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.”
This source said RCRD LBL would feature a central destination site from which content for various genres of music from rock to electronica to urban can be accessed by consumers and branded or sponsored by advertisers.
“There’s an urgency in the industry to find new ways to monetize content,” said one source familiar with the project, “and the economics of the Internet facilitate this model because it allows for a leaner organization while letting fans dictate the process.”
While the industry has been taking baby steps towards generating ancillary revenue through advertising, RCRD LBL is betting the house on a media-centric model that gives away its core product in return for being fully subsidized by advertising.
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.”
The venture, which is being funded entirely by Downtown Records and Rojas, is so nascent that it has yet to negotiate contracts for artists to participate.
In employing a business model similar to broadcast television, RCRD LBL is trying to counter the continuing decline in physical music sales by capitalizing on the swelling flow of advertising dollars online as well as the enormous traffic on peer-to-peer Web sites.
With more than 5 billion songs swapped on file-sharing Web sites last year, finding a way to generate legal income from the trading of music has been the holy grail re cord labels have been in pursuit of for years.
“We live in a world in which kids are sharing music, so peer-to-peer Web sites aren’t going away anytime soon,” said one source. “But with this model you can use your copyright to monetize the traffic on these Web sites by generating advertising revenue.”