The global record store

With 6,500 labels under contract, Beatport.com is conquering the world

Mark Brown, Rocky Mountain News

Published October 13, 2007 at midnight

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Beatport.com charges up to three times more than iTunes for a song. The tracks, mostly music you've never heard, take longer to download. And no, you can't buy the new Faith Hill album.

No matter: Denver-based Beatport is still one of the hottest new music-download sites in the world, supplying dance clubs, DJs and music fans in 130 countries.

Jive Magazine reported last year that Beatport surpassed 3 million downloads. Officials won't talk numbers, but said downloads have since seen strong growth.

One reason the site, launched in 2004 by three local entrepreneurs, has gotten big results is that it started small. Apple's iTunes, the dominant force in digital download, often overlooks smaller sites.

But now this "small" site has grown into a business that employs 70 full time to get music to dance enthusiasts. In the Denver office, near 10th Avenue and Broadway, they manage the music labels in North and South America; the Berlin office handles most of the rest of the world, with New York and London offices dealing with niche markets. It's a lot of music.

"We have more than 6,500 labels who signed contracts with us," said Jonas Tempel, CEO and founding partner. "A vast number of those labels have signed exclusive contracts with us because they feel we're the best opportunity for them to have success online. They've foregone their iTunes contracts; nobody could find them."

"I remember when we went back and did the math and realized that 24 hours a days, seven days a week, every minute we sell a track. And that was a couple of years ago," said Bradley Roulier, a founding partner.

"I think we've sold music to every country in the world. It's so exciting to log on to that ticker (Beatport's online sales tracker): 'OK, Asia is buying right now. Australia is buying. Europe's jumping on. OK, there are a few kids in Africa shopping right now.' It's amazing how global it is. We're just the record store . . . the global version."

The sales rate a few years ago amounted to more than 10,000 downloads a week. Although Jive reported Beatport surpassed the 3 million mark in downloads last year, the company won't reveal what its volume is now. But one number they will talk about - the continued expansion of its sales library, now boasting 275,000 tracks - suggests it's many, many times that.

"We won people over with our consistency. In business today, there are so many people claiming they're going to be the best, do this, do that. They fall short 99 percent of the time," Tempel said.

"With Beatport we never claimed to be anything. We just said our goal is to go out and bring as much content of the relevant music in the world and make it accessible to everyone."

Beasts of (vinyl) burden

DJs for decades lugged crates of vinyl albums to work in clubs. Not only was that a lot of labor, but it was difficult to share music with other DJs.

Turning vinyl to digital files is a slow, frustrating process. It requires recording each song in real time, said Eloy Lopez, chief operating officer and founding partner.

Computers changed the business, however; digital downloading made sharing music a snap. That evolved into a business model for the sharing of music among DJs.

"The DJ industry was migrating from pure analog, vinyl, to a digital platform. A DJ (using digital files) could walk into a nightclub with thousands of songs instead of hundreds," Tempel said.

So why not find a way to make the music available online, where the download time could be drastically reduced?

Tempel was running an ad agency with an emphasis on online branding in early 2003 when the three founders committed to the idea. Beatport was launched in January 2004; the idea was right on time.

"In 2002, I would say, 90 percent of DJs played vinyl exclusively. In 2004 it was probably 50-50. Now in the clubs, 99 percent of the DJs are digital," said Roulier.

The three were no strangers to dance music. As DJs, Lopez and Tempel knew the music; Roulier, director of entertainment for the nightclubs Vinyl and The Church, had relationships with top DJs worldwide.

"I'm a DJ, Eloy was a DJ and Brad's a promoter of DJs and nightclubs," Tempel said. "We had an intimate knowledge of this space. Collectively, we felt like there wasn't anybody we couldn't call to help us with this project."

"I was able to see on a weekly basis this migration happening and knew this Web site would do really well if we got the right content," said Roulier.

"A lot of it was just instinct at first," said Lopez. "To some degree it still is. We still live and breathe electronic music, this industry as a whole. We just have that instinct to say this is what we think is right for our customers."

