Could nugs.net get fans to put down their cellphones? A Q&A with founder Brad Serling
When Brad Serling pitches nugs.net, what artists seem to want most, he says, is to "get the fans to put their phones down." While Serling understands fans wanting to relive a favorite moment of a concert, he's ready to go them one better.
nugs.net, which Serling co-founded with Jon Richter, offers high-quality live recordings from more than 1,000 artists. The company, which has no serious competition in the direct-to-fan live-music distribution world, made its name working with hard-touring artists including Metallica, Pearl Jam, Phish, the Red Hot Chili Peppers, Bruce Springsteen and Widespread Panic. With a live experience that extends beyond the event, Serling says, "maybe they'll put down their phones and enjoy the show, because they don't have to worry about documenting it."
In this interview, Serling discusses how live recordings have become an essential income stream for many acts partnering with nugs.net and why in the age of streaming, physical sales of CDs -- even vinyl -- still comprise a sizable portion of the company's revenue.
Q: You focus on artists who tour all the time. Conventional music-industry wisdom has artists making most of their money from touring and merchandise sales. By selling live recordings, doesn't nugs.net tap into both revenue streams?
A: It is the ultimate T-shirt, in a way. There's nothing more meaningful for a fan who attends a show than a recording of that show. It's just usually not available. We can deliver that show to fans often within a day, or even a few hours.
It's very much in the vein of merch. It's another revenue stream, a way to extract money from the concert after the ticket has been sold.
Q: Is selling live recordings more important as a revenue stream or a way of super-serving fans? How do artists benefit from releasing live material from all of their concerts?
A: We generate significant revenue for the bands we work with that play arenas and stadiums, but it's a drop in the bucket compared to ticket-sale revenue. For them, it's a way to give back to the fans. There's also an element of giving them a higher quality version of what's out there anyway.
With bands playing smaller venues, it can be their most significant revenue stream aside from ticket sales. For many bands, it's well into six figures a year. We're giving them real money for something they're doing anyway. They're performing, and they'd be recording the show even if they weren't working with us.
Q: What genres are underserved in the live-music world? Where are you expanding?
A: Country, Latino, EDM -- particularly now that somebody has figured out how to license the sampling in EDM. That was always the hold-up for us in the electronic and DJ world.
We work with Lotus, who have a younger demographic. They do remarkably well. I'm continually impressed with how well they do -- and they're growing. It's an under-served market.
Ostensibly, any live music. There's no genre barrier. It's 'Do you play a good live show? Is somebody going to want a recording of that show?' We aren't able to work with every band, but, for the right artists, we're able to deliver a major revenue stream.
Q: What objections do you hear when you get turned down?
A: Ninety-nine percent of the time, the noes we get are the artistic no, the perfectionist no. Which is hard to argue with. Some musicians would sit in ProTools and edit every note from a run before considering releasing a night's show.
The second no would be the label, worrying that it encroaches on album sales. Which is totally absurd. Who the hell is paying for a ticket and wants the recording? The guy that bought the album!
Q: How big a role do physical sales have in nugs.net's business?
A: If you had told me in 2002, when we charged our first credit card for a download, that in 2016 CDs would be such a significant part of nugs.net's revenue, I would have laughed you out of the room. The collector mentality drives it. Of course, it doesn't hurt to work with stadium, arena and theater bands with dedicated fan bases.
We'll eventually put out a box of the shows on this Pearl Jam tour that just started. That will retail for a couple hundred bucks, and we'll sell a boatload of them.
It's surprising that it's still a thing with a younger demographic. With Phish, we see it. With Metallica, we see it. That, and vinyl. It's not news that vinyl is having a resurgence, but we see it in the live world, too. We took one show from each continent Metallica played last year and put out a run 180-gram albums, four LPs per unit. They sold out instantly.
Q: What percentage of nugs.net's sales are physical versus digital?
A: Here's a good snapshot: If we're not selling CDs of a particular release, it's a 70-30 breakdown between mp3s and lossless. So one out of every three fans will pay one and a half times the base price for a CD-quality download. High-resolution sales fit into that 30 percent.
If we sell on CD, it does depend on the act. With the younger bands and jam bands, it's maybe 10, 15%. With the archival shows, we'll see it skew higher.
Q: Has any one show really shifted the paradigm for your business?
A: The first Phish pay-per-view we did, which was New Year's 2010 at The Garden. We knew it was going to be popular. We didn't know it was going to be that popular. Pay-per-view went from zero to 50% of our revenue overnight. At this point, we do about one out of every three shows the band plays as a pay-per-view.
Q: What other revenue streams do you envision for nugs.net?
A: The newest one for us is subscription streaming, a la Spotify, via our nugs.net app. It's a monthly fee for all-you-can-eat access to a segment of our catalog.
We'd love to have our whole catalog up there of 1,000 artists and 15,000-20,000 shows, but it's complicated to work out the rights for every single show. So we've segmented off 10,000 of the shows that you can get under one subscription.
That's our newest and most significantly growing revenue stream. The fastest-growing overall revenue stream overall would be pay-per-views. But it's not for every artist.
Q: What's coming down the pike from you?
A: Right now, our Nugster app is just a download manager, a Mac and PC program to download the music you buy from us. We're rolling out a version of it in the next month or so that also will play the files. Right now, the 30 percent of people who pay more for higher-resolution versions of our files are pretty much on their own in terms of how to play them back. Soon we'll give them a one-stop shop to click, download and play at the highest resolution through an audiophile-quality player.
Q: What development in your part of the industry has you especially excited?
A: Personally, it's the newest developments in audiophile recording. Right now, that's Master Quality Authenticated (MQA). It's a new way of recording files, encapsulating them in a traditional lossless file, so they're backward compatible.
MQA is totally different from its predecessors. It uses more modern technology, the same approach used for astronomical calculations and body imaging for the medical field. It's taking the latest thinking on how to compress data and applying it to music.
Basically, it's a way to give the average consumer the highest quality digital audio possible, far superior to what they're used to, which is basically an mp3.
Nugs.net on the Web:
Website: http://nugs.net/
Facebook: https://www.facebook.com/nugsnet/
Twitter: https://twitter.com/nugsnet