates with an audience. From a sponsor’s point-of-view, that’s what they want too. They want an audience that is engaged and passionate and enjoying something that really resonates deeply with them. The whole core of this is, as we shift from mass media to niche media, something that connects deeply with the smaller but more influential, taste making audience is actually more valuable to an advertiser or sponsor. For Puma and BMW and the other sponsors, it’s not about just throwing some banner ads on MySpace and hitting 200 million kids, it’s about hitting the right 200,000 kids. The people who are reading our site, that are downloading music from our site, that are signing up and creating accounts on the site, those are the people that are the early adopters when it comes to music and the most taste making when it comes to this stuff. Kids are so media savvy now that they can smell something that’s fake a mile away, and they’ll click once but they’ll never come back. I think what’s been great about our site is that people love what we’re doing. People that discover the site get it. They’re like, “Wow! These guys didn’t just throw up a bunch of name brands and big name artists.” We could have put the James Blunts of the world on this site and gone for that, but it was about going edgier and more emerging, and getting more credible with the taste making audience. I think that is what they’ve really responded to.
Do you envision major labels becoming a part of this?
We’ve been approached by a handful of major labels. I’m not going to say “no,” that I would never work with a major label, but it’s not critical to our business model. What is critical to our business model is that the artists we work with are good. I wouldn’t want to work with a major label and have them say, “Okay, we’re going to put out the next Paris Hilton single on your site.” That’s really not going to work for us. Obviously there are bands on major labels that are good, and if there was some sort of partnership we wouldn’t rule that out. But the labels that are part of the network – they’re labels that mean something. They’re brands that are speaking in and of themselves. When we tell people we have Warp Records as part of the network, it actually means something to people who know music. It’s a brand that keynotes something really powerful. The whole point of what we’re doing is that it’s more of a curatorial experience. The taste of the person who is turning you on to something is important. In fact, that’s why people read blogs in the first place, because they care about or are engaged by the perspective or taste of the person who’s writing it. That’s sort of the same thing here. That’s why we have a team of bloggers and we tell them, “Think of yourself as an A&R person, because that’s what you are. Your job is to go out there and find things that you like and share them with the rest of the world.” From an A&R person’s standpoint, what we’re doing is actually a dream come true, because every A&R person I’ve ever met tells me the same kind of story: “I had these five great bands. I pitched them and we couldn’t do a deal. My boss wouldn’t let me do a deal with them.” A major label needs to sell like 300,000 copies of a record to break even. But with us, we’re giving away the music. We can work with much smaller bands and do stuff just because we like a band. There’s no pressure to hit a certain threshold. The metrics are totally different.
And the bands make money through the sponsorships?
Yes. Obviously we want the bands to get a lot of people into their music, but there’s infinite capacity for us. The business scales in a way that’s really nice. The fundamentals of the business are completely different, and I think that’s the hardest part for people to get their heads around. We’re an Internet business first. We’re a record label translated for the Internet era. Some people think, “Oh, that means you just sell music on iTunes.” But if someone just wants to sell their music on iTunes, they don’t need us for that. You can do that directly. If a band is only interested in selling their music, then I would recommend that they don’t ever sign to a label and they just record their music and sell it through iTunes themselves. But we all know that music sales are going down across the board. Digital is up, but it’s not growing fast enough to close the gap. I think what we’re doing is a really great way for artists to do what they need to accomplish with their music, which is build an audience so that they can make some money but they can also grow their audience in ways that will help make it easier for them to monetize in other ways, like touring.
Do you think giving away music for free is the way things will have to happen in the future?
I get asked this question a lot, and I don’t know. If it were easy for me to predict the future, I definitely would be taking advantage of it in more ways than just RCRD LBL! I think that what we’re offering is going to be one arrow in the quiver for artists. I think that free is going to be a really big thing on the Web, and there’s going to be a lot of different ways that music is free. There’s going to be free downloads through what we’re doing, and a lot of services offering free streaming. There’s going to be a lot of different options out there. It used to be that you recorded a record, pressed it into CDs, sold it and you collected checks every quarter. Now it’s all about ringtones and digital downloads and there are free components and videos. Basically you have to manage and put yourself out there in lots and lots of different channels. It’s going to be about touring and licensing, and there could be a free component, there might be a sales component. I think the artist is going to have to take advantage of all those channels and sort of cobble together different revenue streams. It’s a little bit more work, but you have to be savvy and work hard. Nothing’s guaranteed anymore. You have to excel and work harder on all these different aspects and pursue different avenues. I think we’re building one great channel for artists and labels to pursue. There’s so little downside to experimenting. We’re just experimenting. We’re trying to see if this will work. So far I’ve been really happy, but if it were really easy someone would have done it already. What we’re doing is saying, “Lets be niche, lets be more focused and start from scratch and build things and see where they go,” rather than trying to raise $30 million and roll the dice and getting everybody in the industry to agree, which I don’t think is ever going to happen. We’ve already put out music from about 215 artists in like 10 weeks, which I’m beyond ecstatic about. I think it’s really a huge number. That’s growing day-by-day. Sometimes we put out an album’s worth of music every single day. And we’ll put out like eight different artists’ music in a single day. Not every artist is huge, but we’re offering some music from Moby, which is our biggest name artist. It’s a big deal to get someone of that stature to participate in what we’re doing. It says a lot about the credibility of the site and the brand that we’ve managed to build. That’s the thing that makes me the happiest. It’s not just about the raw numbers of the audience, it’s also about the quality and the meaningfulness of the brand that we’re trying to build. When we’re talking to sponsors and advertisers, and new artists and labels, RCRD LBL has to be something that means something to people. We’re not trying to be all things to all people; we’re trying to take a stand and stand for the curatorial aspect to music.
** QB Content by Mandy Feingold
