3. Introduction: EDM and its revolutionary character

Artist and event producers must take control of their future. They have to understand intellectual property rights, including copyrights, patents and hallmarks that protect their assets.

Estimated reading time 20 minutes

Dance is the catch-all term for all types of electronic dance music. Currently, the terms EDM (Electronic Dance Music)and EMC (Electronic Music Culture)are in use. The most outstanding attribute of this type of music is its digital origin, using computers and samples. Most dance styles use four-to-the-floor beats that carry a plain melody. The music is arranged in repetitive patterns and most records are driven by a prominent bass line. Occasionally, pop songs are recreated in dance style, or acoustic instruments enhance the digital production.

In its early stages, dance was the exclusive style of music played at many clubs or events, initially called house parties. Media coverage of dance events often focused (and focuses) on the alleged use of drugs and outbreaks of violence, although it has never been established that drug use and violence occur more frequently at dance events in comparison to non-dance events.

The first, embryonic dance styles evolved in the United States in the early 1980s, an outgrowth of Italo disco, new age and synth pop/new wave, the popular sounds at that time. In the mid to late 1980s, house and techno were established as the first stand-alone dance styles, spinning off into a clutch of subgenres. The Warehouse club in Chicago, one of dances breeding grounds, gave its name to house, while techno originated in Detroit parallel to the proceedings in Chicago. In the late 1980s, both styles ventured into the European club scene; the United Kingdom, Germany, The Netherlands, Belgium and the Mediterranean holiday island of Ibiza in particular. It was just a matter of time before the first dance records entered the charts.

Until 1992, all dance styles were called house in The Netherlands. While dance rose to prominence, more and more clubs started to focus exclusively on the new thing; Amsterdams RoXY club being one in a string of many. Outdoor events and festivals attracted visitors in their thousands: Mysteryland (since 1993) and Dance Vally (since 1995).The success of dance established an economic foothold and led to the further branching out of the music into new styles: trance, gabber, hardstyle, drum n bass.

Disruption means a breakdown of the established order. Old companies and business models make way for a newly organized market that caters to new players and develops a new dynamic. If ever a music style could be attributed of a disruptive i.e. revolutionary nature, it is dance. By the mid-1990s, the first cracks in the business model of the established music industry started to show. DJs were able to mix records in their boys room in the attic and play the tracks at parties and events. As simple as that. The technological evolution of the means of production meant that making records was becoming progressively cheaper.

About the same time, the distribution of music was going through rapid and revolutionary changes. Thousands of radio stations engaged the internet as their broadcasting system, by-passing the airwaves altogether. Some years later, internet was the locus of online services offering free and in some occasions, selling music to a worldwide audience. Services like Napster and Pirate Bay hosted banks of music and movies available for free and illegalstreaming or downloading. The new digital reality made the music industrys business model next to redundant.

Millennials, the people born between 1982 and 2001 a.k.a. generation Y, are the biggest consumers of music and the most vocal about their music of choice. Why is it important to share what we like? The music industry of old had its unique, effective way to measure success: chart action, the sales of single and album releases. However, record sales started to decline by the end of the millennium while online music services have become more and more accepted. The music industry has learned the hard way to face up to the new reality: their business is a digital economy. Success is no longer exclusively measured in terms of record sales. Attention is the new currency. A new generation of artists understands that attention is just as valuable as records sales, since it can lead to (paid) performances at festivals and events, merchandise and other sources of income.

Limited required investment

The digital technology is cheap and high-quality educational tools cost next to nothing. The result is artists have acquired a mass audience with having to invest in a traditionally expensive recording facility. All that is needed, in terms of production, to make a modern day record is a computer and affordable production software. Gotye produced the hit Somebody That I Used To Know at his parental home near Melbourne, Australia. The self-produced track was a #1 hit single in 23 national charts and a Top 10 hit in 30+ countries worldwide. In late 2012, the best-selling single that year became the best-selling digital single ever. It sold a mere 11.8 million copies.

