Way Behind The Music

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Backup Player Coran Capshaw rarely steps from behind the curtain. He built his company to help artists like John Legend supercharge their brands and businesses.

Unsung Masses Just some of Musictoday's 200 employees. Many are musicians themselves, including Nathan Hubbard (at lower right), who runs day-to-day operations. All of them are rabid fans.

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Of course, this direct interaction involves some sleight of hand. Behind any given band's online store, it's Musictoday that actually performs the "unfun, unsexy part of the business," says Bruce Flohr, an executive with Red Light Management, one of Capshaw's many ventures. Musictoday's 200 employees are responsible for emailing fans, processing orders, printing tickets, mailing merchandise, fielding complaints, monitoring message boards--all of it. "When you stand in that warehouse, you realize the industry is healthy," says Flohr, who also manages several bands. "It no longer hinges on a silver disc."

But there's a compelling lesson here for any company that makes a product: If you control a piece of the transaction, you understand more about your customers. By aggregating fan data that artists haven't usually been privy to, Musictoday can help shape decisions such as where to tour, advertise, or deploy superfans to evangelize. Considering that an estimated 60% of concert tickets typically go unsold every year, that kind of targeting is no small contribution. "We're able to say to artists, 'We know more about your fans than you do,'" says Nathan Hubbard, 31, who runs Musictoday as Capshaw's chief of staff. "Let's put our heads together and figure out how to monetize this relationship."

Musictoday works behind the scenes to fashion an online identity for artists, then connects them with fans--and drives commerce.

Monetize it they have. Musictoday's roster now counts more than 700 clients using some combination of its services. ("We're a little embarrassed by our scale," says Hubbard, "but it helps.") That list includes newcomers like Legend, legacy bands like the Doors, and everyone in between--Kenny Chesney, Justin Timberlake, Taylor Hicks, Janet Jackson, Britney Spears. The company has also begun expanding beyond music, nabbing Tiger Woods, the Miami Heat's Dwyane Wade, Maria Sharapova, the New York Knicks, comedian Dane Cook, and CNN chatterbox Glenn Beck. "We're genre agnostic," says Hubbard. Fans are fans.

And revenue is revenue. By the end of 2006, Musictoday was on pace to sell more than $200 million worth of concert tickets, CDs, merchandise, and fan-club memberships, roughly twice what it sold the previous year. In keeping with its low profile, the seven-year-old company remains tight-lipped about earnings and its cut of online purchases, other than to say it has been profitable for several years and expects to keep growing. That seems a safe bet given that in September, Live Nation, the industry's largest concert promoter, acquired a majority stake in Musictoday (it won't disclose the purchase price). Live Nation, which does about $3 billion in annual sales and produces more than 33,000 shows a year, is eager to keep moving into live recordings and other concert-related goods. "There's a lot of fragmentation right now, a lot of new products," says Michael Rapino, CEO of Live Nation. "Artists are looking for partners who can deliver these products to their fan base. It's what the labels did for so long. Musictoday is a mile ahead of anyone else."

Capshaw's long, strange journey from fan to mogul began years earlier with the Grateful Dead. "I went to a lot of their shows," he says, "and was exposed to the do-it-yourself model." Jerry Garcia and the boys, whose instrumental jams shot the bird at the radio-hit formula, were a touring tour de force. But behind the reefer haze was a larger, iconoclastic strategy. Deadheads were encouraged to tape shows, which fostered a tribe of bootleggers. The Dead shrugged at the lost record revenue and cashed in by selling its tickets and merchandise directly to fans.

Capshaw didn't consider managing until the early 1990s, when the Dave Matthews Band became a Tuesday night fixture at Trax, one of his two clubs in Charlottesville. He'd gotten into the business as a student at the University of Virginia back in the late 1970s, booking bands for fraternity parties. Eventually, he became a nightclub owner, one with an innate sense of how to take care of the talent: Ann Jones Donohue, now director of sales at Musictoday, started out by researching the artists' favorite foods and preparing home-cooked meals. Grilled seafood for the Neville Brothers. Barbecue for Jane's Addiction's Perry Farrell. "They came to town expecting a deli tray," she says.

Dave Matthews's crew reminded Capshaw of the Dead. How they thrived onstage, improvising, giving a different performance each night. How the crowds grew, attracting fans from around the state. How they taped shows, which Capshaw and the band encouraged to gin up word of mouth. It was a prototypical social network. "I remember talking to Coran once, and he held his phone outside his office for me to hear them," says Donohue. "He said they were going to be huge."