June 4, 2013 at 1:58 pm

Former iTunes Employee’s Startup Will Sponsor EDM… Is Other Music Next?

vidiam sponsored music

Erstwhile iTunes software designer and marketing leader Alec Marshall had a front row seat to watch music downloads chip away at the CD, starting in the ’90s. He says the streaming services replacing the download for many of us are not capable of returning recorded music revenue to its high water mark, either.

His answer: a new kind of sponsorship that includes artist pages where user activity from social networks can be monitored, and sponsorship ads served, in such a way that he claims will earn them more money. All that changes is the target URL on the end of the artist’s tweets, Facebook updates, and so on. The company is called Vidiam (screenshot above), although the version at that URL is not what is launching later this summer.

Vidiam’s first target is EDM, or electronic dance music, which he claims is a few steps ahead of where the rest of the industry is going. As things stand now, here’s how a typical EDM artist repeatedly uses social media to promote single a piece of music:

  1. The artist announces that they are working on something, and maybe sends out a little teaser clip.
  2. They send out a longer preview.
  3. The title track goes on YouTube.
  4. They post the original mix for sale.
  5. They release four or five remixes by friends.

The goal of all of this stuff, he points out, is not to sell anything beyond the artist’s reputation. To EDM artists, the most important download store is Beatport — even though artists on the Beatport top 20 chart make as little as a couple thousand dollars a year from selling downloads there, he claims. Instead, their real financial goal is to climb the Beatport sales charts in order to book bigger venues, establish DJ residencies at bigger clubs, and play larger festivals. He’s talking about EDM, but really, the same trends are happening in other areas of music too.

“The [recorded] media that they’re putting out has become more of a calling card, especially in the electronic music space, because the pain points in this specific genre are reflective of what I think the pain points for the rest of music are going to be in the next few years,” said Marshall by phone. “Down to a T, the artists in this space literally use music and media as business cards in order to get better and better gigs.”

(Related: Grooveshark’s CEO told us something similar.)

Because that chart is so important, EDM artists do whatever they can to climb it, even including costly promotions. His idea: to monetize the self-promotion artists already do online, by channeling their Twitter, Facebook, YouTube, Tumblr, SoundCloud, and anything else into a more controlled space on Vidi.am. An artist would start directing all their traffic to that artist page — everything in the numbered list above. If the traffic logs show interest, Vidi.am can activate its brand team to seek out a sponsor for the page, and the artist gets paid (percentages and amounts vary by deal) for what they’re already doing anyway.

Unlike on YouTube or other general sites, he says, ads surrounding the videos (other than the pre-roll) will be copacetic with the artist’s own goals.

“YouTube is using retargeting cookies and all sorts of tracking mechanisms to try and put behavioral ads around the content that you’re watching,” explained Marshall. “With that, I’ve been bouncing around to all the EDM sites, and I follow a link in from one DJ, I’m really likely to get ads from another DJ surrounding [the song]. That’s really distracting, and it’s a negative environment for the artist, and it’s negative for the advertiser, and definitely not appreciated inside of the fan base.”

Top EDM artists such as Tiësto already earn significant money through sponsorships, but Marshall sees two problems there. First, brands only tend to go after the very top artists — the same one percent or so who are also making decent money anyway. Second, those promotions fizzle after the artist fulfills their contractual obligations.

Tiësto recently participated in a sponsored placement advertisement for Acer and Intel, which looks like it was quite expensive to make — and from Marshall’s perspective, it languished fairly quickly. (The most-viewed version of that ad has about 270K views on YouTube, while the most popular Tiësto mix on YouTube has 47 million views.)

“From the time that he finished [filming] that ad, aside from the three endorsed tweets that he’s required by his rider to do, the traffic to that ad has to come from the brand,” said Marshall. “With ours, if the brand extends that sponsorship into Tiësto’s media space, and holds on to it for a month, all of sudden, the energy that he’s using to market his own media becomes that relationship that they’re trying to establish inside of those paid endorsements. He never has to say, ‘Hey, I love Acer,’ or ‘Go check out Acer.com.’ Instead, he says ‘here’s my new track,’ and Acer’s sitting there in the background for the extent of their marketing campaign.”

Instead, Vidi.am lets the sponsorship continue for a month or so, and everything the artist links to online goes to that page. This sort of sponsorship makes sense, as much as those of us who DJ-ed college radio in the ’90s might cling to the idea that Corporate Rock Sucks. All of that content is surrounded by ads anyway, so why shouldn’t the artist try to make those ads make more sense — and more money, like, for them, directly?

If this sort of sponsored communication works for EDM artists, other genres could be next. Will tomorrow’s country, rock, and pop stars end up copying what EDM artists are doing already, issuing and promoting new music content on a weekly basis, and then trying to turn all of that communication into a sponsorship opportunity? We’ve certainly heard sillier things said about the future of music.

“EDM [is exhibiting this trend of prolific, occasionally sponsored fan/artist communication] because the competition’s so high,” said Marshall. “Really, there’s 18 young DJs nipping at the heels of every DJ that has a solid residency, or every DJ that’s getting paid enough to tour, so they can support their teams and the production value of the gig. They’re seeing that there are no record labels sponsoring that.The funny part is that some of these DJs have elevated into higher levels of artist management [so] we’re talking to the same management company that are managing major country bands, jam bands, rock bands. They are saying ‘Yeah, if so-and-so country music star stops touring for a month, they’re going to get their house taken away.’”

That would make a great topic for a post-modern country song, but that’s beside the point, which is that many of the same forces encountered by EDM artists are being encountered by other types as well.

“I can see the distribution and effects changing in the same way [for other genres],” said Marshall. “They’re relying more on big festivals, touring, and sponsorships to sort of fill in the holes that streaming is definitely leaving behind, and that downloads kind of left behind a while ago.”

Vidi.am is set to launch officially sometime this summer.