A few months later, a young Dutch dance producer who goes by the name of Martin Garrix hit the top of the charts in over ten countries with his track Animals. He was 17 years of age when he recorded and released the track. Animalshit the #1 spot of the Beatport charts and Garrix became the youngest artist ever to claim that feat.

Dance turnover on the increase

Over the last ten years, the turnover of the Dutch dance industry has increased by at least 20 percent. In 2012, Dutch dance did business to the tune of over 586 million Euros, according to consultancy EVAR and Buma/Stemra, the Dutch organization for collecting music copyrights-related fees. The number of mass events is rising fast. The turnover of 3000+ visitor-events has increased by 70 percent over the last ten years. Strategist Kevin Watson estimates a 6.2 billion Euro turnover in 2014 for the dance industry worldwide. For 2013 that figure is 4.5 billion Euro. Others, such as John D. Landon of Massive Advisors, estimate the turnover of the global EDM industry at 15 to 20 billion Euro. EVAR-consultant Ap Reinders expects the industry to hit the 7 billion Euro mark in 2017 at the latest.

Gold Rush

Over the last five years a veritable race has emerged, with many an American company joining the playing field of the ever-increasing EDM market. This gold rush scaled new heights in 2013. SFX Entertainment bid successfully for controlling shares in ID&T and Beatport, at that time the biggest online record store and DJ community. Moreover, 20th Century Fox and EDM producer Diplo announced the first EDM-related movie that year.

SFX, that trades its shares at the (American) Nasdaq stock market quoted as SFXE, was established in 2011 by media entrepreneur Robert F.X. Sillerman. The company produces festivals such as Electric Zoo in New York and TomorrowWorld, which attracted 140,000 US fans in 2013. The American entertainment company fetched 260 million dollars when it went public in October 2013. Incidentally, its share price nosedived afterwards. At that time SFX is of tremendous importance to the US market and the foremost competitor of Live Nation. Both companies, by the way, were founded by Sillerman.

Since 2012, SFX produces over 1,400 events via its subsidiaries Disco Donnie Presents, ID&T (Sensation, Tomorrowland, Q-Dance, Defqon1), I-Motion, Miami Music Group (LIV & Story) and Life In Color, claiming the lead for the dance event market. Currently, Live Nation controls HARD and Insomniac, and includes various promoters in rock and other music and entertainment sectors.

Going public is part of Sillermans goal to establish an EDM company with a multi-billion dollar turnover from ticket sales and radio airplay. SFXs strategy is focused on acquiring quality companies and creating a multi-faceted, all-round dance company. It procured the Netherlands-based ID&T and has strengthened its position with the acquisition of Awakenings (techno events and festival) and ALDA Events.

In February 2016, SFXs market value hit an all-time low due to a chapter 11 bankruptcy the company’s shares are withdrawn from the stock exchange. SFX is expected to become private again sometime in 2015.  

The music industrys shift towards live events and festivals has whetted the appetite of its major players for a piece of the fresh and tasty EDM pie. A recent listing of the most powerful persons in the EDM industry includes Joel Zimmerman (of the new electronic division of William Morris Endeavor), James Barton (Live Nation), Robert Sillerman (SFX Entertainment) and Pete Tong (BBC 1 Radio). Leading the list is Pasquale Rotella of Insomniac, the production company of the Electric Daisy Carnival and the EDMbiz conference in Las Vegas. Duncan Stutterheim, one of Hollands best-known dance entrepreneurs, announced his departure from both SFX and the EDM industry in February 2015.

EDM and the Digital Domain

Festivals and events

Since 2007, the attendance of EDM events in the United States has increased over 46%. In Europe, events like Tomorrowland and Time Warp attract more visitors as well. Emerging events, such as Serbias Exit festival and BPM in Mexico, appeal to a growing number of visitors, while established dance festivals, like Ultra and Sonar, currently roll out their brands on to the global playing field, catering to the markets in Northern America, Europe, Latin America and Asia. SFX is primarily focused on large-scale dance events that attract fans in their tens of thousands.

