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Music firm focuses on artists

Artistdirect, a multifaceted company, is taking a new approach to organizing and selling music and related merchandise on the Net.

    As the music business evolves to keep pace with the Internet, some Net veterans are reinventing themselves to try to grab a piece of what could be a very lucrative market.

    Artistdirect, a multifaceted company aiming to expand and update music offerings on the Net, is taking a new approach to organizing and selling music and related merchandise on the Net by creating artist-specific stores.

    As part of the company's overall strategy, it is redesigning and relaunching its flagship site, the Ultimate Band List (UBL), which cofounder Marc Geiger describes as "the Yahoo of music--the people's search directory of music."

    The redesign comes on the heels of a redesign by another established Net music site, SonicNet. (See related story)

    The revamped site will involve a new logo and "left-hand-side navigation" to allow for easier access to the added features, according to Geiger, who also cofounded the high-profile Lollapalooza tours.

    New offerings include the artists' official biographies, discographies with sound samples, virtual stores for each artist, and album reviews culled from industry bible the All Music Guide.

    "Updating sites is Darwinian on the Net--it has to happen. Everybody has to update," Geiger said today. He comes from a traditional music industry background as a booking agent and artist and repertoire executive.

    "The UBL is a resource, and as a resource it's not as necessary [to redesign]--how much has Yahoo updated its look? But we wanted to keep it fresh," he added.

    The Ultimate Band List has a different approach to providing music information on the Net in that users can submit their own links and place them where they want to on the site using passwords.

    Artistdirect's first artist-specific online store, the Stones Bazaar, illustrates its one-stop strategy. At the site, fans can purchase a plethora of items including Rolling Stones lithographs, phone cards, clothing, mouse pads, and golf balls, in addition to CDs. Geiger said the idea is analogous to what media giants Disney and others have done with their stores.

    "None of these products were developed before we had a site," he noted. "It's the same thing that Warner Brothers did with their stores, introducing whole new lines of stuff around their characters to be sold in the stores. We're doing that with the artists."

    Geiger added Artistdirect is in negotiations with Kiss, Pink Floyd, the Beastie Boys, the Eagles, and others for merchandising sites.

    The concept also works better for the artist, according to Geiger, because it allows them to earn more money from the sale of goods that bear their names and exert more control overall on the environment.

    He said that with retail sales of CDs, for example, most artists earn 14 percent to 24 percent of the sale, based on royalties. With Artistdirect, as long as the artists can purchase the CDs at cost or somewhere below wholesale, they can earn 75 percent to 80 percent of the sale, minus the fee paid to Artistdirect, which handles all the fulfillment tasks.

    Though the Internet allows for an array of features not available on other media--such as databases full of sound samples, interactivity, and video clips--sales so far have only made up a tiny fraction of the roughly $40 billion yearly sales in the music industry.

    Some analysts have blamed the slow sales on the large number of players in the online music space and a lack of strong brands. However, that is changing with Net music retailers forming alliances with larger Web sites and online services, advertising on traditional media such as radio and television, and launching initial public offerings, as CDnow did last month. (See related story)

    Geiger said Artistdirect's artist-specific stores don't have the same hurdles as the more traditional online retailers.

    "CDNow and N2K have to spend a great deal to build their brands. How much do the Rolling Stones have to spend building their brand?" Plus, he added, the publicity is built in because music and entertainment publications online and off cover concerts and CD releases by popular bands.

    Along with the stores and the update to the Ultimate Band List, Artistdirect has its hands in booking artists. Its roster includes Beck, the Beastie Boys, Pearl Jam, and the Red Hot Chili Peppers.

    The company also has created a JavaScript-based software solution to allow booking agents to negotiate all the terms for artists to play at venues. Geiger said Artistdirect uses the software and is in the process of selling it to other agencies. The company also has its own label, Kneeling Elephant Records.