OurStage Act Gaining Partnership Audience Amid Economic Downturn
Chelmsford, MA-based OurStage, which runs monthly contests where bands upload their music and videos to its website to compete for cash and other prizes, is among a number of Web startups in the Boston area that cater to music fans and bands. But the company has also managed to attract a paying corporate audience—providing a needed financial boost during the economic recession, CEO Ben Campbell tells Xconomy.
Before the economic meltdown began last September, OurStage had $6 million worth of investment commitments for its second round of financing, Campbell says. But all of those commitments had vanished by October 2008, when investors pulled out amid concerns about the ailing economy. To stay in business, the firm shrank its staff from 38 to 17 people. It also adjusted its strategy to generate more visibility among music fans—not to mention cash flow—through sponsorships and other partnerships with large corporations.
OurStage now has 18 employees and has scraped together $4 million of the $6 million it seeks for its Series B round of equity financing. It names among its corporate sponsors or partners AOL Music, MTV2, JetBlue, and Radio One. (In July, we reported the first $3 million the firm raised in the round. It has now raised $21 million altogether from a combination of angel investors and other backers.) These big names and others have paid OurStage to sponsor the firm’s musical contests, which enable fans to have a say in who becomes the next big stars and gives the sponsors like MTV some insight into which talents will catch on with their target audiences.
Though there’s no shortage of online venues that allow listeners to pick and listen to musical acts they enjoy most, OurStage is worth noting as a local firm that has generated revenue (and perhaps someday profits) from this type of service. The company, which got its start in 2007 to focus on bringing online listeners the best new music and talents, is moving ahead with several approaches to make the site a moneymaker.
“Our approach is to partner with as many [industry] giants as possible,” Campbell says.
This approach serves the company on at least a couple of fronts, according to Campbell. In July, the startup ran separate fan-judged contests sponsored by MTV2 and Radio One. The contests not only generated sponsorship revenue, but both companies promoted the contests to their own viewers and listeners, helping to send more than 3.5 million unique visitors to OurStage.com for the month. Campbell says that the number of visitors to the site has a direct impact on how much money it receives from sponsors and advertisers. And though the company had a good traffic month in July, Campbell says that he won’t be satisfied that his company’s site is reaching a mainstream audience until the audience hits 10 million unique visitors per month.
In addition to sponsorships and advertisements, OurStage is developing two other means of generating revenue: a marketplace for matching venues with bands and its “Track Validation Services,” or TRAViS, for testing whether target audiences like certain songs before they go on the radio or TV. Major music labels are testing a beta version of TRAViS, which is scheduled for a full launch in the fourth quarter of this year. Campbell explains that the service helps music labels figure out whether specific types of listeners like certain artists before investing hundreds of thousands of dollars to promote them. It also allows labels to promote songs to target audiences. Other companies such as ad agencies could also test music before big bucks are spent to overlay the tracks into commercials, he says.
With its marketplace offering, OurStage has entered the fray of online services that play matchmaker between bands and venues such as music clubs. That’s a business niche already occupied by Boston-based Sonicbids, but Campbell says OurStage’s service is differentiated because venue managers and booking agents can look at the listener ratings that bands have received on OurStage.com as well as glean how many fans a musical group has within a certain geographic radius of their club. As with Sonicbids, bands can put their demos, video clips, biographies, and other info into an electronic file for venue managers. Campbell says that the service is now free, but the company is working out whether and how much to charge bands and venues to use it in the future. (The site features more than 100,000 bands in total, he says.)
OurStage is trying to highlight the best new artists in nearly 40 different musical genres, including country, Christian, heavy metal, hip-hop, pop, by applying its own rating system. With each of the competitions it runs, the rating system is designed give each act or band equal exposure, preventing the most well known bands from glomming all the listeners and ratings. Campbell adds that most users of OurStage.com are people who listen to the site’s genre- or sponsor-specific music stations, which feature songs that fan judges have rated as the best in each genre.
Campbell tells me he formed the company after having difficulty finding quality content such as videos and music on popular sites such as YouTube and MySpace. “What I found frustrating is that sites were set up and didn’t help you find out what was good,” he says, and he saw a big opportunity to provide people with a site that culled only the best of the new musicians on the Web.