You know spring is just around the corner when Seattle starts chirping about South By Southwest (SXSW), the gigantic music, film and tech bash in Austin, Texas, where last year more than 2,000 groups presented showcases for 25,000 fans and music-industry types.
But this year, the big Seattle story isn’t about rapper Macklemore or folkies The Head and the Heart, it’s about a Sodo tech startup that’s delivering on-demand video and audio recordings of live concerts to mobile devices.
The founder and CEO of Lively (www.getlive.ly), Dean Graziano, a self-described “serial entrepreneur,” has set up shop with 18 of his 25 employees at an Austin mansion he’s calling “Lively Manor.”
Starting Wednesday, he’s throwing a poolside party and courting moguls from Sony, Warner Bros., Universal and others with 15 showcases.
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Lively is also recording a whopping 120 performances at SXSW, including No. 1 artists The Lumineers and Seattle acts Tangerine, Noah Gundersen and The Flavr Blue, which features Macklemore sidekick Hollis.
Not yet a year old, Lively has raised more than $2 million in venture capital and has logged 193 shows. Many of the shows are free, and the others are available to purchase after you download the free “Lively” app.
Investors, artists, promoters and distributors are waxing enthusiastic about the company.
“This could be a defining event,” says Lively investor Rich Barton, the former Microsoft exec who founded Expedia, co-founded Zillow.com and sits on the board of Netflix. “South By Southwest is pretty famous for launching all kinds of tech companies, like Foursquare and Twitter. I wouldn’t be surprised if Lively came out of this with a lot of momentum.”
Nobody believes that more passionately than Graziano himself. A burly, disarmingly enthusiastic New Jersey native whose operating speed exceeds normal limits and whose conversation is peppered with startup jargon like “cap ex” (capital expenditure) and “scale it” (bang for your buck). Graziano worked as a tennis coach for 12 years before catching the tech bug in Seattle, in 2004.
Married with three kids, Graziano, 44,
founded Visible Technology in 2005, which enabled businesses to track their brand reputation, exiting with a sizable take-away. He also had a founding role in the media-planning software company ReachMachines. This is his first venture into music. It all started, he says, at the 2012 Deck the Hall Ball at KeyArena.
“I noticed there were 20,000 people with their phones in the air,” he says, sitting in a big armchair in his spacious Sodo office. “I thought, ‘Wow, this is lose-lose for everybody.’ As a fan, I’m trying to capture this experience, and it’s really poor quality. And if I’m that guy that’s standing there the whole time, I’m not enjoying the show, and I’m actually pirating (the music). And for the artist, all that content’s walking out the door … How do you turn this into a win-win?”
Graziano and his staff developed a device to record shows directly through the mixing board and post them for sale almost immediately. After you download the free Lively app, for five bucks you can listen to the audio of a concert you just saw, on your phone, by the time you get to your car. Video? Ten bucks, 24 hours.
“That’s the value prop (value proposition),” he says. “It’s a merch play. Do I buy the T-shirt? Or do I buy a video of what I just saw that lasts forever?”
Lively does three-camera video shoots for as little as $1,000, editing them the next day. So far, they’ve been active in Seattle, Los Angeles and New York and are moving quickly into markets across the country.
Lively takes 30 percent of the retail income, the App Store takes 30 and the artist gets from 40 to 70 percent, depending on sponsorship support. (Budweiser is already on board.) Many videos on the app are free.
An added attraction for artists is the Lively Audio Manager (LAM), a gadget that enables bands to record shows and upload them to the Lively app themselves.
“It’s very cool to have an additional financial stream from a show,” says Seattle singer-songwriter Shelby Earl, whose work is up on Lively.
Though Lively is a digital company, its 11,000-square-foot Sodo digs feel more like a speak-easy than a startup. Its two stories feature open work spaces, a lounge, walls covered with rock memorabilia, glassed-in recording studio, stand-alone stage and a green room.
That’s intentional, says Graziano, since Lively also records bonus material at the site, as well as wooing sponsors and developing community there. Lively threw an opening gala last November featuring four bands for a crowd of industry insiders, plus notables such as then-Mayor Mike McGinn. As people departed, they were offered a code to download the Lively app and a video of the party.
But hoopla aside, why is anybody going to pay 10 bucks for something they can get for free, since an hour after any show, 20 videos of it go up on YouTube?
“Sure you can get that,” says Lively Chief Marketing Officer Geoff Walker, who used to run the Rhapsody studio at RealNetworks and developed the Fox-affiliated Root Sports brand. “But it’s from a guy 40 rows back.”
Fans seem to know that. Graziano says 26,000 people have downloaded the Lively app so far and that 26 percent of the people at Lively-captured shows have made a purchase. (He won’t reveal how many shows have actually sold, however.)
He also says he has statistics proving that the average visit to his site is 48 minutes and people who buy something go back to it 10 times. That’s red meat to potential sponsors, as is the Facebook/Twitter “share” button at the bottom of every download, which can exponentially multiply viewership.
Presumably Graziano is zealously sharing such figures at SXSW. His first day there, he inked a partnership with San Francisco’s INGrooves Music Group, which distributes and markets albums by more than 4,000 artists.
“This is another vehicle for us to market our own artists,” says InGrooves’ senior director of corporate development, Liz Lowry. “The cool thing about it is that the artist is not paying for the live studio recording.”
But in the end, selling download “merch” may not even be where the real value lies.
“We’re creating a pretty valuable catalog of content,” Graziano points out. “It’s not Spotify, Pandora — they’re licensing a catalog and charging a subscription. I’m creating a content catalog. And as you know, content’s king.”
Alex Kochan, vice president of AEG Live Northwest, one of the country’s two top concert promoters, agrees.
“Wouldn’t we all love to have a hundred of these things Jimi Hendrix did?” asks Kochan.
Maybe. But the startup world is notoriously mercurial. And cutthroat. Another player, Evntlive, in Redwood City, Calif., recently entered the marketplace with $2.3 million in financing and was promptly gobbled up by Yahoo.
It’s anybody’s guess when investors will see a return, but Barton — who says he’s in for Lively’s April “A round” of fundraising, which has a $5 million to $10 million target — speculates it could be five to eight years.
Not surprisingly, Graziano sees an investor exit in 18 to 24 months. In the meantime, he needs to bring home the bacon from Austin — big-name artists, sponsors and deals with major labels.
Can he do it?
“That’s the zillion-dollar question,” he says, smiling.
Paul de Barros (206-464-3247 or firstname.lastname@example.org) covers music at blogs.seattletimes.com/soundposts/ or follow him on Twitter @pdebarros