After establishing itself as a huge success in the travel industry, Airbnb is now looking at expanding its services into the live music space by partnering with Sofar Sounds to offer guests "Music Experiences".
Guest post by Chi Zhan from the Berklee College of Music: Music Business Journal
Founded in 2008 in San Francisco, Airbnb has gone from three air mattresses and broke roommates to a company valued at more than $30 billion. Having changed the way people travel, which led to a massive revolution in the hospitality industry, Airbnb is now trying to make its move to enter the live music space.
In November 2016, Airbnb launched a new offering called “Trips” as an offshoot alongside its home rental service. Trips allows consumers to not only rent a place to stay, but also sign up for local activities including city tours, surfing lessons, and music events.
Later in March 2017, it seemed that Airbnb had bigger plans for the live music industry when it unveiled what it calls “Music Experiences” under its global Trips platform. Music Experiences was launched with the intention to grant access to exclusive and immersive music events, including intimate live performances, special pop-up gigs, underground music sessions, and meeting local artists and performers. After the launch of Music Experiences, music quickly became one of Airbnb’s most popular booking categories with around 100 concerts held worldwide every ,month. Many of these are even held in unconventional venues such as cathedrals and wine cellars, all with deliberately small audiences of around 50-100 people per show.
Following the success of Music Experiences, Airbnb continued to show interest in the live music industry this February with the launch of “Airbnb Concerts,” a platform that specifically focuses on staging concerts around the world. James Beshara, Airbnb’s Head of Music, expects the number of venues to skyrocket from the current 100 concerts per month to 20,000 per month at the end of 2018. Airbnb Concerts is now available in 25 major cities across the globe, including San Francisco, Los Angeles, New York City, Tokyo, London, Amsterdam, Paris, and Sydney, among other locations. Moreover, according to Airbnb’s Vice President of Trips Joe Zadeh, this year Airbnb is “going to expand [Trips] to 1,000 cities… we’re going to put our foot on the gas,” said the executive at an event in San Francisco.
The success of this model has sparked interest in new ways concerts can be experienced and how technology can create new opportunities for artists, organizers, and concertgoers. Startups exploring this concept are emerging all over the world, one of the most interesting being London based startup, Sofar Sounds.
Sofar Sounds is a startup company that focuses on music events and has an offering similar to Airbnb Concerts: intimate concerts at untraditional venues. Initially, in March 2017, Airbnb had even launched “Music Experiences” in collaboration with Sofar Sounds.
Started in 2009, Sofar Sounds calls itself a global community where guests and artists come together to experience music in an intimate and respectful setting at a secret concert. Currently operating in eight cities around the world, the site allows their concert artists to receive a compensation of $100, plus 100% of merch sales and a high-quality video of the performance. Guests can purchase a ticket to the concert at the price of $15 to $20. Sofar concerts happen in a wide range of venues, from homes and apartments to rooftops, breweries and galleries, all provided by Sofar hosts. In addition to its eight full-time cities, there are more than 300 Sofar cities around the world that are run by volunteers. In early 2017, Sofar Sounds claimed that they are putting on approximately 500 gigs per month.
Although the two share the basic idea of building a global community where people can enjoy more intimate and interpersonal live music experiences, the cooperation between Airbnb’s “Music Experience” and Sofar Sounds was not long-lived, and Sofar hosts have not been seen on Airbnb’s website since. It is apparent that Airbnb has greater ambition in the intimate concert business, considering its goals of expanding Airbnb Concerts between 50 and 100 cities, launching its Trips project in over 1,000 cities, and holding over 20,000 concerts per month by the end of this year,
How Profitable Are These Intimate Concerts?
While such small and intimate concerts can be used as effective marketing tactics, they do not however appear to be very profitable for artists. After all, Airbnb just stepped into the live music business and started building the project less than two years ago, and despite Sofar Sounds having a history of nearly ten years, it seems that the company has been facing challenges in its development, most likely due to a lack of capital and little growth incentive.
In the case of Airbnb Concerts, tickets for gigs cost around $20 to $35. The company explained that artists could earn between $150 and $1,000 per show, and Airbnb only charges a 20% fee for each booking. There is certainly potential for flourishing profits here, but for the revenue to grow and become sustainable, the intimate concerts that Airbnb holds have to grow both in quantity and in quality.
Speaking with Billboard, James Beshara stated, “five years from now, I think more people will experience music in intimate settings like this than they are experiencing in arenas, stadiums, and festivals. That’s how big of an opportunity I think this is and hopefully, we’re a substantial part of that.”
In the case of Sofar Sounds, the ticket price for Sofar concerts is around $15 to $20, which is a relatively low price compared to Airbnb’s. The venues that Sofar concerts take place in are voluntarily offered by Sofar hosts, who can submit their host applications through the Sofar Sounds website. Despite the fact that there is no cost for venues and the fee for artists is very low, Sofar Sounds reveals on its website that “currently, Sofar does not make a profit, and we are backed by a group of wonderful and supportive investors who believe in our goal of connecting people through intimate, live events.”
Will These Intimate Concerts Benefit Artists?
The intimate concert idea, although innovative for the live music sector, may not be game changing in terms of revenue for artists. For artists looking to play gigs, Airbnb Concerts would be better utilized as a marketing tool to access a certain pool of listeners, or to improve listener experience through reviews. However, booking with Airbnb Concerts may not significantly increase the amount of money an artist gets, for the ticket price remains unchanged and Airbnb charges a 20% booking fee. The other service provider, Sofar concerts, certainly will not generate growing revenue for artists either, as Sofar gives artists a fixed compensation of merely $100 per concert.
Nevertheless, Airbnb Concerts and Sofar Sounds might be a good tool for artists to market their music. Because artists are putting themselves on an interactive platform actively looking for guests to attend their gigs, and consumers, at the same time, are actively looking for a live music experience. Guests can also leave comments under the gigs they attended, giving future guests an overall idea of what to expect, and motivating the artists through constructive criticism. “Through the platform, we’re able to support up-and-coming and local artists by connecting people to their events and bringing their music to even more fans around the world,” said Chesky.
In conclusion, the intimate concert idea brings a whole different live music experience to concert guests, especially music lovers. Instead of standing 5,000 feet back, staring at a big screen, music lovers are now more easily connected to intimate settings and can interact with artists via digital platforms like never before. This is also a great opportunity for local and startup musicians to connect with their fans and build up a fan base, which contains both locals and travelers from other cities and even other countries. By utilizing Airbnb Concerts and Sofar Sounds as marketing tools, independent artists will greatly benefit from these platforms as the live music industry continues to drive the music business forward.
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Sanchez, Daniel. 2018. Airbnb Experiments With Smaller Concerts In Non-Traditional Venues And It’s Taking Off. Digital Music News. February 26. Accessed March 2, 2018. https://ift.tt/2sTaMzG.
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Woo, Jen. 2017. Airbnb Teams up With Sofar Sounds to Offer Secret Live Music Shows in SF. 7×7. March 28. Accessed March 2, 2018. http://www.7×7.com/airbnb-teams-up-with-sofar-sounds-to-offer-secret-shows-in-sf-2318384636.html.