Stick It To 'em

(New York, Billboard, 03/11/07, by Wolfgang Spahr)

The Germanic music industry is cashing in on the popularity of live music, using the USB "memory stick" format to produce instant live albums for fans at concerts.

Since the summer, Munich-based company di[rec] has been recording festival sets onto the roughly 2.5-inch sticks and making them available for €17 ($24) just five minutes after concerts finish.

"The industry has been very open to our business model," di[rec] co-managing director Tatjana Mühlthaler says, "because we offer a way to turn the popularity and uniqueness of live music into sales of recorded music, at the moment when concertgoers are most receptive."

Di[rec] declines to disclose details of contracts or sales figures, although industry experts estimate that up to 5% of audiences have been buying the sticks.

The strategy has won approval from record executives struggling with slumping sales in Germany, Switzerland and Austria. The company already has deals in place with Universal and Sony BMG, plus a host of indies including V2, Nuclear Blast and Century Media, although artists must also be signed up on a case-by-case basis.

While German trade revenue from recorded music fell 3.2% in 2006 to $1.41 billion, according to the IFPI, live promoters report booming business. There are no official figures for the sector, but research by German trade magazine Musikmarkt suggests the 2006 concert business was worth more than $5 billion.

"We are seeking to gain a share of the artist's entire value chain," says Edgar Berger, CEO of Sony BMG in Munich. "So, [this] is an ideal answer for us."

The USB sticks—which have a capacity of 256 MB and hold digital rights management-protected Windows Media Audio files—have been offered at Austrian events including the Nova Rockfestival (held June 15-17 in Nickelsdorf), where Swedish metal bands In Flames and Clawfinger were among those to use the service, and the FM4 Frequency Festival (Aug. 15-17 in Salzburg), where English electronica outfit Groove Armada and Swedish rock act Moneybrother joined the program.

"The idea met with a positive response," says concert promoter Florian Zoll of Rothenburg, Germany-based KARO agency, which used the service at Germany's 15,000-capacity Taubertal Festival in August. "Most people thought that it should have been invented a long time ago."

Bands have offered instant live CDs at concerts before, but this move comes as the USB format gains in popularity across Europe. It was recently made chart-eligible in the United Kingdom, where acts including the Fratellis and Keane have issued memory stick singles.

Di[rec] now plans to expand into recording regular concerts, with German rock act Revolverheld, English singer/songwriter Chris Norman and Italian-German pop singer Nevio planning to offer the service at forthcoming dates.

Mühlthaler says that some artists have expressed fears that the recordings may cannibalize sales of traditional live album releases, but adds, "Our recordings capture the unique character of the concert, complete with all the rough edges. Live CDs are mastered albums which fans have generally already bought."

"USB sticks can't compare with albums," says Jochen Maass, executive officer at Donzdorf, Germany-based indie Nuclear Blast. "They're really only for hardcore fans in a bid to put a stop to bootlegging."

But iO guitarist Henning Rümenapp, whose band issued a USB recording of its Taubertal Festival set, says the USB stick gives the band "a closer connection to our fans. Visitors to our concerts will always have good memories of our music."