The new music startup I am discussing this week is a company in the live music space called Gigstarter. The live music experience has certainly changed drastically with the advancement of technology, introduction of social media, and shift of consumer tastes towards more visual demands of the entertainer. Despite this, the economics behind the live music industry hasn’t changed in years. Gigstarter hopes to be that change. Put very simply, currently when artists go on tour the booking agent will contact venues and book shows far in advance, and then a promoter will market the show and try to sell as many tickets as possible. Thus it is largely a guessing game as to what the most profitable venue is. Gigstarter’s idea is basically to reverse engineer the process. Namely, they will sell tickets and measure demand from fans before the show is booked, and only when they are sure they will make enough money they book the venue. Gigstarter’s idea is so simple that it seems painfully obvious, however it is clearly not given how long the industry has traditionally operated. Here is a video that helps explain what they are all about:
The benefits to the artist are numerous. First of all, basically all of the financial risk of touring is taken away. Usually, when a show is booked, the promoter and the artist don’t know if the costs of the show and marketing will be recouped by ticket sales. In general, the promoter will take the brunt of this loss, but the artist obviously has a main interest in getting many tickets sold as well. With Gigstarter, the venue is not booked until sales are made, and more importantly until the best venue is chosen. The way that Gigstarter is able to do this is through the social media channels of the artist. It is all about targeting and finding the artist’s fans and literally asking them where they want the show to be, rather than telling them where it is and hoping they’ll be happy about it. The locations with top support will be picked and sold ahead to those fans, and only if the target sales figure is met will the show actually be booked. This is basically the equivalent model to Kickstarter (which must be where Gigstarter got its name from). Kickstarter crowdsources money for projects of many kinds, and will not actually do project until the target funding number is raised. If it is not, everyone gets there money back fair and square and nobody wins, but nobody loses. This genius business model that skyrocketed Kickstarter to the top of the startup world is the same reason Gigstarter has so much promise.
And not just risk-reduction is a benefit. It is also very effective in increasing fan engagement. In the Gigstarter model, fans are engaged from the beginning, and given power in the decision making of the tour. They almost function as a tour manager of sorts. This is a very exciting proposition for superfans, who are always looking for ways to get more personal with the artist, which in turn will get them more involved in the artist social media, and also likely cause them to be willing to pay higher prices for the tickets (the figure presented was that Gigmaster ticket sales are on average 33% higher than traditional sales).
Lastly, and very simply, Gigmaster takes out the middleman. The promoter is no longer necessary, because the show is already sold if the artist chooses to book a gig. Not only this, but because the tickets are sold direct to fans through the Gigstarter website, ticket fees are reduced. All of this allows the artist and their team to keep a larger part of the pie.
This is the first time in a while that the current industry structure of live music is legitimately threatened, however it seems if it does in fact change, it will certainly be for the better.