It was a brilliant idea: take the specialized needs of club DJ’s and create a digital product pipeline catering to their specialized needs. The traditional distribution business failed to recognize the vitality and popularity of club music in a way they could translate it into a business model. Their platform and business model bears some resemblance to the “toll-gate” strategy of Apple:
“Back in 2002, a young club promoter and two resident DJs came together from different professional backgrounds to solve a problem. They had no idea that their solution to provide digital content to a world of DJs and fans of electronic music would grow so quickly into such a success story. Taking on this challenge meant that Beatport’s founders Eloy Lopez, Brad Roulier, and Jonas Tempel were taking part in modernizing the entire dance music retail industry, and this was undoubtedly their goal.
Since those early days, these founders, along with a team of dedicated staff, have watched the company grow exponentially, and been humbled by the positive response they’ve received not just from their peers, but from the hundreds of thousands of customers spread out in almost every country in the world.”
We exist largely because iTunes validated the space of paying for music online, and they made it a business model that is respected worldwide,” Tempel said…. “Beatport got really lucky in that when we opened an office in Berlin, it was at a time that the city re-emerged as the center for electronic music,” Tempel said. “With this kind of business, you have to start in the underground. You have to connect yourself with the early adopters of style.”
Growth in the last few years has surged due to the industrywide increase in digital downloads and because of Beatport’s repeat buyers. “DJs need new music because they play every week, it’s their job,” Tempel said. “So they want a resource where people are supplying them with content on a regular basis. A huge portion of our revenue is driven every week by the same customers.”
“I would say Beatport and iTunes share about 10 percent of the same content,” Tempel said. “The key difference between our business and iTunes is that they’re based on merchandising stars like Coldplay. With Beatport, our customers go in looking for their favorite record labels, favorite re-mixes, what’s on other DJ’s playlists. The DJs we sell to are highly educated about what they want, so if you don’t have the content, regardless of all that other stuff, they’re not coming back.”
Beatport is on its third version of the site’s user interface and recently launched two additional websites: Beatportal.com, a blog-based site with news about electronic music, and Beatsource.com, another music store focused on hip-hop and urban music. The company also has a strong presence in event sponsorships, …“Beatport is at a natural inflection point where we have created this amazing retail platform and our best use of that platform is what we’re going through right now,” Tempel said. “We own everything. There are no non-proprietary applications that we created. That’s one of the things I’m most proud of from a business point of view. It gives us a significant and defendable competitive advantage… ( Ryan Peacock )