The site launched with just 75 labels on board. The number has since grown to 6,500 labels with more than a quarter-million tracks.

"We were proud of that (growth). That's a lot of labels. To get a label to send a hard drive or CD of their intellectual property to some people in Denver and just trust that it's going to be a good deal - that sales pitch is hard," Tempel said. "But it worked because we had this belief from Day One that we'd do it better than anyone."

Customers are investors

The start was slow.

"Some (DJs) tried to hang on to analog as long as they could; they thought it was the purest form," Lopez said. "They knew about us but they weren't using us. We didn't have all the latest content yet, or they just didn't want to make a switch.

"We battled that through 2005 all the way to 2006. As Brad said, content is king, and we've got the content. That's what helped us get over that hump of attracting the top-tier DJs and ultimately influencing the second-tier DJs and their friends."

"It's just a lot of hard work," Roulier said. "We don't have the shelf life as long as iTunes or traditional record stores. We're trying to close the gap between production studios and artists. We've closed that gap significantly. We're able to be 'right now' and have the hottest tracks in the world."

Bill Renkosik, who spins as Bad Boy Bill, is one of a number of DJs who use Beatport - and invested money in the site to help get it going.

"I remember being in Germany at a hotel and . . . I had forgotten I wanted to play a song that night that I still needed to download. I logged on, downloaded the track, burned it to CD from my laptop and was out the door in a few minutes (and played the track that night at the club). That is still amazing to me," said the Chicago-based Renkosik.

Distribution problems for his label, Mix Connection Multimedia, were the bane of his existence. So when the chance came to invest and distribute through Beatport, he jumped.

"I knew it was the future," he said, as record stores didn't have the physical space to keep his vinyl in stock. "I was getting e-mails from DJs that are going to the record store and saying the song from my label they want is out of stock. It was just frustrating."

Other international superstar DJs, such as Richie Hawtin and John Acquaviva, have invested as well.

"I find myself with a lot of my free time on either planes or in hotel rooms or on the go, but still with an Internet connection," Hawtin said. "Beatport continues to offer the most well-rounded, one-stop source for all things within the electronic dance world."

Hawtin had previously been an investor in Final Scratch, a technology that got music into DJs' hands. "Beatport was the next step in what our world/scene needed after the introduction of those technologies," he said.

But all the content can have a downside. "We actually have the music before it's hot," Tempel said. "So we really get it so soon that we are actually part of the hit-making process. Traditional brick-and-mortar models and even iTunes - people come there looking for specific songs. I know I want Bob Seger's greatest hits or Pink Floyd. You're gonna find it.

"The Beatport environment - from week to week the sounds and style change. Producers change. One guy making a hit one week isn't the same guy making hits the next week."

Fans can buy songs for their iPod in MP3 quality. But instead of selling music in only sound-degraded MP3 format, Beatport has lossless WAV files for perfect sound at $1 more per track. The huge files would take up the space of 10 songs on your iPod, but they're sought after by DJs.

"The quality speaks for itself. Just look at this sound system we have here," Roulier said on a recent afternoon at the club Vinyl. "We have 80,000 watts of power. For $1.99, it's worth it to have the WAV form."

Even at the highest prices - Beatport charges $3.49 for exclusive, lossless tracks - it can make economic sense for a DJ to use.

"It's actually so much cheaper than buying vinyl," Tempel said. "I buy a lot of music on the Web site and it's not even half, probably a quarter, of what I used to spend."

Besides, "our customers need our music," Roulier said. "It's a need- based relationship. They need it, they feel, to do their job the best. They're very loyal, and they come back on a weekly and monthly basis.

"They have to have it to empower them to do their job, whether it's playing a lounge with 50 people or just starting. From 2,000 people to 100,000 people, these artists need this music."

Meet the founders of Beatport.com

Bradley Roulier

• Age: 34

• Birthplace: Leavenworth, Kan.

• High school: Denver Academy

• College: UNLV

• Job before Beatport: club/event promoter

Eloy Lopez

• Age: 29

• Birthplace: Denver

• High school: Denver West

• College: ITT Tech, Red Rocks