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Beatport has been the world’s largest online dance music retailer for almost as long as there have been online dance music retailers. And it remained in that position despite some poor decisions made during the EDM boom, when SFX bought the company in a flurry of acquisitions before filing for Chapter 11 in 2016.
Beatport emerged from bankruptcy with a new CEO, INgrooves founder Robb McDaniels, who returned the company to profitability by re-committing to its core customer, the worldwide community of professional and home DJs.
We connected with Robb as he prepared to return to Los Angeles after two years of running Beatport from London to find out what the future holds for one of the most beloved brands in dance music.
The Cadence: Thanks for taking the time to talk to us. You’re in the middle of moving from London back to Los Angeles. What brought you to the UK?
Robb McDaniels: The short version of a long story is, I came to London about two years ago for a couple of reasons. One was to integrate Plug-In Boutique and Loop Masters, two companies we bought.
The second reason was to be at the heart of everything happening in the EU when things reopened. And the third reason was opening up our London office, which opened officially a couple of weeks ago. So with my job kind of done here, I'm gonna head back and work out of the LA office.
You have a history in London as well, yes?
I was born here and lived here until I was six. Then came back to the London School of Economics for a little while in college.
I've always maintained a connection to London. It's where I got my passion for music, through friends who were DJs when I was 13-14. I would come visit them in the summertime — this would've been the mid- to late-eighties. We would hang out, a couple of kids would be playing on the original Nintendo or Sega and a couple of the other guys would be behind on the decks DJing vinyl.
Did you plan on making a career in music?
I went off to college and turned my focus to finance for like six years after college. I was never really passionate about it, but it was a great experience. I learned a lot about business and finance, which has served me well later on in my career.
What made you pivot from banking to music?
I had just moved to San Francisco with my investment bank. Everyone was starting a company in San Francisco. Entrepreneurship is in the air. That's when I wrote the business plan and started the concept for InGrooves as a company that would acquire the rights from dance and electronic labels.
You were one of the first to lay the pipes that connected music creators to what we now call DSPs. Was this an a-ha moment?
I didn't know what the fuck I was doing. When I started InGrooves, I couldn’t name the five major labels at the time. I was very much an outsider, but I knew how the dance industry worked and I knew that it was very much independently driven and very fragmented.
I just called the labels I knew and said, “I've got this new digital company. We're gonna help you generate money that you're otherwise not generating.”
They had nothing to lose.
We were a service company. And if you don't like the provided service, you can fire us. That was just sort of antithetical to anything in the music industry, which was like, “We must own everything!” I think it resonated. And then we just got lucky.
You were working to get content into the pipes. Now we have the opposite problem where it’s more like an open sewer.
Back then there was enough friction that you didn't have as much of that problem. I think we solved it on the distribution side, but a lot of it was more on the production side of things.
Now we gotta get ready for the next cycle. This is the thing that I keep telling everybody. Do you think streaming is the end-all? Anytime you reach a point when you're 15 years into a format cycle, that's when the next thing's already started. It's coming up, you just haven't seen it.
The people that are gonna win are those that are willing to take big bets now on something let's less than 1% of the industry. Hello, blockchain. Hello, metaverse.
Are you bullish on these technologies?
I know that evolution happens. We're already 15 years into the Spotify world of all-you-can-eat. And it turns out we don't want to eat this much. So inevitably, what happens is people will flip back the other way and start to look for a more authentic, curated, immersive experience, that is tailored to my specifications.
Do you consider Beatport well-positioned for this change?
Since the beginning, it's been able to live largely as an independent company in a space dominated by the largest companies in the world — Apple, Google, Amazon, Spotify. Even Tidal is owned by Square, and Deezer's is a public company. Yet here's Beatport, this little engine that could.
What do you attribute that to?
The reason it's been able to sustain itself is because our customers are different than all of those other companies. Our customers are DJs. That is our only customer.
When I joined almost six years ago and the company had been wrapped up in the bankruptcy of its parent company, it had turned its focus away from the DJ as the customer and was chasing the fan in the front row. They lost their focus.
What we've been trying to do is make sure that we're providing better service and more tools to that legacy DJ customer because they're gonna be customers for life. We want to be like Adobe as a company — creating lifelong customers. We felt like if we could do that, then we could still run a nice little successful business.
But the real opportunity was in this shifting music experience landscape. If we move from this passive experience to a more active and immersive one, we believe we can unlock people's inner DJs and open up the customer funnel.
That business is growing like a weed, and we've augmented it with about seven different acquisitions to do a better job shaping a producer community with sound packs and plugins.
Where will that growth come from? Is it in the typical North America-Europe markets? Or is it more global?
We've reduced the footprint in Berlin to try to spread out more around the world. We definitely want to expand even further and look at getting people down in Latin America and Asia. So we are beginning that process of expanding and getting curators there, marketing people and labor relations, so we can really connect with these communities, and increase the diversity on the platform in terms of the music content and just overall sort of diversity within the company.
You are also an advisor to Audius, which seems to be the current leader in creating a Web3 DSP. How does that relate to your goals at Beatport?
To be clear, I'm two feet in Beatport. And I don't wanna be accused by the SEC of pumping tokens. But I knew one of the founders, and I want to do everything I can to be supportive of entrepreneurs. I love mentoring, especially extremely talented young executives.
Audius is one that I'm definitely a big believer in. They've been early pioneers. There are many similarities to what I went through in the last two decades navigating the shark-infested waters of the music industry.
Like we already said, if you want to watch our full 60-minute conversation with Robb McDaniels, click here and upgrade to one of our paid tiers and get access to all of the premium material we have lined up.
TAKEAWAYS
Salient statements from this week’s music news.
1. Twitter Hit With $250M Lawsuit From Music Publishers Over “Massive Copyright Infringement”
The platform’s years-long refusal to join competing platforms like Instagram and TikTok is paying licenses for music has finally come to a head.
Takeaway: Under the Digital Millennium Copyright Act, Twitter can limit its liability over infringement by its users but only if it took reasonable steps that provide for the termination of accounts held by repeat offenders.
2. Indie Distributors, Spotify & Amazon Form Music Fights Fraud Taskforce
Both ends of the streaming fraud pipeline have committed to slowing the illegal practice.
Takeaway: It is estimated that streaming abuse including bots, click farms, and imposters account for hundreds of millions of dollars in lost income yearly and dilute the royalty pool and reduces revenue for legitimate streams.
3. Ticketmaster Agrees to Disclose Full Ticket Prices Upfront — But Many Shows Will Be Excluded
A group of ticketing companies, including Ticketmaster, Seatgeek and Dice, have agreed to remove hidden fees (at least in some venues).
Takeaway: While the buy-in from some of the world’s largest ticketing companies is an important milestone, the voluntary change will likely only impact a small percentage of tickets and give ticket sellers who conceal add-on fees to consumers until the end of the checkout process a competitive advantage over firms who display the full price at checkout.