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Happy New Year. The End is Near.

Happy New Year. The End is Near.

I’ll be upfront. This will piece will be a bit cynical. My personal background is pretty far from finance, but like most of us who blog about EDM, either we know and understand the industry or we’re bluffing our way through it well enough that most of you would never notice. Now that I’ve let you in on the secret, let me go out on a limb and say that things are rapidly changing in our industry. 2014 stands to be very different when it comes to the industry of EDM than 2012 or even 2011 were and a lot of it hinges on the changes being made at Beatport.

I’ve wanted to write about this topic for some time now. Fortunately, the holidays had other plans for my time and that has given me the opportunity to watch the fallout from the “shocking” layoffs that were revealed by Techcrunch.com in early December.

In a lot of ways there is more being made of this than there should be. Beatport is a publicly traded company now. It’s got new ownership and leadership. There is a much bigger vision for it and higher expectations. All of that is because of the huge EDM boom in the US, which of course is an extension of what has been happening for years throughout Europe. All those expectations and as Techcrunch.com noted… Beatport is currently losing a lot of money.

Changes had to be made there. As SFX Entertainment, Beatport’s new owner, has also acquired numerous technology companies, laying off most or all of Beatport’s technical programming and engineering staff makes sense. As a side note: I personally want to know who’s brilliant idea it was to turn Beatport’s API into a tightly regulated API that (almost) nobody can develop with. I hate to say it, but I hope that person was one of the ones laid off. Was that mean? Sorry. If you don’t know what I’m talking about, don’t worry about it.

Here’s the biggest irony of all of this: it wasn’t but a few years ago when Beatport’s competitor joined together with the common goal of taking down Beatport. It wasn’t but a few months ago when more and more people became outspoken against the goliath that Beatport has become. It seemed like just about EVERYONE wanted to take down the big dog. They wanted to see Beatport be defeated and fail.

If that’s the case, why are so many people shocked and horrified that SFX Entertainment is making changes to “correct” the weak areas in Beatport? You’d think the public admission that Beatport is having problems living up to an apparently impossible standard would have its detractors singing praises out to a God and Savior that they may or may not actually believe in.

The answer is surprisingly simple. EDM is reaching the end of a bubble cycle globally. Sales across the board have been falling. Sales charts are being manipulated on just about every digital store because it’s cheaper for a label to purchase its own music than it is to advertise on ResidentAdvisor.com. And why not? $250 will buy a hundred exclusive track sales on Beatport, but won’t even get you 2 weeks of advertising on ResidentAdvisor.com.

Label Engine founder Lazy Rich opened up on Earmilk.com in regards to just how bad sales are right now at Beatport:

“I don’t think people realize how bad the situation is. People don’t realize that to get into the top hundred on Beatport you need to sell forty or so copies. That’s it, forty. People have the mentality, “this guy’s in the top hundred on Beatport, he must be raking it in right now, making huge dollars” but we’re making nothing right now.” — Lazy Rich

Now, we can debate what it takes to STAY on the Top 100, but I have had artists confirm that they have broken into the Top 100 for their genres on fewer than 100 sales. If a label spends $250 on a hundred copies of their track, they can push it up into the top hundred and keep it there for at least two, if not three days or more. That’s a higher exposure rate than anything ResidentAdvisor.com could do for you.

The fact is that Beatport is the main retailer for EDM right now and has been for many years. If they’re the biggest and it only takes forty tracks to get into the top hundred, how well do you think their competition is doing? I can tell you from my experiences with MK837 on Traxsource and Satellite Records, you can break into their top hundred with much lower sales. In the case of Satellite Records, you can hit the number one position and maintain it with so few sales that I don’t even want to publicly state it.

The truth of the matter is that no matter how bad Beatport is or was as a company, they reshaped the industry. They almost single-handedly killed vinyl. The fact that they are struggling right now and people are scared means only one thing, the industry is expecting a major shake-up. If the other digital stores were doing better, we wouldn’t just be talking about the layoffs at Beatport, we’d be talking about some upstart digital store that was hot on Beatport’s heels and poised to take them down. We’re not though and that’s what’s frightening.

Happy New Year.

Oh… here’s another thing to fear. SFX and Clear Channel just made a radio deal.

8 January 2014 Articles , , , , , ,