Business Models Inc.

Overview of DJ Business Models

July 31, 2011 | Patrick van der Pijl

For years now I am travelling to Ibiza in summer. The beautiful white Island is a great source of inspiration. Beaches, haciendas, restaurants and clubs. Unbelievable to see that such small island hosts so many clubs that are open every single day with great DJ’s. Unbelievable because prices of tickets start from 40 euros up to 80 euros and prices of drinks start from 10 euros; not to mention the VIP arrangements where people pay up to 30.000 euros for a table. How do they make that work in Ibiza? Why are people willing to pay such amount of money and most interesting: How does the business model look like? This year I decided to talk to some local people, people from the industry and do some additional research.

Various DJ’s and various business models

Most DJ’s are themselves the most valuable resource. They are the brand and deliver the shows themselves. Almost all of them produce, some for third parties and some in cooperation. Most DJ’s monetize their brand value by means of performances, merchandising, CD sales through their website. Fatboy Slim sees the biggest change in the music industry right now: “The DEATH of selling music. And the rebirth of live music and parties. When I was younger you played gigs to sell your records and you’d lose money. And now you don’t have records to sell but you make money cos people still want to go out and party.”

When I arrived at Ibiza airport I could see Tiesto was there also – his plane with his name tag was parked there. I thought he must have his own plane being able to meet his busy tour schedule. Tiesto plays in summer almost every single night! You could say he is the most hard working DJ. Tiesto – Tijs Michiel Verwest – set up his own record label Black Hole Recordings and produced albums for a.o. Armin van Buren. The number of own records is impressive. Recently he introduced a new record label Musical Freedom. On Mondays he has his own show in the Privilege club here in Ibiza.

Carl Cox celebrated his 10th anniversary on the island in club Space. Carl – not so famous probably as Tiesto – was the first DJ who won in 1997 the title Best DJ of the world. Carl is known for his mixes and plays also in clubs all over the world. Carl runs the label Intec Digital – All roads lead to the dancefloor. Carl loves technology and social media. He himself launched a new app where you can mix songs yourself.

Bob Sinclar, French DJ and producer, also owns his own record label yellow productions. His breakthrough to the bigger audience was the song “Love Generation” which hit the hitlists all over the world. It became one of the anthems of the FIFA 2006 World Cup. Bob runs Yamahay, an underwear fashion brand. In his latest advertisements for his clubnights he is wearing his underwear himself.

My wife introduced me to Roger Sanchez (see picture up here), one of the best live DJ’s in the world. Roger or S-man is an American House DJ. Remarkable about Roger is that he mostly plays 6-7 hour sets without even touching his own records. “If am doing my DJ thing, I do my DJ thing and play other records” he said during our short conversation in Ibiza. “If I do my show, I’ll bring my own crowd with dancers etc.”Roger recently changed his venue Pacha for Amnesia last year and Space this year where he plays on Monday nights. “It is a different ground and I like to be at Space”. Roger is the owner of his own music label Stealth Records. Roger was one of the first DJ’s who launched a brand with the potential to be bigger than himself: Release Yourself (2002). His podcast/radio show is very successful and has more than 15 million listeners.

A collection of DJ’s: The Swedish House Mafia

The Swedish House Mafia started in 2008. They launched themselves last year in Ibiza. The SHM exists of 3 Swedish DJ’s: Axwell, Steve Angello and Sebastian Ingrosso. Each DJ has their own career and status: 10, 14 and 16th position in the DJ Magazine top 100 chart.This Mafia follows a traditional model: they got themselves a record deal with EMI in 2010. They play every Monday night at Pacha in Ibiza and the place is sold out. Costs of a ticket euro 70 (Pacha has a capacity over 3.500).

F*** me I am famous – a brilliant DJ business model

On the Ibiza party advertisements you’ll see both Cathy and David Guetta. David – French DJ and producer – is probably the most successful producer and DJ at the moment. Despite his personal success as a DJ, he created a brand that IS bigger than himself: F*** me I am famous (FMIF). This the-club-turned-global-party brand produces parties all over the world. Here David operates with his wife Cathy. She is the first lady of the brand, CEO and supermum of Guetta Inc. They both met 20 years ago when David started as a DJ and Cathy was working behind the bar. “She was the best dancer I have ever seen!” David came to Ibiza in 1995 and introduced the party label F*** me I am Famous three years later. Cathy works to give the people the best time of their life. She is responsible for every detail. The show, the artwork, the goodies and the VIP treatment. The business model of the label is interesting. With their label they produce the party themselves incl. the clothing, the dancers and the DJ’s. At the moment they are able to charge double ticket prices compared to the other clubs (80 euros) and the club is full every week. They look for cool venues all over the world to ‘broadcast and perform’ their show. How do they make it work? They bring their own people and rent the club. An interesting revenue model whereas David is able to introduce new DJ’s, plays fewer time himself and makes more money than with only his own gig.

More Event Clubbing Business Models…

This Event Business Model is not new in the clubbing industry. We see more Event labels like “Defected in the House” which is part of the Defected Music Label and founded and promoted by DJ Simon Dunmore. The brand was established in 2006 and it’s house in Ibiza is Pacha. Another Event label is Subliminal Invation – owned by Record label Subliminal – establised in 2001 and promoted by Erick Morillo and Helen Coates also has it’s house in Pacha.

Thanks for your inspiration! to pacha magazine, space magazine, Roger Sanchez and Ben Turner.