American E-Idol

Online talent contests hit the big time

Amid the clips of Christmas song kara-oke, martial arts moves, and Star Wars-inspired dance steps, true talent lurks online. The trick for media giants has been finding a way to sift through the weird and wacky and find potential stars. Now, Epic Records, Universal Music Group, and EMI are taking a stab at that, teaming with startup media Web site Music Nation to turn online music contests into serious business.

Think of it as American Idol for the digital set. But this time around, millions of people will be able to take a shot at fame, rather than the tens of thousands who line up outside convention halls to audition for a TV show. In mid-November, wannabe rock, urban, and pop stars will be able to start uploading videos to Music Nation. Clear Channel Communications (CCU ), meantime, will promote the contest online and on the air.

In January the 15-week contests in each of the three genres will kick off. Weekly online votes by judges and the audience will determine which singers move on to the next round and eventually win a record deal with Epic. Universal and EMI plan to sponsor contests in Europe and Asia next year. The clips will also be used to create an online broadband channel on the Venice Project, a video startup.

Music Nation won't be alone for long as a talent showcase. Fox Interactive Media is thinking along the same lines. News Corp.'s (NWS ) digital unit, which bought karaoke contest site kSolo.com in May, is considering how to integrate the service into MySpace so that it can rev up the online contests and feature talent as it does with American Idol. And Bix, a two-month-old site where individuals can set up their own comedy, beauty, or karaoke contests, says it is hearing from labels and studios eager for prospects.

"HIGHLY PROFITABLE"

The number of Web contests, whether sponsored by big brands or put together by just folks, has ballooned recently. So far, though, they have been strictly for marketing and entertainment. This fall, Survivor producer Mark Burnett launched Gold Rush, an online scavenger hunt that promises $1 million in gold to the winner who unearths clues on AOL (TWX ) and CBS. And companies such as Mentos and MasterCard have run contests for consumer-created videos.

Music Nation is now tapping into this enthusiasm to help uncover talent and, of course, create a hot Web destination. It will use people power to sift through the huge mass of performances that appear on videos, MP3s, and blogs and help labels adapt to the new digital world. Says Charlie Walk, president of Epic, which provided an advance of under $1 million to be part of the contest: "At the end of the day, if people love this, it's highly scalable and profitable for us."

Or Music Nation could flop. Web users can be more opinionated than their off-line counterparts: They may decide a contest that ends in a label deal is uncool. That's a chance the music industry, desperate to find growth, is willing to take.

By Heather Green

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE