JUST HOW BIG ISEDM? EDM fests regularly draw hundreds of thousands, EDM tracks top digital downloads, and a new generation is using the computer to make music. What does it mean for the music industry? If you're under 30 years old, you grew up using a personal computer and a mouse. If you're in your teens, smart phones and tablets have always been a part of your world. These demographic groups that have been steeped in digital technology from birth have embraced the computer as a music making tool, making electronic dance music, or EDM, the fastest growing genre on the planet. EDM is a catch-all header that encompasses a vast array of electronic genres that revolve around manipulating samples, loops, and beats including techno, bass, electro, trance, house, dubstep, and numerous others. But whatever you call it, EDM is big. The splintering of commercial radio and the advent of personalized download services has obscured the five-year growth trajectory of EDM: If you're not seeking it out, it's easy to overlook it. But, the numbers reflect a musical style that has resonated with millions worldwide. Attendance at the five largest EDM festivals in the U.S. expanded by 41% between 2007 and 2012, while the total concert market for the same period edged up just 3%. A broad-based consumer survey conducted by EMI music found that 29% of U.S. respondents reported a "passion" for EDM, implying a fan base of 74 million. And, according to Neilsen, EDM had the highest growth rate of all music genres, posting a 36% year-over-year increase in digital downloads in 2012. Electronic dance music has captured the imagination of the "millennial" generation, and nowhere is it more evident than at the Electric Daisy Carnival, a three-day electronic music extravaganza held each year in Las Vegas that features top DJs performing on amazingly complex sets. The fest, held earlier this year, drew a staggering 350,000 attendees, making it close in size to the mythic Woodstock Festival of 1969. But unlike most of the hippies who wandered onto Max Yasgur's farm to hear Hendrix; Crosby, Stills, and Nash; and Sly and the Family Stone, the attendees at Electric Daisy paid between $100 and $1,000 for a three-day ticket. And Electric Daisy is just one of many fests. Elaborate music events that draw between 50,000 and 100,000 have sprung up in Detroit, New York, Miami, Seattle, and across the continent in Europe. The various genres of electronic dance music constitute an increasing share of digital downloads. In 2012, EDM tracks represented close to 30% of all music downloads and on YouTube, EDM videos are now among the most popular. Avicii's recent hit "Wake Me Up" has clocked an incredible 130 million views. Dave Guetta, the top French DJ, has several hits with views topping the 100 million mark. Contrast this with the videos of top-tier rock bands like AC/DC and Metallica, where the YouTube views are in the 10 million range. The Grammy Awards last year acknowledged this growing impact by giving nationally televised exposure to electronic dance-music superstars Skrillex, David Guetta and Deadmau5, who jammed on stage with the Foo Fighters. Billboard magazine, for its part, has added several EDM categories to its closely watched charts. Even Wall Street has a bullish take on EDM. SFX Entertainment, a major producer of EDM fests, including the Electric Zoo, went public last month, raising $260 million in an oversubscribed IPO. The transaction values the entertainment company at $1.0 billion. Robert Tullo, an analyst from Albert Fried & Co., said of the transaction, "This isn't Wall Street speculating on demand. Bodies are showing up for these events, and it shows no sign of abating." In many respects, EDM parallels the early evolution of rock 'n' roll. It has the benefit of being incomprehensible to older generations. It has an edgy outlaw quality, with its roots in underground, barely legal clubs. The two genres even share a tradition of liberal drug use. "You have a new generation every eight to 10 years that finds its own music, its own sound, and for this generation, dance music is the biggest new thing," explains Dutch DJ Afrojack, also known as Nick Van de Wall. Perry Farrell, singer with Jane's Addiction adds, "The energy being created from dance and electronic music is as powerful as rock 'n' roll. It's getting stronger and stronger. You want to see people flip out like they did in the mosh pit at a rock show? They're doing it in dance music. It's scary, dangerous, exciting, like rock 'n' roll used to be." Finding a creative outlet using electronic tone generation to create music has captured the imagination of millions, but what does it mean for the music products industry? On the positive side, EDM has dramatically lowered the hurdle for music participation by drastically reducing the hours needed to gain some proficiency. Traditional instrument makers may scoff at EDM, but it has succeeded in achieving the stated goal of virtually every industry association, supplier, and retailer: namely to enable a much larger slice of the population to participate in music making. Jack O'Donnell, CEO of inMusic brands, which has a leading market position with its Akai, Alesis, M-Audio, Numark, and Sonivox lines, explains how EDM is attracting an entirely new customer. "The creative freedom that EDM offers to potential producers and performers, and the availability of high-quality, low-cost music production and performance tools, is helping people interested in the genre to become active producers and performers," he says. "In addition, the increasing popularity of applications like Ableton Live and our own Ignite music production software has lowered the barrier of entry for people without formal music or music production training. You don't need to read music or understand how to operate a mixing console to make music with these sorts of tools." Matt Derbyshire, a