Since it went public in October 2013, SFX is facing the fresh challenge to profit its shareholders. Consolidation of its position has yet to result in profitability. In SFXs first quarter of 2014 report, Sillerman stated that great strides have been made in realizing the worlds biggest production company of EDM live events and leading digital entertainment content. For 2014, he predicted a 30% increase of SFX-produced festivals, totaling some 70 events (in 2013, SFX produced 54 events).

The majority of this growth will be realized in North America, where the company has introduced popular festivals to new territories: Mysteryland (originally from the Netherlands) in the States and Electric Zoo (New York) in Mexico. Moreover, SFX initiated new festivals, such as Dont Let Daddy Know in The Netherlands and The Hudson Project in Saugerties, New York. In 2015, further expansion was expected for North America, Latin America and Asia.

Although no longer a public company, SFX was working hard on revolutionizing the production of EDM live events, concentrating on promoting the facilitation of total marketing solutions for brands. The FX-1 platform supposed to serve as the framework for the integration of artist management, social media positioning and digital technology. Pioneering marketing and content partnerships aimed at achieving Millennials were fundamentally important to SFXs strategy, since it is the way to link EDM fans to prominent brands.

In the opening quarter of 2014, SFX announced deals with four top brands, including Anheuser Busch-InBev and Clear Channel. Later that year, the DJ project with Simon Cowells Syco Entertainment was launched, in partnership with T-Mobile, the Statesfastest growing telecom provider. The unique partnership of T-Mobile, Syco and SFX enables Ultimate DJ, a new concept in TV programming. It will stimulate the adoption of EDM as a mainstream genre.

Underground vs. Mainstream

EDM is quickly gaining mainstream status, leading to sponsor deals, company takeovers, fusions, strategic partnerships and brand affiliations. All of a sudden, DJs are the new rock stars or, to quote US magazine Forbes, the Electronic Cash Kings. The annual list of the trades biggest earners is headed by Calvin Harris and runner-up David Guetta; their earnings over 2014 are estimated at 66 million and 30 million dollars respectively. Harris is a bigger earner than Jay-Z or Kate Perry. His pole position is a career first. In February 2014, he signed a contract with Las Vegas mega club Hakkasan for 70+ gigs in a two-year period. He enhances his income by writing and producing songs for pop stars like Rihanna. The rise of dance over the last three years has been astronomical,he told Forbes magazine. I happened to be at the right place at the right time.

The majority of the dance music festivals operates a standard line-up of a select few big name DJs and acts. In some circles, this practice is regarded as a rapeof the electronic music genres essence. For example, Carl Cox, David Guetta and Tiësto represent various subgenres and associated audiences, while many fans opinion that these artists dont comply to EDMs expectations. The underground’ vs. ‘mainstream conflict is battled out continuously on Twitter and other social media by any number of DJs and producers.

Some of the DJs authenticity is questionable, for that matter. It conjures up shades of the hip hop battles of the 1990s. Reports on Paris Hilton and Kim Kardashian behind the wheels of steel or the announcement of an Ibiza club-residency for Justin Bieber fuel the flaming debates. Some believe EDM to be a pop trend, a bubble about to burst. For the time being the global trend persists and dance music gradually becomes a mature global industry.

Progress

Since its beginnings in the early 1970s, the evolution of electronic music is intimately linked to the progress of technology. The advance of online Do It Yourself platforms had made life easier than ever before for the music aficionado. The closing of the gap between the fan and the artist feeds the believe that anybody can be the next big time DJ or producer. Studio gear has become far more affordable over the last ten or twenty years. Recently, Skrillex pointed out that he produced his Grammy Award-winning tracks on his laptop with the aid of some generic software.

The single biggest problem of todays EDM industry is its lack of professionalism and expertise. This doesnt come as a surprise since it is driven by technology that has been practiced for two decades or less. On every level, thousands of online courses, specialized schools and business conferences are added to the knowledge structure. With it’s flowering, the industry helps to redefine the concept of education. Of special importance are educational institutions dedicated to the training of novice producers, artists and business professionals, like Richie Hawtins CNTRL: Beyond EDM.

