Online music hub ReverbNation was founded in 2006 as a social networking and career-building tool for up-and-coming artists. Since then, the company has had a continued track record of success in bringing new talent to the fore in popular music.

Grammy-winning acts like Imagine Dragons, Alabama Shakes, and The Civil Wars all started their careers through ReverbNation, and 35,000 new artists sign up for the site each month, in hopes of finding a similar stepping stone to music stardom.

Simon Perry, the chief creative office at ReverbNation, spoke to Business Insider about how his company has evolved in recent years to reach a positive “inflection point” in its business.

No longer simply a platform for uploading and discovering new music, the site has employed big-data analysis and large-scale human curation of its artists to become the go-to “farm system” for record labels and music festivals seeking out new talent.

Unlike SoundCloud and the many other music sites struggling to stay afloat in a similar domain, Perry says ReverbNation has been steadily growing – and remaining profitable – due to its inventive shift in business model.

The "Facebook of music"

In 2013, ReverbNation's executives realized that they could carve out a distinct lane in the music industry by crafting a system for artist discovery that would be founded in the big-data analytic techniques of companies like Facebook and Google.

By performing what Perry calls the "huge undertaking" of analyzing the dense volumes of music and personal information that artists upload to their site, the company has been able to identify which acts stand out as potential successes early on in their careers.

"Artists tell us everything about themselves. It's the Facebook of music," Perry said. "They aggregate their social media with us. More [concert] show listings for emerging artists are posted with us than any other single site in the world. Hundreds of millions of minutes of music are streamed on our site, and we send hundreds of millions of emails on behalf of our artists."

With its big-data ear "listening" to every artist on its site, and with a tiered system of music experts distinguishing which new acts have talent, ReverbNation's robust curation system can now single out rising independent acts and present them with career-making opportunities.

Once ReverbNation has identified a new crop of promising artists, the company then acts as a bridge for those artists to reach record label contracts, lineup placements at major music festivals like Bonnaroo and Summerfest, and break-out appearances on TV and media outlets.

Shifting the music industry model

Alabama Shakes

Foto: Alabama Shakes, another Grammy-winning act that started out on ReverbNation. source Getty Images

In discussing ReverbNation's place in a shifting music industry, Simon Perry described how, in his view, the industry's rapid growth in recent years belies an important, underlying problem.

"My fear is that this two years of growth that we've had in the music industry represents something of a false dawn on the back of streaming companies like Spotify," he said. "It's been built on the back of a business that's losing money and doesn't have a long-term business model."

Perry contends that for the industry to stay afloat, record labels will need to "cut their costs of goods sold" by getting to artists earlier and signing them to cheaper initial contracts - rather than continuing the long-standing tradition of participating in high-cost bidding wars over artists that may or may not make it.

And that's where ReverbNation, with its curation system for new artist identification, has become a vital tool and A&R-like scout for labels and publishers.

When we spoke, Perry was in the midst of conducting an artist search for Sony/ATV Music, the world's largest music publisher.

Taking the heavy lifting out of the publisher's work in scouting new artists, Perry and his team presented Sony/ATV with a select group of up-and-coming artists from across the globe, all of whom filtered their way up through ReverbNation's curation system.

"A lot of the artists were from the middle of nowhere, like 20 miles outside of Reykjavík, Iceland, for instance," Perry said. "And they were like, 'Wow, these artists would never come to our attention.' Because by the time they do, it's too late, and they're competing with UMPG [Universal Music Publishing Group] and Warner/Chappell.

"These are artists that are great, and no one's picked up them on yet," he continued. "But because we have a 360-degree purview, we have a crow's nest view of emerging artists, and we're listening to all of them through our site, we are able to identify these acts earlier than anyone else."