senior production manager at Novation, a leading maker of controllers, offers a similar explanation for the appeal of EDM. "It was rooted in creators engaged in naïve experimentation with drum machines and sequencers, but the music they created went on to become a cultural soundtrack for hundreds of thousands of people. Now, with the access to music-making devices and software becoming more accessible and sophisticated, this naïve exploration can happen on a far broader scale, and so it makes sense that more people are enjoying it." EDM practitioners have also taken existing products and used them in new and original ways. Roland's drum machines, which have become a standard component in many EDM rigs, are a case in point. Kim Nunney, president of Roland U.S., says that although the company's TR-808 and TR-909 drum machines have helped define the genre, it wasn't part of the corporate strategy. "These musicians and producers used them in ways we could barely imagine at the time. It's almost as if the gear serves as the muse at times," he explains. "In the end, musicians define the musicality of a product, and we have many musicians to thank for the impressive legacy of these instruments." But does a larger potential universe of music makers translate into a larger m.i. market? The jury on that is still out. EDM customers may be more numerous, but they tend to spend a lot less on gear than the traditional instrumentalist, and much of their spending bypasses the specialized retail distribution channel altogether. Apple's GarageBand, bundled with all Mac laptops, and available as a inexpensive iPad app, allows a large contingent to completely satisfy their urge to create EDM, eliminating the need for any subsequent purchases. The more serious enthusiast who takes it a step further, may drop $400 to $1,000 at an m.i. store on a control surface. But unlike the guitarist or drummer, he isn't as likely to regularly spend on ancillary items, like straps, strings, sticks, effects, and hardware. What's more, the software at the heart of these more sophisticated EDM set-ups such as Ableton Live and Logic is increasingly being sold manufacturer-direct online, rather than through a retail setting. It's only when an aspiring producer or DJ invests in a sound system that they become a big-ticket customer for the m.i. retail channel. Manufacturers like inMusic and Novation are working to change that, however, introducing a torrent of unique new products designed to expand the creative horizons of aspiring DJs and producers. In addition to keyboard controllers and traditional DJ CD players, both companies have added control surfaces that defy easy classification. Akai's APC controller, which features rows of assignable buttons, has been designed expressly to work with Ableton Live software. Novation has taken a similar approach with its line of Launchpad Controllers. A distinctive selling point of the Launchpad is the Automap software, which makes it easy to assign switches to hardware. Explaining the R&D process, Novation's Derbyshire says, "Our goal is making it as easy as possible to be creative and inspired. The Launch series was inspired by customers who wanted to move from being a DJ to actually creating their own music. There is some great software out there for producing music, and LaunchPad makes it easier to access." Market leader Guitar Center is taking the trend seriously, as evidenced by its new store format. Although the retailer's roots are in the guitar business, hi-tech electronic products are now the first things customers see when they walk into the store. The company management isn't abandoning fretted instruments by any means – they just assume that customers know guitars are there because of the store name – but, they want to become the preferred destination of EDM enthusiasts. Some musical purists argue that EDM is sterile, ultimately uninteresting, and another passing fad, soon to become a punch line, like disco. While there are some stylistic similarities between EDM and disco, there is one significant difference. EDM enables mass participation, which would suggest greater longevity. O'Donnell adds, "What is now being called 'EDM' has been around for a very long time. Styles like house, techno and trance are all subgenres and have been around since as far back as the '80s. The music will continue to evolve, but I don't see it going away any time soon." Derbyshire adds, "Like other forms of music, EDM has enough history now that each new trend tends to draw on past influences. This tends to reinforce it." Forecasting popular musical preferences is problematic, but here's one prediction that both seems likely and offers the promise for future sales growth in the m.i. industry: the integration of traditional instruments and electronic sound. Predicting this integration is hardly going out on a limb, as it's already taking place to tremendous listener acclaim. The French techno-band Daft Punk has achieved extraordinary commercial success collaborating with guitarist Nile Rodgers. And as mentioned earlier, Avicii's integration of traditional bluegrass and electronics has topped every chart imaginable. Sales for mostly instrumental electronic- music albums aren't in the same league as Beyoncé or Katy Perry, usually topping out at about 300,000 copies. But countless hip-hop and pop artists in recent years, from Lady Gaga to Nicki Minaj, are collaborating with DJs and electronic-music producers for hits. O'Donnell has a simple piece of advice for retailers and suppliers adapting to this evolving trend. "Creative artists will continue to do what they always do: Look for ways to create new and exciting art, assimilating what's around them and making it their own," he says. "As an industry, the best thing we can do to capitalize on that comes down to one word: Listen."
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