Hawtin and a team of stand-out DJ-producers lecture and host workshops on various aspects of technology and music production; in turn, they learn from interaction with students and professionals. In the Netherlands youngsters are educated to feel comfortable in an entertainment and lifestyle environment, and to be aware that the music business is not just about music; it is a business too. At the institutions, the new commercial and creative professionals will conceptualize the tools for the global industry that is involved in events, lifestyle and entertainment, an industry worth billions that keeps on growing – and growing bigger due to technological and socio-cultural developments.

EDM and the Digital Domain

Technology and the digital age

The growth of the festival and event market was facilitated and markedly affected by digital technology. This is all the more remarkable since attendance rates of non-dance music festivals and events are in decline. EDM festivals pull more people; moreover, the number of EDM festival has grown by a third. EDM events appeal to the 18-35 age bracket, which represents the most affluent cohort in all of the entertainment industrys history, one that has money to spend like no generation before.

The success of social media and digital technology feeds and supports the popularity of dance. Digital technology asserts low threshold interaction between artist and fan, access to and sharing of audio files, and enables online audio and video services such as Soundcloud and YouTube. The fear of missing out (FOMO) drives fans to elevate EDM-related topics to trending status on social media and the internet. Public companies like SFX Entertainment invest serious money in digital technology and, by consequence, the artist-fan relationship.

The aspects of the industry

The record label or music company is responsible for the distribution of the music and the support of the artist who is trying to establish his name. At the same time, they connect artists by maintaining relations to management companies, booking agencies and other artists. It is often said that the record label is deleted from the business equation. Over the last ten years the labels role has become more oblique and shifted, or so it seems, to online marketing and distribution. It is becoming a service-centered business as the artist is becoming a network, as opposed to a product.

Most record labels operate in a particular niche and thus create immensely popular subgenres. Play Me Records, for instance, has become synonymous with the aggressive dub step sound since its inception in 2009. SpinninRecords, on the other hand, releases many a pop crossover EDM hit single, while other labels concentrate on a non-traditional sound. Labels are as numerous as stars in the sky, however, most barely manage to cover their operational costs and can only survive by breaking new artists and acts.

Many labels are run by people who are passionate about the music and will move mountains to support their artists. One of the most interesting aspects of the EDM revolution is the rapid evolution of the record label over the last ten years and the drastic change of its part in artist development. The digital music landscape has been transformed, and so has the music industry of old, including the role of what used to be known as the record company.

Chances are, you, the reader, will have bought new music at Beatport or iTunes. Both platforms distribute (digital) music; Beatport hosts a library of some 1,110,000 tracks on 8,000+ labels. Thus they enable fans to support artists via the purchase of their music. In EDM, labels function as middle menwho market the artists output.

Beatport, iTunes and Spotify are, simply put, hubs that connect music and its audience. Due to the ever increasing demand for digital distribution they have encountered various challenges. Piracy and the rise of peer-to-peer file sharing have resulted in unlimited access to any commercially produced track or album. iTunes, Beatport and Spotify had therefore to win over the consumer who had grown accustomed to a free for all frenzyto pay for his or her music. Gradually, the balance is shifting in favor of legal music consumption.

Beatport, for instance, ensures fans pay for a track of guaranteed sound quality, offering 320 kbps (the industry standard) downloads in WAV format. iTunes uses lower bit rates, so their tracks are cheaper. The 192 kbps downloads are fine for iPods and iPhones, but are unsuitable for use by working DJs. Record companies sell music via a delivery platform or aggregator, that offers the music for sale through the hubs mentioned. These take their cut from the sale; a certain percentage from the hubs cut is paid out to the label.

The manager still has an important role in the artists business model. He finds opportunities for networking, gives career advice, sets up interviews and media interaction, and helps out on the road. A good manager has his sights firmly set on the artists goals. The artist is the focus of attention for a team of supporting professionals. A dedicated plan and transparent communication assist the effort of achieving the artists objectives. The manager constantly counsels the artist on his way to the top, unburdening his artist wherever and whenever he can. The managers efforts are aimed at extending and expanding the artists career, attaining the highest possible level of success and creating plus guarding the artists public image. Likewise, managers must be aware of the manner in which the digital revolution has transformed their role.

