Many people think of Airbnb as the poster child for disruption: leveraging the sharing economy to democratize participation in the travel & hospitality marketplace, turning those industries on their heads.

Now, the $31 billion startup is building a similar business case for music—and no one in the traditional music industry seems to be looking.

In November 2016, Airbnb expanded beyond its core Homesbusiness with the launch of Experiences, a highly-curated platform through which travelers can book single- and multi-day activities and excursions with locals. At the 2018 Code Conference last month, Airbnb CEO Brian Chesky revealed that the Experiences product is growing 10 times faster than Homes, with the former reaching 1.5 million bookings a year.

Music, one of the most powerful barometers of local culture and identity, naturally took prominence in Experiences, and Airbnb decided to honor the trend with the launch of a separate Concerts page in February 2018. As of press time, Airbnb Concerts has a relatively small footprint—17 cities across Europe, North America and Asia—but the company anticipates that number climbing to between 50 and 100 cities by the end of 2018, with the flow of concert guests growing to 20,000 per month.

That 20,000 figure might seem small—Madison Square Garden can host the same number of fans in a single night—until you realize that Airbnb has no interest in competing with incumbent promoters like Live Nation or venues like MSG for market share.

Instead, the tech behemoth is banking on intimacy: concerts under Airbnb’s specific brand prioritize smaller crowds, with a max capacity of as few as 20 and no more than 100 people per show, as well as unconventional spaces such as houseboatschurches and open-air observation decks.

In fact, several smaller startups like Little ConcertSofar SoundsGroupmuse and Side Door have already been perfecting this approach to live music for over a decade. The support—and competition—of a gargantuan travel platform like Airbnb may catapult the previously underground trend further into the mainstream.

Perhaps the most important detail is that the hosts of the Airbnb Concerts themselves, rather than Airbnb as a supervising company, are responsible for most of the marketing and promotion around their own events. This autonomy has proven to be a boon for the dozens of artists, indie record labels and collectives such as The.WAVshesaid.so and the Amsterdam Music Project that are now hosting concerts in partnership with the startup, and who might not otherwise have easy access to traditional or large-scale performance spaces.

Moreover, it’s not only independent and DIY acts who are jumping on the opportunity: John Legend is hosting a sold-out Airbnb show for 48 lucky fans at a secret location in Downtown LA this Thursday, donating 100% of the ticket prices to his own criminal justice reform initiative FREEAMERICA. Airbnb is also playing an instrumental role in the Mayor of London’s Sounds Like London campaign this month, hosting concerts by local emerging artists in partnership with Little Concert.

The rise and institutionalization of the intimate concert is a mirror not just to Airbnb’s strategy, but also to the current state of the music industry at large. In a digital music consumption era both amplified and plagued by distance, a growing number of music corporations are trying to take their online interactions offline to foster more meaningful discovery and artist-fan relationships.

For instance, Spotify’s Fans First program has helped artists like Ed Sheeran, Kacey Musgraves and Arcade Fire identify and reward a small group of their most passionate fans on the platform with exclusive invites to secret events, ranging from regular concerts to non-musical activities like high tea (Musgraves) and cookie-baking (Sheeran).

“I think it’s directly tied to a blend of both the political atmosphere and technological era we’re in, and the way people are or are not relating to one another,” Sarah Klearman, Creative Director at shesaid.so and co-organizer of the network’s Women in Music concert series in the Bay Area through Airbnb, told me. “Big companies are paying attention to the fact that people are seeking more genuine, authentic interactions in real life, and as a result these companies are taking on more socially-charged experiences and participating in smaller acts of activism or intimacy. It’s a really complex change that’s happening, but in general I think it’s positive and coming from a good place.”

For the live events industry—which is currently dominated by corporate behemoths like Live Nation and AEG—the ramifications of a race towards intimacy are significant. A recent online survey that Airbnb Concerts conducted among 2,000 Americans, not only did 69% of respondents agree or strongly agree that they are more likely to discover a new favorite artist in an intimate venue than in a large venue, but 78% of frequent concert-goers (five or more concerts a year) also agreed that intimate concert venues make for a better experience overall than large stadiums.

“Five years from now, I think more people will experience music in intimate settings like this than they are experiencing in arenas, and stadiums and festivals,” James Beshara, Head of Music at Airbnb, told Billboard. “That’s how big of an opportunity I think this is, and hopefully we’re a substantial part of that.”

