Category: Topspin

Robb McDaniels of INgrooves dishes on the state of digital music

Robb McDaniels InGrooves

What do Thievery Corporation, Universal Music Group and Dolly Parton have in common? They all use INgrooves to distribute their music to more than 600 digital stores worldwide, including iTunes,, eMusic, 7Digital, Verizon Wireless and countless others.

San Francisco-based INgrooves has been in business for 10 years, but few people have heard of it or its chief executive, Robb McDaniels. That’s beginning to change, in part because the company earlier this year purchased Fontana, a Los Angeles distributor of physical albums for more than 200 independent labels.

INgrooves is turning the most heads, however, for its role in the new digital economy. Last year, INgrooves distributed songs that rang up roughly $1 billion in digital revenue. And while it's true that distribution isn’t the kingmaker it once was, as only a handful of labels have the resources to ship albums to thousands of physical stores, it's an interesting perch from which to witness the digital tidal wave that has permanently transformed the music industry’s retail landscape.

As a sign of how much things have changed, McDaniels, 37, is scheduled to deliver the keynote address on Wednesday at the annual Music Biz conference of the National Assn. of Recording Merchandisers, the 54-year-old group once dominated by the likes of Tower Records, HMV and Virgin Megastore.

We spoke with McDaniels, a former financial analyst for Marsh & McLennan Securities, about the next wave of technology to hit the mainstream music industry in the solar plexus -- on-demand streaming services such as Spotify, Rhapsody, MOG, Rdio, Slacker, Muve and others.

Now instead of getting pennies per download, artists are having to wrap their heads around building their careers on fractions of pennies per play. Here’s an edited version of the interview.

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RootMusic 'likes' Topspin on Facebook

RootMusic Logo RootMusic, whose free BandPage application is the one of the most popular on Facebook, has teamed up with Topspin to add even more juice to its app.

BandPage is currently used by more than 200,000 bands to set up pages on Facebook, which in many ways has become to musicians what MySpace was several years ago: an online marketing outlet capable of reaching hundreds of millions of people. Taylor Swift, Arcade Fire and Kanye West are among those who use BandPage to market their albums and let fans listen to free samples of their songs.

Topspin Logo With Topspin, a music-technology startup based in Santa Monica, BandPage on Monday let artists also sell merchandise on their Facebook pages.

"We've been asked many times about other things that make an artist's career really successful," said J Sider, who founded the San Francisco-based RootMusic a little over a year ago. "We're excited to now provide them with solutions that are beyond the marketing." 

The ability to sell merchandise directly to fans from Facebook is harder than it may seem. Doing so requires a system for processing payments, fulfilling orders and tracking sales on behalf of artists. Topspin already does these things, and more, for thousands of bands who have their own websites, but it it had until now not expanded to Facebook, whose estimated 700 million users represent a potential gold mine.

For now, the "merch" will involve largely physical goods, not the kind of virtual items sold on Facebook by social games such as FarmVille or Pet Society. That means vinyl records, T-shirts bundled with CDs or other collectible souvenirs that bands are increasingly relying on to make ends meet.

Whether by design or happy coincidence, the sale of physical goods is not currently subject to the "Facebook tax" -- a 30% cut that Facebook garners from the sale of virtual items or digital content on its platform.

The upshot for bands? 

Ian Rogers, chief executive of Topspin, said, "This will help spread the concept of artist-as-retailer to the most popular place on the Web," meaning Facebook.


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-- Alex Pham


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