EDM and the Digital Domain

The way ahead

Dance keeps on swaying the world. Meanwhile, a new generation of music fans that appreciates a strong link between music and technology is coming of age. The EDM fan is deeply involved in digital technology, more so than fans of other types of music; this involvement applies to live events as well as communication with fellow fans. The online behavior and the focus on digital technology of the new generation of EDM fans directly affect the growth of the EDM industry.

Evidently, EDM fans are totally nuts about their music and love to discuss it. Eventbrite, a leading online ticketing and registration platform, has looked into fan behavior in conjunction with Mashwork. The study showed that fans (pun intended) fan the flames utilizing social media.

The studys objective was to understand the conversational topics of EDM fans, such as the difference between fans of the various EDM (sub)genres. Over 70 million messages were analyzed. The results showed that, on average, EDM fans daily tweet 11 times, a markedly higher number than the 1,85 tweets per day of the average Twitter user. EDM fans are used to discussing concerts and events via social media and over 30 percent of the fans discuss various EDM (sub)genres. One in three tweets is EDM-related. However, not all conversations were about music per se; 14 percent was subculture-related, like PLUR lifestyle, rave communities and certain dance steps.

The quantity of EDM-related messages is simply bewildering,Martina Wang, Eventbrites Head of Marketing, states in Billboard. EDM fans are the most social of music fans, both on and offline. It offers an outstanding opportunity for EDM brands to catalyze dance by connecting them online.

Mobile

The use of mobile phones at EDM events has always been stigmatized, however, festival and event producers can apply this tool to create a communal awareness at their events. One in four EDM-related postings were actually posted during an event. It tallies with some 42 million online impressions for EDM events per year.

EDM fans are really passionate about their music and express it in a positive manner. Two out of five conversations about EDM on social media address the adoration of the genre. EDM fans are constantly sharing photos and videos of past events, and share music of newly discovered artists. Their ardor seems to be inexhaustible.

Dance lovers are super-fans. They really create the success of EDM events by their passion for live experiences and their behavior on social networks,Wang elaborates. The EDM industry has a unique opportunity to connect to this group of very social, passionate people.

EDM and the Digital Domain

Content

The emergence of the internet has completely transformed the way we do business in the music and entertainment industry. Technological progress and social media tools have induced a revolution in the way we consume, produce, distribute and discover music. Artists have created vast pools of new fans via the internet because they understand the power of the new technology. EDM is inherently linked to technology and can therefore be labeled as disruptive. Artists often start out by filling up their laptops with music and subsequently integrate new technology in their productions. Innovative software assists live shows in stadiums and arenas.

DJs have used modern technology to build a personal and intimate relationship with their fans. Social media are supremely equipped to focus on the individual in an authentic and meaningful fashion, in shrill contrast with analogue media like television and radio that renders the consumer a passive receptor of information broadcasted by brands via commercials. Socials media are personal, intimate and interactive. It enables users to participate. By these means, music and stories can disperse via Facebook, Twitter and other types of social media platforms.

Many DJs and event and festival producers acknowledge the potency of social media. Increasingly, they mobilize social media to enter the fansdigital habitat in order to communicate one on one. They react to tweets, comment on music and content of fellow artists, and customarily post personal videos of their creative endeavors. The fans have direct access to the artists and feel they belong and are part of an inner circle. The result is a multitude of fans, both online and offline.

Many DJs were early adopters of the free music-model and decide to the dismay of their record companies to continue the practice of making their music available for free via social media. On channels like Soundcloud they offer their music for remixing, so it can be re-used. Thereupon they utilize social media to comment on the new remixes and share them. To many fans, it feels like being part of the creative process. An artist is not just a nice song that is consumed and forgotten. He is in non-stop interaction with his fan base. It compels EDM artists to be fresh and innovative.

Binding agent

Music connects and is uniquely able to stir up emotions, even rapture. The power of music does not change and nor does the demand for music. Nevertheless, the music industry is changing, at an astonishingly fast rate. If anywhere disruptive forces are at play, it is in the music industry. We are on the cusp of the third disruptive spell. Again, the dance scene is leading the way.

