YouTube stars don't always welcome record deals

The label representative had the astonished hotel clerk provide phone numbers for every Denters listing in the local phone book and then called each one until he reached Esmee's very surprised mom.

That call was just one of many Denters has received from artist and repertoire (A&R) reps during the last five months to discuss a potential recording contract.

Never heard of her? Well, hundreds of thousands of YouTube members have. The doe-eyed girl-next-door with a soulful voice and shy smile has become a bona fide Internet sensation. She's posted videos of herself singing Beyonce, Monica and Natalie Imbruglia covers -- using nothing but a karaoke machine and her sister's low-tech webcam -- that have been streamed almost 8 million times. Nearly 20,000 fans have subscribed to her YouTube channel to receive automatic updates, with about 200 added a day, putting her at No. 22 on the all-time most-popular list.

Denters has since traveled to the United States and met a veritable who's who of the music industry's leading executives, from Jason Flom to Antonio "L.A." Reid to Tommy Motolla. She has recorded demo tracks with Kelly Rowland and is fielding TV deals with Sony Pictures Entertainment.

GOING IT ALONE

The obvious logical next step, then, is a record label deal, right? Not so fast.

"We may decide not to get together with a label," Denters said via phone, waiting for a flight from Los Angeles to New York for another round of meetings and recording sessions. "We may try new stuff. I've already accomplished so much on my own, we'd like to see what we can do with that."

Artists like Denters, emerging from the realm of user-generated media, have learned to tap the viral power of the Internet to do what acts a generation ago could only dream of -- build a grassroots following numbering in the thousands at very little cost or effort.

But being talented and building a fan base is only part of the equation. Artists who decide to go it alone must bear the full financial weight of the various aspects of a music career -- recording and production fees, distribution costs, marketing and promotion expenses and more.

These costs are falling in the digital age. Recording and production fees can be extraordinarily cheap, depending on the level of sophistication desired. Tech-savvy artists can further cut costs with a good laptop and ProTools.

Distribution can be done digitally through such firms as the Orchard or INgrooves, which take a flat percentage of each sale for their efforts. Physical sales can be handled by CD Baby at $4 a pop. There are a gaggle of online services designed to host commerce and promotional sites for unsigned acts as part of a "music social network," most notably PureVolume and Sellaband.com. Companies like Musictoday can serve as a one-stop shop for artists for Web site hosting and design, digital downloads, concert ticket sales, CD replication, fan club management, and merchandise sales and fulfillment.

For licensing, digital services like Rumblefish, PumpAudio and even some digital distribution firms like the Orchard promote their clients' work to advertising firms and film producers and charge only a percentage of the licensing fee in return. And since they've taken no recoupable advance, these artists get to keep all the proceeds.

PROMOTIONAL POWER

Yet the reality is that no act has carved out a lucrative career doing all this on its own. Many point to Clap Your Hands Say Yeah as a DIY success story. And while it's true that the band declined to sign to a label for either its 2005 self-titled debut or its sophomore album, "Some Loud Thunder," released January 30, the band did secure major-label-affiliated distribution through the Alternative Distribution Alliance. After capitalizing on blog buzz the first time around and selling more than 125,000 copies, according to Nielsen SoundScan, the band has sold only 29,000 copies of its follow-up so far.

The hard part for DIY bands is mass retail and radio promotion, an area where record labels still hold tremendous sway.

"There are relationships and leverage that labels have with retail and radio placement," says Ryan Leslie, a producer, manager, artist and head of new-media marketing firm NextSelection. The company was behind the MySpace marketing of newcomer Cassie and is now working with another YouTube star, Mia Rose. Leslie also brought Denters to the United States for her initial round of industry meetings. "The majority of CDs is bought in the major chains, (and) radio is still one of the greatest outlets to discover music," he says.

Denter's producer/manager, Billy Mann, says that label meetings so far have been thought-provoking. "It's been really interesting hearing their point of view on how they would harness all this YouTube activity that she'd created on her own," says Mann, who has written hit songs for Pink and Jessica Simpson. "How does the music business then link arms with that and help move it forward?"

While Mann ponders such questions, labels are busy trying to decide just how much value to place on the kind of fan base that Denters has accrued. A&R reps are unsure exactly how metrics like 20,000 YouTube subscribers or MySpace friends relate to potential customers.

"Strong online popularity doesn't necessarily translate to real sales," says Steve Yegelwel, senior VP of A&R at Columbia Records.

Yegelwel cites OK Go to support his point. The act's famous "treadmill" video for the single "Here It Goes Again" was an Internet viral smash, viewed more than 1 million times on Yahoo Music and more than 11 million times on YouTube. But the album "Oh No" has sold slightly more than 200,000 copies, and the single was downloaded a little more than 450,000 times. Many of those sales came after the song was added to more traditional promotional outlets such as MTV.

KEYSTROKE OF SUPPORT

In the past, an artist's potential could be measured by how many people attended their shows or bought their CDs. But with the convenience factor of the Internet, it's easy to sign up to support the artist without the two points of sacrifice used to judge true attachment -- time and money.

"They don't have to wait in the cold for a ticket," says Jordy Trachtenberg, vice president of content acquisition and A&R for the Orchard and former owner of indie label Gammon Records. "They're just sitting in their bedroom. The biggest effort is their finger pressing down."

Yegelwel adds: "Everybody wishes there was some formula you could just plug in and determine whether there's more of a likelihood that that band will do well."

MySpace hopes to address that concern by giving artists the ability to sell music directly from their MySpace profiles or through the profiles of their fans, called the MyStore. This will give A&R reps a more tangible metric by which to judge an artist -- downloads sold, rather than streams or friends.

But since MySpace began offering the service as a "soft launch" in December, few artists have adopted it. Among the top 20 unsigned acts on MySpace, none have a MyStore module on their profile page. SnoCap, the company that operates the service, in late January lowered its per-track commission from 45 cents to 39 cents to spur more adoption.

Denters, for one, has her fans -- both virtual and real. Two YouTube fans, who have posted multiple videos of themselves singing along to her songs, took the time and effort to meet her at the airport in New York when she arrived in the United States in early February. Despite having no idea what flight she was on, they showed up at John F. Kennedy International Airport with "Welcome Esmee" signs, waiting as passengers from virtually every flight from Europe arrived until Denters appeared.

Reuters/Billboard