CODE The Monstercat Label Model: From YouTube Channel to One Million Record Sales

Monstercat CEO and founder Mike Darlington never intended to make a record label.

“People don’t need record labels anymore,” he says. “Artists can do everything on their own. So we either had to do it for them better or provide a platform and marketing tool they can’t find on their own. That’s where the community concept came for Monstercat. We created a brand that fans can use to discover music and artists can use as a platform for getting their music out there.”

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Formed in 2011, the Vancouver-based independent dance imprint can now lay claim to more than one million record sales, including formative releases from present main stage mainstays like Krewella, Project 46 and Vicetone. Despite lacking any major label backing, Monstercat’s past eight compilations boast iTunes Dance chart-topping first week sales figures. Its recently launched podcast hit #1 on iTunes in 13 countries, including its native Canada, where Monstercat is the 11th most subscribed YouTube channel with nearly 2 million followers.

“We didn't have a traditional model or big artists that built us as a company,” says Darlington. “We had to grow on our own and from a community standpoint. It’s one thing to say we built something on YouTube, but with the numbers to back it up you can see we actually did something. It's not just like we grew fans, but we grew fans who are actually purchasing music.”

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Most impressively, Monstercat has enjoyed such success while making all of its music available for free. Darlington is an anti-corporate Bitcoin enthusiast whose penchant for defying convention is integral to the Monstercat mentality.

“I believe in music being available everywhere,” says Darlington. “I seed our music everywhere. The artists know that and they’re fine with it. I don’t take down any of our torrents. We just want the music to be available. Our fans know it’s available, but if you look at the iTunes charts we almost always have an album sitting in the top 10.”

Monstercat began as a YouTube channel that Darlington and his friends used to share music and support each other’s tracks. As their dedicated YouTube fan base swelled, they became increasingly involved in music promotion and scouting, and a fledgling media company soon took on the trappings of a modern record label.

“YouTube is the most organic of any platform,” says Darlington. “It’s the only place where you can put up a track, leave it alone and then come in a couple weeks and it has 5,000 hits because of the way you've tagged it. Also everyone's a content creator. People go to YouTube to find music to use in their videos and then that traffic comes back to original source of music. It's an amazing ecosystem.”

In early 2012, Darlington received a cold call from Jake Udell, the manager of a then-unknown Chicago trio called Krewella, persuading him to listen to their demo.

“I was very shocked because no one calls me out of the blue,” says Darlington. “We weren’t that big then, maybe 100,000 subscribers. I remember listening and thinking the production was good and the vocals were something I hadn’t heard before. The great thing about Monstercat is that we like to sound different, so I thought why not? That track was ‘Killin’ It,’ their first official single.”

Krewella signed with Columbia later that year, becoming one of the first EDM acts to be picked up by a major label. Darlington says the signing was more significant from an experiential standpoint than a financial one.

“It was a stepping stone,” he says. “It helped us prove we’re not just an Internet thing. Most importantly, it built an ally and a friend and we all learned together. I consider Jake my mentor. Anytime they did a campaign or a deal, I would learn from it.”

2012 proved a landmark year for Monstercat as well. After its seventh compilation album began climbing the iTunes dance charts in June, the label’s fan-fueled “Operation Dethroned” campaign helped the label notch its first No. 1 album. A fan submitted a cartoon of a toothy black cat mascot celebrating on a summit, giving birth to the label’s logo. Artists began phoning Darlington to tell him they had quit their day jobs.

“That was when I realized this was becoming something,” says Darlington. “That was an amazing feeling because I’d been told from day one you can’t make enough to be an artist if you don’t tour.”

As Monstercat gears up for its first North American tour, Darlington admits that touring has posed a major challenge to date. Monstercat’s releases run the stylistic gamut, from Pegboard Nerds’ searing dubstep and Vicetone’s nuanced big room to the melodic bass music of Fractal and Au5. While Darlington appreciates the flexibility that the genre-free approach offers, he also recognizes the schisms it can create.

“Growing with YouTube means growing an audience that is generally younger and might not go to shows,” he says. “We learned early on we had two different audiences, some who listen at home and some who go to shows. Some tracks fit each and don’t cross over. Home listeners don’t want to hear a club banger. That’s made it difficult to cross over into a touring brand, which is why we’ve really held back on our shows. But now that artists are finding ways to do crossover music, we’re curating music that can work in both environments.”

Darlington attributes the label’s following to the engaging personalities of its artists, as well as the sense of ownership it offers fans through open-source A&R opportunities. A recent campaign allowing fans to submit tracks to win a spot on Monstercat’s Tastemaker team received more than 3,000 artist submissions and 9,000 demos.

“For us, the first thing is ‘Do we like the music?’ but the second is ‘Do we like the people?’” he says. “Who are they? How do they treat others? It really is a family and a community. It makes the fans buy the music, not just because they want to buy the music, but because they know it's actually going to benefit the artist and Monstercat as a whole.”

Moving forward, Darlington has prioritized artist development and embracing new technology. The label now employs four full-time developers for sophisticated platforms and campaigns, and became the first dance label to accept Bitcoin as payment last year.

Rather than being territorial, Darlington has been delighted to see Monstercat’s business model emulated by fellow YouTube-based upstarts.

“Almost all of the curation channels are starting labels, using compilations and signing artists on a by-track basis,” he says. “It’s created a new model for people to get into the industry. It used to be very hard to create a label without being a sub label to a major. Now there are people with hundreds of thousands of fans who can build artists and sell music. Anytime we can take away power from the major labels, I get happy.”