Social media bring about direct relationships between the artist and the listener. Artists no longer generate the bulk of their revenues through sales of CDs or downloads. It is from performing that they earn the money. This transforms music from a physical product to an experience. Free downloads and file sharing have made music common property. Scarce supply is no longer relevant; it is all about grabbing the listeners attention. Ownership makes way for access. In the music industry selling physical products is replaced by downloads and streaming. These days, fans have access to immense data banks of new songs and older material (the so-called back catalog). It is no longer a must to physically own the music, that attitude appears to have become obsolete.

Market socialism

The music industry and the part that deals with EDM in particular, must accept that we live in an era of market socialism. Market socialism is what happens when a capitalist society is confronted with a market value that has been redefined. Money is no longer the approved way to express market value. Connections and artist contacts are the new value indicators, as expressed in YouTube-plays, Soundcloud-plays, Facebook-likes and Twitter-followers.

Consumer research points out repeatedly that the majority of the marketing messages miss their target, connecting to the interests and needs of the customer, by a mile. More importantly, nowadays anyone is able to control what marketing messages are presented to him or her. Telemarketing, direct mail and email can be blocked from our daily info diet; we zap TV channels to dodge commercials or simply skip them when we watch TV at our time of preference via a digital service.

Red Bull is a company that has understood this new reality and it offers a great example of how to deal with it. Red Bull creates more content than Disney and publishes it in an environment not just media environment, by the way where the brand identity comes into its own. None of its messages sell Red Bull, or anything for that manner. What the company does, media-wise, is publish and distribute content that appeals to a group of users, connects them and makes them part of a certain lifestyle. It helps them to express an identity.

Transition

This exposes a new and, to some, uncomfortable reality: album sales are no longer the bedrock of an artists career. Nor are downloads, whose sales figures are slipping. The old schoolmusic industry clings desperately to its business model, the sale of physical product. However, that model is obsolete and has been for some time. Even the superstars are struggling. Pittbull sold less than 10 million albums in his career, in spite of 54 million Facebook fans and millions of YouTube-views at one point in 2013. This is the reality of the new music industry. It is built on fluid attention, not on direct music sales.

Festival and event producers make money by adding meaningful content to the fansexperience, raising their profile and, hopefully, gaining influence. On Twitter masses of loyal and responsive followers become active, which act as ambassadors and brand advocates. They spread the brands mission to their followers. On Facebook, festivals and events can create dynamic and loyal communities; interaction inspires and creates an increase of reactions.

Freedom of publication

Meerkat, Periscope, Ustream and YouTube offer opportunities to reach a worldwide audience and communicate to a live community that spills over to various social networks. Blogging is more important than most people realize. This stream of messages enables festival and event producers to learn from their fans and participate in the discussion about the future of the festival or event.

Since anyone is free to publish and has his or her say, artist and festival producers can reach parts of the public that is not their target audience via their content. It all starts with a mission and is reinforced by the content artists and event producers create. One of the most valuable means that the artist or the festival producer attains is influence, goodwill and social capital. Obviously, it has a price: the costs of production, distribution and maintenance. But in the end, the payoff is handsome. It justifies the investment of time, money, creativity and passion. This way artists and event producers not just build their profile via media, they become prominent through content and complicity.

Level playing field

These days, artists and event producers can reach a bigger audience through digital channels than before, when they had to rely on the traditional gatekeepers of media platforms. The opportunities to impact have been leveled and this affects programming events; the business model of artist, event producers and the music industry; and media participation. It is through the interplay between media and interaction that we establish the basis of affinity. People connect to movements they can believe in. It is the human, intellectual and financial investments in genuine content that give meaning to experiences, and in this way, hopefully, one day your brand will become meaningful too.

Artist and event producers must take control of their future. They have to understand intellectual property rights, including copyrights, patents and hallmarks that protect their assets. They have to learn to understand the core principles of the digital world in order to align the strategic partnerships for the distribution of music, content, touring, merchandising and branding. They have to learn how to build an effective team that can exploit the potency of their creativity and content in a business-sound way. Only by self-education are artists and event producers capable of survival and being responsible for their success in the digital world.

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