What goes on at Beatport influences electronic dance music as a whole. The site, essentially, serves as a barometer for genre trends, making what’s on iTunes and the Billboard charts look too dated or too mainstream. So now that Beatport’s parent company, the infamous SFX Entertainment, just fired a quarter of its staff according to reports, a domino effect could spread throughout the rest of the genre.

For those who haven’t been following the reports, TechCrunch put out a lengthy expose concerning the recent firings in Beatport’s Denver and San Francisco offices. Sources told the tech news website that HR fired the music downloading service’s entire engineering teams – or, specifically, the departments not making money. These would be the professionals likely associated with services like Beatport DJs, Beatport Play, and Beatport Mixes.

Employees cited compared it to a “bloodbath” – one that could’ve been worse, if SFX Entertainment decided to deliver the pink slips by conference call, like they originally intended to.

Part of the large round of cuts stems from improving the user experience, from a greater focus to the store, and the $1 million losses Beatport saw for the third quarter on $12 million of revenue. “[SFX] is not concerned with anything but the store,” one source told TechCrunch. “It was crazy. It was a fucking bloodbath for sure. Some of the people laid off were working there for almost ten years.”

Unfortunately, the employees let go got a fair severance package – part of which entailed not divulging information about Beatport’s new direction.

Right when the news got out, SFX was sure to do damage control – including that quintessential Billboard interview. Just days after, SFX president Tim Crowhurst explained to the music magazine Beatport became “spread too thin” and now the operation has a single vision.

As far as the engineering layoffs are concerned, Crowhurst attempted to put a positive spin, explaining SFX’s new acquisitions have replaced their staff. With Beatport and SFX looking to the future, the music downloading site is expected to become more product-focused – although the other services won’t be cut just yet.

Along with Crowhurst’s interview, SFX and Beatport released a lengthy statement to the press concerning the firings:

“With the additional resources provided by SFX, we are making significant new investments in Beatport and focusing on providing the best possible experience for our users – the DJ, the producer, the labels and the entire Electronic Music Culture community. To allow us to adapt and improve our service, it was necessary to make some organizational changes. We have closed our San Francisco office, reorganized our engineering team, and cut some positions in Denver. Beatport has always been about innovation and connection and these moves allow us to focus on that. With the recently announced acquisitions of PayLogic and Arc90, this refocus on maximizing Beatport as the definitive site for everything related to Electronic Music is indicative of our commitment to igniting the simmering Revolution of this astounding movement, Electronic Music Culture. We look forward to unveiling a number of exciting new technology initiatives in 2014.”

At this point, the whole question of “Is EDM making money?” is moot. Right now, if Beatport is a microcosm of the genre, the question is, “What happens to a dance music institution when it doesn’t make enough?”

Monetizing Something That’s Not a Sure Thing

Dance music culture has this strange habit of repeating itself. The Hacienda club’s bankruptcy in the early ‘90s sets a predecessor of a cultural institution – New Order to acid house, synthsizers to DJs – being extremely successful but not making a dime, and is a scenario every promoter ought to take note of: Just because a culture, and its physical aspects like a club or music store, become popular, that doesn’t mean there’s money behind it.

Factory Records’ Tony Wilson didn’t get the message until it was too late and neither did major labels looking to capitalize on the electronica craze in the late ‘90s. SFX Entertainment might be the third (or fifth, or 10th – who’s actually counting?) time a promoter buys into a trend and – surprise – finds out the return on the investment isn’t paying off.

For some background, SFX quietly purchased Beatport earlier this year for $50 million. Over nine months, however, SFX lost $2.5 million and also saw its stock prices drop from $13 to $11.60 per share.

The only thing is, unlike the single-degree wrongheadedness of Factory Records’ business model for the Hacienda club, SFX Entertainment purchased other key dance music institutions – Made Event (behind Electric Zoo) and Donnie Disco Presents, known for various events around the West and Southwest regions.

So, Then, a Popular Format Gets Changed

Beyond the financial aspects, SFX’s current actions show it’s trying to change something not entirely broken to begin with. Contrary to SFX losing money on Beatport, the music downloading website has a 10-year history – and frankly looked to be chugging along just fine. It likely won’t ever be in the iTunes-level financial echelon, but it doesn’t need to be – it meets and has met a niche market.

Although Crowhurst says Beatport’s non-store features will remain in place for now, what happens in the future once SFX turns its attention to the store? Will the features for DJs get dropped? Will SFX start observing how much each artist or track earns and then start dropping the ones that aren’t “performing” up to par – i.e., like operating a pop music label?

Should this happen, the comprehensiveness that makes Beatport a dance music fan favorite, regardless of whether you like trap or trance, mainstream EDM or the most obscure underground track possible, gets lost.

It’s like cutting out the side stages at Ultra Music Festival – you know, the ones where DJs aren’t playing mixes of the Top 10 EDM hits – and everyone gets funneled over to Avicii, Tiesto, and David Guetta. From there, you lose the “true” fans’ loyalty – as opposed to the fleeting trendsetters’ current focus – and in a few years’ time, it ends up a pathetic shadow of its former self.

Being Naïve?

Beatport’s own staff thinks it can ride out the mainstream trend and still have a following, but a format change – starting with firing employees to changing features to who knows what cuts the future holds – could transform all that.

Beatport has been lucky in the fact it has stayed underground enough to be legit for the most hardcore dance music listeners but visible enough that mainstream fans know what it is. It’s this continuum keeping a balance in dance music culture of quality, accessibility, and comprehensiveness. When one pillar maintaining its current balance gets cut, the whole thing gets lopsided and eventually falls down.

In a significant sense, SFX’s encroaching on Beatport mirrors gentrification, down to outsiders overtaking a neighborhood without having knowledge of the local culture and customs, flattening it with trendy yet out-of-place boutiques, and then claiming to its well-known, richer friends that it found the hippest place in the city to live and hang out. Only, less than a year later, the hipsters-in-Brooklyn stage is over for Beatport, and its parent company, rather than keep a culture intact, appears to have the white-washed, one-note, safer musical suburbs on the mind.