Rockol Tracks: Electronic-dance music – the making of a $6 billion business
Raise your hands up! Electronic dance music (EDM) is currently worth $6.2 billion and is going after global domination. A minor exaggeration? Maybe.
But, as a business, dance music rocks. Who would have thought that a former niche music genre, and not a digital-tech service, could qualify today as a potential savior of the besieged international music industry?
The evidence can be heard from what started as muffled beats in far-flung semi-legal rave events at warehouses in Europe and has now reached commercial crescendo levels at arenas in the US.
EDM DJs, from Calvin Harris, Avicii, Carl Cox and David Guetta to Skrillex, Deadmau5, Afrojack and Tiesto can command massive fees to spin and remix for the energetic chaos known as their young and restless fans.
These acolytes’ devotion, plus revenues from recorded music, festivals, club nights, other venue events, DJs earnings from live shows, the sale of dedicated software and hardware, have helped turned EDM into a $6 billion-plus business, according to a report unveiled at the International Music Summit’s IMS Ibiza event on 21-23 May.
Even though EDM DJs are also some of the hottest producers around, it is interesting that the report, by EDM consultant Kevin Watson, attributed the vast majority of the revenues ($4.2 billion) to live performances.
Once dismissed as the repetitive electronic sound that only ecstasy-fueled devotees understood, EDM is not only going mainstream, it is also making real money.
The IMS report states EDM was the only major genre (including rock, pop, urban and country) that saw positive growth in Nielsen SoundScan’s sales figures for the US in 2013. In the UK, 12 of the Official Charts Company’s Top 100 albums last year fell in the EDM category, compared to five the year before. And, that year, Avicii’s Wake Me Up single went down in history as the most streamed track ever (200 million-plus) on Spotify.
Hints of electronic music’s burgeoning mass popularity have emerged in recent past. In 2012, Skrillex picked up three Grammy Awards for Best Dance/Electronica Album, Best Dance Recording, and Best Remixed Recording, Non-Classical. And, Daft Punk made history as the first EDM act to pick up the Grammy Awards for Album of the Year (Random Access Memories) and Record of the Year for Get Lucky (featuring Pharrell Williams).
Live Nation Entertainment, the world’s largest concert promoter that has handled traditionally pop and rock mega acts like Dolly Parton, Eagles, Bryan Adams, Kings of Leon and Nitin Sawhney, bought Creamfields in 2012.
The UK-originated Creamfields dance-music festivals, which entertain crowds of between 10,000 and 80,000 each, have expanded internationally in Europe, Latin America, the Middle East and Asia-Pacific.
Other fast-growing European festivals include Tomorrowland in Belgium, the UK’s Global Gathering literally tours the world hosting festivals; and Helsinki-based Weekend Festival has become another top dance-festival brand.
In the US, Ultra Music Festival and Electric Zoo Festival are among the increasing number of live dance-music events invading the country. India has turned out to be a surprising new home to EMD. Although still small in size, the market is developing quickly with festivals such as Supersonic, Sunburn and Enchanted Valley Carnival and such home-grown DJs as Nikhil Chinapa.
Meanwhile, mainstream festivals, including Europe’s biggest at Glastonbury, are adding more dance-music acts into the line-up mix.
But the real sign of EDM’s status as a business investment came when SFX Entertainment successfully listed on the US’ NASDAQ stock exchange October last year, just over a year after its launch.
Robert Sillerman, the entertainment mogul who founded SFX, is a serial entrepreneur whose experience includes owning rights in the Elvis Presley estate, and American Idol producer 19 Entertainment; he also created the company that eventually became Live Nation Entertainment.
With SFX, he decided to focus on electronic dance and embarked on a whirlwind acquisition spree. In less than a year, he owned the biggest international portfolio of EDM-festival operators, including the Netherlands-based ID&T, and i-Motion in Germany. In Australia, SFX owns Totem OneLove (producer of the Stereosonic series of festivals) and operates Creamfields Australia. In the US, there Disco Productions and Life in Color, plus a 50% stake in the Brazil’s Rock in Rio. SFX also owns Beatport, arguably the world’s biggest DJ-centric web portal.
In addition to the acquired festivals, SFX plans to grow organically. Its first significant move in that direction is the newly launched series of seaside-themed shows called SunSets Festivals. Although SFX’s stock-exchange value has slumped since its launch, Sillerman’s ambitions are not waning.
The IMS report notes that the company, which sold more than 6 million tickets in 23 countries in 2013, plans to organize 70 festival/events this year.
Both SFX and Live Nation plan to use some of those events as platforms for discovering next-generation DJ talents. With Forbes magazine reporting that the nine biggest earning dance-music DJs collected $225 million last year compared to $114 million in 2012, DJing is turning into a hardcore profession to aspire to. Calvin Harris alone collected $46 million.
To ensure that this rising sector’s trade needs are met and provide a forum for best practices to be shared, the Association for Electronic Music (AFEM) has appointed Mark Lawrence, a former senior executive at UK rights-management organization PRS for Music, to be its first CEO.
EDM’s phenomenal growth is attributed to fans adoption of social media, their willingness to engage with it, and their enthusiasm for sharing their experiences.
Whatever their fancy might be, the thump-thump of electronic, electro, techno, dance, drum ‘n’ bass, dubstep is climaxing into an all-out roar.
[Juliana Koranteng]