Monstercat Revolutionizes Independent Electronic Music Scene

Monstercat is proving that independent labels have the ability to reshape the music industry. 

Founded in 2011 by University of Waterloo students and entrepreneurs Mike Darlington and Ari Paunonen, originally as a medium for Darlington and his friends to share and promote their music, Monstercat has rapidly evolved into a thriving electronic dance music record label and technology company, helping independent electronic artists build and promote their brands, while using today’s social media channels such as YouTube, Spotify, iTunes, and SoundCloud to give fans access to the artists and their music.

Monstercat has traditionally signed artists for single releases only, rather than to exclusive deals, allowing artists the freedom to explore releasing tracks on other record labels. Over its four year history, the company has adhered to an aggressive music release schedule, releasing three tracks a week, and a compilation album, typically after every 30 song releases.

Popular artists that have launched from the Monstercat platform include Krewella, an American electronic dance group from Chicago, Illinois, Pegboard Nerds, Vicetone and Project 46. In June 2014, the label reached one million record sales in the US market, and announced its first tour in July 2014, with 20 concert dates and venues selected through a vote by 22,000 fans. 

In December 2014, Monstercat became the 8th largest YouTube channel in Canada, broke into the Top 250 channels in the world, and launched a new 24/7 music stream on Twitch.  For young emerging artists, Monstercat offers a huge opportunity for exposure with 76 million views a month across all streaming platforms.

Capitalizing on the reach and advertising power of YouTube early on allowed Darlington and Paunonen to monetize the business and quickly build Monstercat into a scalable enterprise.  “In our first three months of business, our artists earned $6K in music downloads, and $26K in streaming advertising,” says company COO Ari Paunonen. “We knew the business was feasible at that point.”

A pretty incredible feat, really, given both Darlington and Paunonen were in parallel finishing up demanding science and engineering degrees at University of Waterloo.  “I actually had my best academic year ever while working on Monstercat full time,” chuckles Paunonen.  In the guys’ last term at school, they moved the business into the Waterloo Accelerator Center, where they could tap into the incubator’s business advisory and mentorship services to help them mature the business and grow.

After graduating from the Accelerator Centre in 2013, Monstercat’s founders and eight employees made the move to Vancouver, taking up residence in former HootSuite offices in RailTown. “The move to Vancouver was the right thing to do for our business, and it brings us close to the West Coast music scene,” says Paunonen. “A lot of people want to be part of the music culture, but don’t want to move to LA or Toronto.  Vancouver is sufficiently different, an LA light if you will, and it’s a big attraction for our artists and for attracting talent to our business.”

While Monstercat remains digital distribution oriented, with the launch of its first tour in July 2014, Darlington and Paunonen are now diversifying the company into new areas including artist management, live events and publishing administration.

“Artists that we find are typically in the very early stages of their brand and careers. So we built an entire team devoted to lifting them up. If we can just supply an artist with an investment so they can live comfortably, have the right tools and focus on their art, our team can be the ones to build them to the next level.  With revenues now in the millions and growth of 85% year over year, we are finally in a position where we can make those investments, and fuel our expansion into management, and if all goes as planned, build successful brands,” says Paunonen.

While branching into the more traditional music label avenues, Paunonen continues to put focus on the technology that enables the business to pursue its new models. The founders have invested more than a quarter million dollars in developing Connect, Monstercat’s label management platform. Whereas traditional labels only pay out royalties quarterly or semi annually, Connect was built so that artists receive a reliable source of income every month. Monstercat is also getting ready to launch subscription offerings for fans and YouTube content creators, providing them with access to the label’s entire music catalogue, first dibs on new releases and the freedom to use the music in their videos on YouTube.

“Every minute 2,000 fans dial into one of our channels. They are very engaged and let us know exactly what they like, and what they want,” says Paunonen.