AIRBNB CONCERTS: THE FUNDAMENTALS FOR HOSTS

As of press time, the cities hosting the most Airbnb Concerts are London (22 listed experiences labeled as “intimate concerts”), New York (20 concerts) and Los Angeles (18 concerts). There are six other participating cities in Europe (Amsterdam, Barcelona, Lisbon, Madrid, Paris, Vienna), six others in the US (Miami, Portland, San Diego, San Francisco, Seattle, Washington, D.C.) and, last but not least, two cities in Asia (Seoul, Tokyo).

Organizationally, every host of an Airbnb Concert liaises with a regional company rep, who usually holds the title of “Trips Market Manager” or “Music Market Manager” and is responsible for vetting venues and concert ideas for quality and safety (e.g. Consuelo Hernandez in NYC, Lamar Gary in SF, Jason Sneed in LA and Jort Statema in EMEA). As of press time, Airbnb is also hiring an APAC Music Market Manager—signaling that Concerts are a key pillar in the company’s continued global expansion.

Beshara and Kathy Gerlac (Global Music Operations Lead) oversee the entire Airbnb Music team, which sits under the larger “Magical Trips” department at the company. Such a hierarchy sheds light on how music is just one of many levers Airbnb is pulling to integrate all steps of the hospitality business into its own operations, resulting in what company execs previously called “end-to-end travel.”

The business model for Airbnb Concerts is relatively straightforward: as with other Experiences, the company takes a 20% fee off of each ticket sold, with no other charges or upfront payments required from the concert hosts. Tickets for these concerts typically cost between $15 and $25, but can soar to as high as $200 apiece for a high-profile artist, as is the case with John Legend’s show.

For regulatory purposes, Airbnb maintains its own relationships with venues (even hiring designated “venue hunters” to scope out the best and safest locations), and leaves it to hosts to book the artist lineup and to determine how to split ticket proceeds amongst themselves and the performers.

This arrangement encourages a level of creative involvement from artists and their teams rarely seen on the traditional concert circuit. For instance, with WMN/N/SND—a female-focused Airbnb Concert series in NYC hosted by local marketing agency and indie label IMG Agency & Records—one of IMG Records’ breakout artists Tangina Stone is directly involved in booking and operations for all the shows.

“Often bookers aren’t coming from that space of understanding what it’s like to be an artist,” Anastasia Wright, Founder and Owner of IMG Agency & Records, told me. “They see artists as a commodity: ‘What’s your draw? What do you want upfront? Will you make good money for the venue?’ Tangina’s coming from a different perspective, because she’s an artist herself.”

Artists can also secure independent sponsorship beyond Airbnb to cover overhead costs—as was the case with LA-based singer-songwriter Eddy Faulkner, who hosts the Make an Impact concert series through Airbnb and was able to secure a free compact system from Bose for one of his recent shows.

As with Experiences in general, Airbnb Concerts with multiple dates over time are more successful than those marketed as one-off events, in part because travelers need the flexibility to choose their preferred dates while they’re visiting a certain city. Hence, unlike with usual one-off tour stops or showcases, the Airbnb Concerts team has encouraged hosts to think of their music programming in terms of a series with an enduring theme over time—which can prove challenging without similar buy-in and commitment from venues.

In addition, while concert hosts own their branding and promotion once they’re listed on the Airbnb website, the company is still rather restrictive when it comes to curating the concert ideas themselves, which may be seen as a disadvantage for artists looking to maximize their creative flexibility.

“We came to Airbnb with a bunch of concepts around women in music, and we had to make some compromises, especially with regards to genre,” said Klearman. “We wanted to highlight a wide variety of genres and less conventional experiences—for instance, we wanted to bring on an artist who specializes in live looping, and there’s an amazing local group of womxn DJs called the Chulita Club that works specifically with vinyl. But Airbnb is very specific about working with more singer-songwriter types and more acoustic experiences, because that’s what’s been more successful for them. I think once we prove over time that we can put on successful, compelling experiences of our own, we’ll get more leeway in the future.”

THE BENEFITS AND CHALLENGES FOR HOSTS AND ARTISTS

What makes Airbnb such a distinct channel for live music marketing is that it draws a direct commercial line between music and international travel.

