After 12 Years, Beatport Still Doesn’t Get It – Parent SFX Declares Chapter 11

In early January, Beatport bestowed upon us the pontifications of their current President and CEO, Greg Consiglio, who announced several new ancillary “features” to the 12 year-old music download service. Turns out that Consiglio was just putting some preliminary lipstick on the bad news, which was to follow: SFX Entertainment, the owner of Beatport, has filed for Chapter 11 protection. Beatport followed up the dour announcement with more sunshine:
beatport-12years-of puff parody image

All Beatport users, customers, and partners should rest assured knowing that this action will have no impact on our ability to continue offering the most complete electronic music experience available. Around here, it’s business as usual.
That means the entire Beatport platform is fully operational without restriction. The store remains open. The streaming service continues uninterrupted. New releases are being added every day. New videos are being scheduled and filmed. Payments to labels and suppliers are ongoing in their usual manner.
In fact, Beatport is expanding.  Just last week we launched a version of Beatport customized for the Dutch market, our first foray into operating a fully localized service, and we will be introducing several new features to our News and Video sections over the course of the coming weeks.

But this can’t be good news for Beatport, who has been rudderless for quite some time, and can’t seem to cement the core of their business, downloading music. Consiglio is not the founder of Beatport. Nor has he truly broken any real ground at the service, which is still miles and miles and miles behind other download services in terms of the most crucial aspect of “crate digging'” — Search.

Fact is, Greg Consiglio has only been at the helm of Beatport for 7 months. Seven. Yet, he waxes on about all the current developments at the service as if he was spearheading the action himself. What’s worse, all the recent “features” that Beatport has added, does not serve the site’s primary mission: buying music. Make no mistake, Beatport sits at the top of the Dance Music Download food chain in terms of size, quantity of music and gross sales with their mostly Farm-To-Table approach, but that’s certainly not because of Consiglio or SFX. Jonas Tempel, Beatport’s original founder, deserves the credit for developing the service and brand. What lead to Tempel’s exit in 2010 is not publicly known, but if you look at the site from then and now, the additions do NOT make it easier to find music you want to buy.

We have discussed Beatport’s anemic search facilities in the past in the past, but no matter how many times they revise the navigation, or tweak the interface, inserting keywords into the search field does not get you closer to finding precisely the genre, sub genre and sonic energy you are looking for.

While it’s nice that Beatport has started a streaming service, it is certainly not at the benefit of all artists. There has been some discrepancy regarding exactly what the payout is for DJ’s who upload content to the service. Beatport’s Director Of Communications, Antony Bruno, contacted us to clarify some of the particulars of our original story, including that artists “only earn 5% of income for plays their streams.”

To clarify… the 5% revenue share noted in the T&C refers to user-generated content, specifically mixes created by Beatport users. It is what users, not artists, will earn per stream if they upload mixes containing tracks they didn’t create or own rights to. So if a Beatport user creates a mix comprised of tracks written and performed by other artists and uploads it to Beatport, that user would earn 5% of any revenue generated from the subsequent stream.

The labels who provide to Beatport the tracks contained in such mixes will be paid for the stream per their licensing agreement with us, and they will pay artists per their respective contractual agreements, which is far more than 5%. Key phrase in the T&C here: “Any payment made to the uploading user is independent of those contractually agreed upon with participating labels.” (It’s also worth noting that Beatport is paying users this 5% out of our cut of the agreed upon split with rightsholders.)

Bruno classifies DJs who upload their own mixes as “users” and not “artists” for legal reasons, but many of us in the industry feel that a DJ mix is an artform, and many DJ’s classify themselves as artists, but that’s an argument, which is beyond the scope of this story.

While the 5% only specifies “users” who upload mixes, Beatport’s Terms & Conditions specifies that the rights to your tracks are capped at the 5% as well:

“[This] royalty is your sole compensation and includes all payments due to you in connection with the Content, including any mechanical royalties, public performance monies, or other music publishing monies to which you may be entitled as a writer or composer.” (See Beatport’s Terms & Conditions)

Bruno goes on to clarify Beatport’s “Terms & Condition’s clearly state that the 5% figure for users is independent of the rate paid to labels.” So what is the licensing rate for labels? Bruno was very quick to point out that the 5% rate was only for users, but would not inform us about payouts to individual artists or labels. That is Beatport’s right, and transparency would mean that all artists and labels would most likely receive a standardized royalty. However, that didn’t stop us from polling labels in our network to see if we could determine an average royalty rate per stream, which we found to be about 4.5 cents.

Back to Consiglio: “We are keenly aware of the unique role Beatport plays in the careers of professional DJs and artists, and as a result have a responsibility to continue fostering both emerging artists as well as those who reach mainstream success with major labels.” It’s hard to determine exactly what Consiglio means by “[having] a responsibility to continue fostering both emerging artists as well as those who reach mainstream success with major labels.” The worst search functionality certainly doesn’t “foster” download sales. And, an inconsequential content division won’t “foster” money into the pockets of artists either.

What Beatport is not telling artists on their service is the fact that the company can mine the data from streaming, and sell this information back to the labels, radio and other industry concerns who can benefit from this intelligence. Nothing wrong in finding ancillary revenue streams. However, Beatport needs to develop symbiotic technology that they can use to add revenue via data mining, and help customers find the music they want to purchase. For example, Beatport should incorporate a Shazam Feature in their app, allowing users to tag songs they hear at a club or festival for immediate purchase.

Thus, it’s hard to buy into Beatport’s assertions of giving back to the artists and labels who have made the company what it is today. What is apparent is that the company is ripe for a takedown. A few savvy coders, who can remove Beatport’s bloatware, create killer search functionality, revamp the unintuitive navigation and match you to the tracks you want to buy in the most efficient manner, can take a significant chunk of business away form the concern who has completely forgot that “meeting the unique needs of the electronic music community–DJs, artists, labels, and fans” doesn’t mean solely serving it’s own bottom line…or what will be left of it, if SFX survives Chapter 11.

Author: FutureMusic

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