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: … Next Page »

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