The future looked bleak for the major record labels when hundreds of websites like ReverbNation popped up a decade ago, allowing artists to distribute and market their own music online.
But in part because of their international reach, fast-growing streaming revenues and deep relationships with terrestrial radio, the record companies have retained their power—while many of the do-it-yourself upstarts have fallen by the wayside.
With the major labels still on top, ReverbNation is trying to recast itself as their ally—sort of a super-manager that invests in artists early in their careers with the hope that labels will sign them later.
“We are moving deeper into the traditional music space,” said ReverbNation’s chief executive and co-founder, Mike Doernberg.
ReverbNation’s primary source of revenue is still the fees it charges artists to use its online business-management software, such as its website builder, fan-newsletter creator and song-storage service. The company says about 8 million fans and 400,000 to 500,000 acts visit its website at least once each month.
Last year, ReverbNation launched a new program called Connect, inviting 350 of its most promising acts to join, investing $1.4 million in helping them launch their careers and in some cases taking a management role—and a small cut of their earnings—in return. It is budgeting a similar investment for this year, footing the bill for expenses such as recording-studio time, video production and travel.
The North Carolina company showcases these artists on its site in features called “Discover” and “The Watch List.” By putting money on the line, Mr. Doernberg said the company finally can start profiting from artists who succeed after using its services.
ReverbNation’s change of tune spotlights the upheaval under way in the music industry, which has been somewhat masked by its flat revenues during the past several years.
While the world’s overall recorded-music revenue has stabilized globally at about $15 billion, sales of CDs and downloads are dropping, while streaming services charging $10 a month for unlimited music are quickly gaining steam, and record companies also are investing in video content and wooing corporate sponsors to supplant falling music sales.
Since hiring its head of A&R and chief creative officer, Simon Perry,in 2013 to start sifting through the site’s talent, ReverbNation has signed 1,250 artists to publishing and rights-administration deals, 50 to other types of licensing pacts and six as management clients, including Vienna, the granddaughter of disco queen Donna Summer,and soul-rock group Thaddeus Anna Greene. None of the artists in which it has taken an interest has signed to a major label, though it has had some successes.
Sammy Brue, a 14-year-old singer-songwriter from Utah, is among ReverbNation’s first experiments in its new approach, which recently led to his signing with a prominent independent label.
Mr. Brue, who first picked up a guitar at the age of 10, joined ReverbNation as an 11-year-old, trying to “get my name out there any way I could.” Mr. Brue opted for the site’s free, basic service, posting videos of himself at home singing on a “crappy mike” and making show announcements that the platform helped him link to his various social media accounts.
Then about a year ago, Mr. Brue said he got a call from ReverbNation inviting him for what he thought was an audition at a hotel in Salt Lake City. Instead, the company executive who met him said he could use all the fancy tools on the site for free, and promised to schedule a show for him at the Hotel Café, a top nightclub in Los Angeles, inviting a slew of managers, booking agents and labels to attend.
“My dad was very skeptical, but I was 100% down as soon as we got there,” Mr. Brue recalled.
ReverbNation then started booking him and filming him at events such as Summerfest in Milwaukee and the CMJ Music Marathon festival in New York City, creating a total of eight high-quality videos that ranged in length from 50 seconds to six minutes.
Kim Buie, vice president of A&R for New West Records, said she heard about Mr. Brue from a friend and then watched the videos of him that ReverbNation had produced. When Mr. Brue’s manager called her, she said she already had fallen in love with the long-haired, bespectacled Americana artist, signing him to a record deal last month.
Ms. Buie said she intends to use the ReverbNation-branded videos in her label’s marketing campaigns.
“The hours of footage they’re already sitting on—that is a gift for us,” Ms. Buie said.
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