“The great benefit we bring artists is promoting them to the millions of travelers that use the Airbnb platform every day, and we know this directly drives a majority of [the artists’] bookings,” Beshara told me. Indeed, a recent study by SimilarWeb found that Airbnb receives more direct, organic web traffic than any other travel brand.

Interestingly, many musicians and hosts I interviewed for this piece reported that 60% to 80% of attendees at their Airbnb Concerts were travelers from outside their local cities—a phenomenon that Beshara described as “flipping touring on its head.” In this vein, Airbnb’s long-term impact on local live music scenes might be similar to how Amazon and eBay impacted online retail at large, giving local mom-and-pop shops access to a global customer base.

“A lot of local talent in the Bay Area has been pushed out by the tech sector, so it’s nice to see someone like Airbnb who’s registered so much success offering a solution for the artist community,” Andreea Magdalina, Founder of shesaid.so, told me. “Big tech brands have the power not just to connect people worldwide, but also to empower local communities, and I hope to see more of that in the future.”

Many of the concerts listed on Airbnb have taken on an element of advocacy and activism. As with John Legend, many hosts use their visibility on the platform to shed light on crucial gaps in the music industry or in society.

“WMN/N/SND is starting to do what I want it to, which is become a hub for women working in this industry to discover & support emerging female talent, and connect with one another,” said Wright. “It hits at a deeper problem that women are not performing on the charts in comparison to male artists. A friend of mine who’s an A&R said she gets submissions all day from men, and very few from women. That’s crazy to me. We want to create a space where women can support other women, discover female talent and become that connective tissue.”

While WMN/N/SND currently hosts around two concerts a month, booking individual lineups three weeks in advance, Wright hopes to be able to knock out one showcase a week in the future, in part because both the Airbnb Experiences platform and the hustle of the modern music industry reward regularity.

“The more concerts we do, the further out we’ll start to book, because then we can wrap full campaigns around the artists performing,” said Wright. “Eventually, we want to introduce more international or traveling artists to the lineup to give them a platform in NYC as well.”

Aligning with the Airbnb brand has also given artists a leg up in discussions with potential managers, labels and publishers, as well as with other potential sponsors and brand partners. “It gives me leverage in negotiations not just to help with my music and get more songwriting opportunities, but also to help promote and monetize other artists on their rosters, in a way that actually pays those artists well,” said Faulkner.

On the other hand, the fact that Airbnb relinquishes the majority of marketing responsibility to hosts and artists is both a blessing and a curse in overcrowded music markets like Los Angeles. “At this stage, it’s been mostly friends and existing fans who have been coming out to shows, and we haven’t had sold-out showcases yet,” admitted Faulkner. “But the last thing I want to do is throw away an amazing opportunity to bring the local songwriting community together.”

Considering that Airbnb made $93 million in profit last year on $2.6 billion in revenue, some concert hosts are also suggesting that the startup could afford to give additional financial support to performers, especially in the Concerts initiative’s early stages.

“There’s a part of me thinking that Airbnb can also afford to give artists even a small guarantee,” said Klearman. “I understand why they’re being very calculated at the outset and paying close attention to what is and isn’t working, to ensure that they can really scale in the future. That’s in the best interest both of Airbnb and of the artists involved.”

SOFAR SOUNDS: ONCE A PARTNER, NOW A COMPETITOR

To veterans of the intimate-concert scene, Airbnb Concerts naturally draws a comparison to secret-gig startup Sofar Sounds, which was founded in 2009 and has since expanded to 400 cities around the world. The Richard Branson-backed startup employees 60 full-time staff, with the help of over 5,000 local volunteers around the world who handle promotion, audio production and merchandise sales for each show.

What distinguishes Sofar Sounds the most from Airbnb Concerts is that the former’s lineups are unannounced until the day of the show—meaning that paying audience members are buying more into the umbrella, centralized Sofar brand than into the appeal of the individual artists performing.

“The secretive aspect of the gig reflects our philosophy that all music, and all musicians, are created equal,” Rafe Offer, Co-Founder and CEO of Sofar Sounds, told me. “We don’t have any designated ‘headliners’ in our shows. The last band might have a bit more energy in their set, but the order is not dependent on social following or sales.”

From the perspective of hosts and artists, this can be beneficial in that Sofar takes care of the audience, while the artists simply “just show up and play—which I’m told is rare in the music world,” said Offer.

