Sound investment

Clubs to set sites on brand recognition

Hollywood Boulevard, a street overflowing with the images of superstars, is getting a slice of downtown New York’s avant garde.

The Knitting Factory, the premier presenter of music from the fringes of jazz, rock and classical, in April will open a Hollywood outlet that will feature two performance spaces, a bar and, most significantly, a state-of-the-art sound system, video and audio recording facilities, Webcasting equipment and a control room visible to the audience.

“I want this to be the first club of the future,” KF founder Michael Dorf said. The venue will book the sorts of acts that have given the New York hall its cachet — improvisers such as Roscoe Mitchell, composers like Laurie Anderson and rock bands along the lines of Soul Coughing — as well as local experimental outfits.

The move into L.A.’s Galaxy complex near Mann’s Chinese, which will be followed in the late summer/early fall with a venue in Berlin, is the physical expansion of a club that has been at the forefront of cyberspace expansion.

Dorf has been preaching the gospel of the Internet for years, as has House of Blues. (HoB Webcast a concert in 1995, before it even had inner-office e-mail.) These two “beer-and-mortar” chains, however, are more than presenters of live music.

They personify the new image of clubs: taking national what has long been a local mom & pop venture. Knitting Factory and House of Blues use live music as a starting point to establish themselves as a brand name for consumers of CDs and digital downloads.

In a word, they’re branded: the Knitting Factory as the epicenter of new and experimental music; House of Blues as the multi-genre home of hot contempo acts. Currently, their ‘Net presence is promotional; the future, both hope, is a revenue source.

By streaming live shows, both sites become virtual clubs, an idea that Dorf intends to exploit when the L.A. club launches by offering video and audio of a New York show at the L.A. club in the early evening.

HoB’s strength is in its ability to package a national tour in conjunction with a host of promotional Web activities.

In the branding of live music, the venue, not the performer, is the star.

“It doesn’t matter who was here the night before or who will be here the next night,” said Chris Stephenson, senior VP of sales and marketing at the House of Blues. “The night you’re there it’s your club. The importance of the brand is promise and trust.”

Launched by former Hard Rock Cafe co-founder Isaac Tigrett with backing from a Harvard U. foundation and several celebrity investors, HoB now lists Chase Capital, J.H. Whitney & Co. and Silver Ventures among its owners. (Tigrett was behind the idea of branding and using the Internet from day one).

The company, which opened its first club in Cambridge, Mass., in 1992, is run by Greg Trojan, the former CEO of the California Pizza Kitchen chain.

House of Blues proper has seven Stateside venues, with at least four more in the planning stages. And, thanks to its acquisition this year of Universal Concerts for $190 million, it has nearly 60 halls to present larger acts — not to mention a syndicated radio show and a live-concert TV show that will be back in production early next year.

Its site, in addition to serving as a guide to its live presentations, is being positioned as a marketing tool for labels to break young bands.

“We feel we’re creating a model that is record company-friendly,” said Lou Mann, president of media properties for House of Blues.

The HoB model is to put an act on tour in there, most likely as an opening act, then as a headliner, and to provide promotional support through downloads, online chats, a concert broadcast and online editorial. “It’s a marketing support system,” said Mann, who formerly topped Capitol Records.

The Knitting Factory has used its performance spaces and Webcasts for the development of artists and repertoire. The Knitting Factory operates four labels and has released more than 60 discs this year.

Most consider KF music to have only marginal commercial potential, but Dorf can turn a profit on an album despite selling fewer than 5,000 copies. And clearly, demand has blossomed. Four years ago, annual revenue from the club and diskeries was $269,000; last year, it skyrocketed to $6 million.

The expansion has been possible through an infusion of capital from New York investment firm the Argentum Group ($4.2 million) and Leslie/Linton Entertainment ($650,000). Dorf also has strategic alliances with Bell Atlantic (which sponsors four KF-curated jazz festivals in the Northeast), Liquid Audio, RealNetworks, and others.

But that money is minimal compared to what investors are sinking into dance clubs. Rather than wait for enough patrons, however, to cross the velvet rope and pay a cover charge, they, too, are turning to branding.

In the world of dance halls, the biggest success story comes from Ministry of Sound; in the godforsaken Elephant & Castle area of south London, the venue emerged as London’s hottest, coolest club in 1991.

Though it lacks that cachet today, it has become the U.K.’s largest indie record label, exporting British club culture to the world with hugely lucrative tours as far afield as India and Japan. It has spawned a radio show, clothes and all sorts of licensed products. The business turned over £25 million ($41 million) last year, and will grow to a projected $66 million this year.

For the most part, the dance clubs are establishing themselves through theme nights and DJ-specific parties that define the space as much as a live venue.

“Over the last five years, people have seen further opportunities in electronic music and club culture,” said Borja Beneyto, the marketing and communications director of Madrid’s Mercado de Fuencarral.

London’s Ministry has played a massive role in turning dance music (dubbed “electronica” by the media, to embrace house, techno, garage, trance and all the variants) into the mainstream pop music genre it is today.

The Ministry bridged the gap between the clubs and the charts by collecting hot club tracks, which were (are) generally one-offs (and not widely available ones at that) into albums that can be sold in the high street.

The Web site for Prague nightclub the Roxy is getting 50,000 hits a month, said U.S. co-owner David Clark, who has also introduced a line of club clothing, Belly.

Liverpool’s legendary Cream — credited with causing a dramatic surge in the popularity of the city’s colleges this decade — also has a record label, sells merchandise and goes on international tours. Cream has been invited by the Buenos Aires city government to stage a free, publicly funded millennium rave at the city’s massive polo stadium for 100,000 people.

As odd as a polo stadium may be for a rave, there is odder real estate offered by these ops: Said Beneyto, “we do annual raves but offer a mall as well.”

A mall? Strange as it seems, Madrid’s Mercado de Fuencarral has a leisure complex that includes shops, an art gallery, a cybercafe, restaurants and a chill-out zone. Its basement club is packed Wednesdays, Fridays and Saturdays. Some 70% of Madrid clubbers — so many that there are traffic jams at 5 a.m. — buy their clothes and accessories at the Mercado.

“Part of being successful is all the sensationalism that is part of rock ‘n’ roll,” said Jason Bentley, a longtime disc jockey in Los Angeles and director of A&R for Maverick Records.

“In dance music, everyone gets to participate. People who can effectively step away from the scene and manipulate it — Malcolm McLaren, say –control the culture,” Bentley said.

Los Angeles nightclub impresario and a former New Yorker who longs to create a club that would evoke the mood of Manhattan in the early 1980s, Sandy Sachs has had some control over the culture. She is now overseeing the Factory, which on Dec. 7 launched its two-room club with a night of ’70s-inspired disco in the front space and a Latin band in the back.

The aspiration behind the Factory — a nightclub owned in 1968 by Frank Sinatra, Tony Curtis, Anthony Newley, Sammy Davis Jr. and others — is “to be to the next millennium what Studio 54 was to this one.”

“Who doesn’t know Studio 54 and who doesn’t talk about it? What other club has ever gotten that kind of press or brand recognition?” asked Sachs. “If they weren’t busted, who knows where it could have gone?”

(Adam Dawtrey in London and John Hopewell in Madrid contributed to this report.)

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