Downtown Records Comes Up With A Business Model That May Be A Little “Crazy”

noah | June 11, 2007 3:15 am
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Downtown Records, the home to Gnarls Barkley, Art Brut, and the Cold War Kids, is planning on launching a new label with a slightly different, slightly bloggy business model later this year:

In a move designed to upend the traditional record label business model, Downtown Records and Internet entrepreneur Peter Rojas plan to launch an online-only record label that will offer its music for free and generate revenue only through advertising and sponsorships, The Post has learned.

Dubbed RCRD LBL and targeted for launch this fall, the venture aims to merge free, exclusive music with niche blog content to offer advertisers highly targeted sponsorship opportunities. Or, to put it another way, the label marries Downtown’s ability to identify cutting-edge artists – the label’s roster includes blog-beloved bands like Gnarls Barkley and Cold War Kids – with the architecture of Rojas’ weblogs to create a next-generation online music company.

One source familiar with the project described it as a “curated YouTube or MySpace for music with an editorially driven filter.”

While this new venture hasn’t actually signed any artists yet, that hasn’t stopped investors from being optimistic:

According to a preliminary business outline obtained by The Post, the venture offers advertisers three different levels of sponsorship packages that feature a combination of contest, podcast and “single of the week” sponsorships as well as advertising plug-ins that run over the course of several months.

Sources said the idea seems to have a lot of traction judging by initial conversations with Madison Avenue.

While these sources declined to provide revenue projections for the venture, they did say that they were “confident that the Web site will generate significant revenue early on.”

While we agree that labels have to look beyond the idea of record sales being the prime source of revenue, we have to say that the label’s prospects for success aren’t certain–after all, they’ll still depend on which artists the label signs, a list that is currently empty. Yes, Downtown has a great track record as far as spotting buzzy bands that get a lot of online attention, and the music’s low cost will certainly help as far as stoking initial awareness–but the assumption that audiences will be as enthusiastic about these bands as advertisers are is a big jump, blogs or no blogs, and it’s reflective of the “we will tell you what you’ll like” attitude that’s helped larger record labels get into the mess they’re in right now.

USING ADS, NEW ONLINE LABEL OFFERS MUSIC FREE [NYP]

[Disclosure: Rojas is the Chief Strategy Officer for Weblogs, Inc., a competitor of Idolator’s parent company, Gawker Media.]