Yet, this means that the creative flexibility within a Sofar show is even narrower than with an Airbnb Concert, because artists and their teams have little to no control over the arc of the event, and sometimes even over their own performance.

“There’s not a lot of wiggle room with Sofar, because they’re going for a specific type of show: it’s very stripped down, there’s only one type of backline,” said Wright. “There are typically three or four artists on the bill, you don’t decide who the other artists are, and Sofar is the main brand. Whereas Airbnb is more about musicians and creators leading their own experiences, and growing their own brand on the platform. You’re in partnership with Airbnb, while Sofar books you. It’s a different experience.”

In addition, there has been ample controversy and criticism against Sofar’s payment policy to artists: musicians are paid only a flat fee of $100 for their performance.

This has the most detrimental effects in popular Sofar cities like New York where attendees are required to pay $20 in advance for a ticket, without the option to apply via a free lottery for a spot like in the company’s early days. If 70 people pay $20 each to attend a Sofar show in New York with three artists on the lineup, that means that the artists altogether receive only around 20% of total ticket sales—literally the opposite of the Airbnb model, where artists and hosts keep 80% of sales.

Despite these arguably unfavorable economics for artists, the Sofar team insists that their sole focus on music and their brand cachet honed over nearly a decade give them an advantage over Airbnb and other competitors. “Airbnb is likely working hard to tap into their database of travelers to drive conversions to shows,” said Offer. “With the Sofar community, they’re always there for the music.”

In fact, nearly a year before the launch of Airbnb Concerts, Airbnb and Sofar Sounds had actually announced a partnership enabling the latter company to list over 100 shows on the former’s Experiences platform. Unsurprisingly, that partnership is now on hold, as it seems like the two companies are now direct competitors in the concerts space—but collaborations are “definitely on the table for the future,” said Offer.

AIRBNB CONCERTS LONG-TERM: FROM TOURING TO OWNING

While Airbnb is not “breaking into” the live music industry through traditional means, current industry trends can certainly work in Airbnb’s favor, especially with regards to increasingly global and multilingual hits and collaborations. In the era of BTS and “Despacito,” music fans and execs alike are now more keen to understand and support hyperlocal music scenes on an international scale, and Airbnb Concerts could play a role in facilitating those connections on a one-to-one level.

Both Airbnb and Sofar are also looking into supporting artists on multi-city tours, in addition to offering single-city concert experiences. Some artists have already played dozens of Sofar shows around the world, leaning on the company as a sort of informal tour infrastructure. One prime example is singer-songwriter Josh Savage, who played 27 Sofar shows in five weeks across France and the U.K., capturing the journey in a film titled the Living Room Tour Documentary.

In a similar vein, Airbnb Concerts served as the ticketing platform for Australian singer-songwriter Vance Joy’s five-city, sold-out “We’re Going Home” tour earlier this year, which charged $102 per ticket and donated all proceeds to Polished Man, a campaign dedicated to raising awareness and funds for victims of child abuse.

Finally, one potential solution for Airbnb when it comes to regulatory obstacles is simply owning more of the physical spaces where its core products come to life.

“For now, Airbnb is an organization that doesn’t own the houses in which people stay, but I can see them buying up their own houses and event spaces in the future to host their own experiences,” said Klearman. “I believe they’re positioning themselves to be successful enough in scaling their concert experiences to become more of a booker in the traditional sense.”

In the spirit of vertical integration, Joe Zadeh, VP of Trips at Airbnb, has also publicly suggested that the company would give priority access to future high-profile shows to participants in its upcoming Superguest travel membership program, which is expected to launch this summer.

As Airbnb Concerts accelerates its scaling efforts significantly this year, the company will need to tread carefully in ensuring that it supports musicians properly, in an era where ownership consolidation and vertical integration efforts rarely have creators’ or fans’ interests in mind. Considering the debacle that certain Bay-Area neighbors like Uber have gotten themselves into in terms of proper worker compensation and rights, accountability is at an all-time high—and the creative community is no exception.

“If these companies are interested in becoming genuinely involved in local communities, then they should provide comprehensive support all around,” said Klearman. “Otherwise, you’ll only regurgitate the same narrative around corporate exploitation that’s been running for so long.”

Source : Forbes