Nugs.net is the biggest network of music sites you've probably never heard of. Created in 1993 as a place for founder and CEO Brad Serling to keep his growing collection of live Grateful Dead and Phish tapes, the site has since grown into a major force in online music sales, having sold over 50 million paid downloads of live music.
Nugs.net currently powers the online download stores for over 300 artists, including Metallica, Dave Matthews Band, Phish, the Grateful Dead, Widepread Panic and moe. The company also runs download stores for major US music festivals like Bonnaroo and Lollapalooza. Via compilations (such as the environmental benefit album "Music for the Planet") and festivals, Nugs.net has provided live download services for over 400 bands.
How Nugs.net Got Started
When Serling launched the original Nugs.net back in 1993, he had no plans to turn it into a business -- he just had a overwhelmingly large tape collection that was getting harder and harder to manage. Because it was getting more and more difficult to trade tapes (and later DATs and CDs) with other fans while on the road following the Grateful Dead and Phish, Serling set up his website as a place for people to download MP3s of his taped concerts. He got permission from the bands to set the site up as long as he wasn't profiting from it. By 2000, the site was serving 3 million downloads per month and the Grateful Dead took notice, contacing Serling about turning Nugs.net into a business.
In October of that year, the popular touring band Phish was preparing for their last show before what would become a two year hiatus. The band's management had heard about Serling and his work on Nugs.net from the Grateful Dead and set up a dinner with him on the night of what fans fondly refer to as "The First Last Show Ever." Serling tells me he and the band "hit it off immediately and saw eye to eye on many important themes (no DRM, allowing tape trading to continue, offering lossless audio) and we made plans to stay in touch during Phish's hiatus."
Fast forward two years and Phish was ready to return to touring. The band and Serling cooked up a plan to release every one of the shows from that tour as downloadable MP3s via what would become Live Phish, Nugs.net's first branded band website.
"I officially created Nugs.net enterprises as an LLC with my attorney/partner Jon Richter in November of 2002, and we charged are first credit card for a download on December 20, 2002, ushering in what is now a common practice of releasing paid downloads of live shows. At the time, no band had ever released every night they played as a download the next day. In fact, iTunes wouldn't launch for another 7 months." -- Brad Serling
Present and Future
Since that time, Nugs.net has sold over 50 million downloads across their network of paid download stores. The original collection of free audience tapes still exists as the Stash and attracts 3 million downloads per month. Nugs.net operates an online streaming radio station that goes out to over 50,000 listeners and Serling's live music "nugscast" podcast reaches 70,000 people each month.
Phish was not the first act to release an entire tour as a live set. In 2000, Pearl Jam released their entire tour via a set of officially sanctioned "bootleg" CDs. Serling tells me he met with Pearl Jam in 2001 and advised them to release their tour via the Internet as downloadable media, which they eventually did starting with their 2005 tour via a partnership with basecamp productions. I asked Serling what he thought of Pearl Jam's early efforts in the live music business that he has helped pioneer. "I think it was ballsy and should certainly be applauded," he told me, "but it was ultimately problematic that all those live masters were property of Sony and not of the band. Many of the more established artists I work with learned that lesson from Pearl Jam."
Recently, Nugs.net has begun offering live video alongside their traditional audio product. This is an area that the company plans to explore more in the future, but because there is no standard licensing rate established for music in video, the situation is tricky from a legal standpoint, and Nugs.net has been forced to keep their video library fairly small.
Though Nugs.net offers custom DRM solutions to its clients, most of them appear to opt not to encumber their downloads with digital rights management. Serling himself takes a rather indifferent view toward DRM. "I've often said DRM stands for 'Doesn't Really Matter,'" he told me. "While I certainly wish that more people bought than stole from my company and my clients, the reality is that DRM does not solve the problem. People who want to steal will steal and people willing to pay will pay."
Serling favors a value added approach to selling music. Nugs.net, he says, offers products that consumers can't get elsewhere (professionally mastered live music the day after a show and live concert videos), and the service also includes "value adds" like downloadable CD and cover art, photos from the shows, and in many cases, high quality FLAC files and an option to purchase a CD copy.
I asked Brad Serling to sum up his thoughts on the future of online music distribution. "Ubiquity," he said. "All your music everywhere. True music fans will happily pay for the privilege." And I think he's right -- that's something I would gladly lay out cash for.
Disclosure: I've bought more live Phish shows from their Nugs.net-powered site than I care to admit.