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Monstercat co-founders Mike Darlington, left, and Ari Paunonen are pictured in their office in Vancouver on Wednesday.

Jimmy Jeong/The Globe and Mail

The founders of Monstercat take pride in their label's numbers: 689 million streams and 1.3 million singles sold last year; 3 million YouTube subscribers; 15,000 members on its official subreddit; and at least half a dozen fans with the company logo permanently tattooed on their bodies.

To call the electronic Vancouver label's fanbase loyal is an understatement. Community, for Monstercat, is everything. Even if – especially if – that community is pirating or reusing their music.

The rules around sharing intellectual property, the company believes, should be fluid. "There are grey areas to it," says chief executive officer Mike Darlington, who co-founded the company with university friend Ari Paunonen four years ago. Last fall, the company issued the "Monstercat Manifesto" to its fans, proclaiming adapted work as "innovation" and social music sharing as "celebration." It's as much a set of values as it is the start of a discussion.

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"You have to remember that the community of dance music is made up of DJ mixes and remixes and sampling," Darlington says. "It's been a part of our culture from the beginning of time that people manipulate other peoples' works to create something new. … We're trying to prove what we believe in – creating an open economy, and an open way for people to work with other peoples' content."

For most people in the recording industry, those are bold words. For Darlington, Paunonen, and the dozens of artists they work with, it's a wholly normal proposition. Their approach to business is profoundly progressive for one simple reason: They didn't know any better when they got into the game. By accepting today's shrewd music streaming-and-sharing paradigm as an ordinary phenomenon, Monstercat has quietly become a shining example of How To Make It In The Music Business In The 21st Century.

The Downtown Eastside company, with a staff of 26, has released 11 No. 1 charting iTunes dance compilations and bills itself as Canada's largest independent label focused on electronic dance music, or EDM. Its 40 active artists revel in the genre's many nuances, from trap to jazz-influenced glitch hop.

In their conference room – actually an old loading bay, refurbished courtesy of previous tenant Hootsuite – the 25-year-old co-founders unfold their backstory. Both big electronic music fans and club-goers, the pair met at the University of Waterloo in Ontario, where Darlington was establishing a reputation for throwing parties. The parties gave him face time with artists, and he fell into managing a few. Paunonen soon joined along.

An early advertising deal with YouTube netted them $26,000, or about 10 times what they were making in sales. "We saw that was going to be the future of everything," says Paunonen, the chief operating officer. "That YouTube piece allowed us to scale."

The nascent Monstercat team began uploading whole tracks to YouTube when most labels were only allowing teaser previews because of the service's then-lacklustre licensing agreements. The co-founders were far too young to be nostalgic for the high-volume, high-margin CD sales era.

"Because we weren't selling music anyway, all of our music was coming from streaming," Darlington says. They developed an attitude that would lay the foundation for their copyright manifesto: "We're plenty happy for you to keep listening to it on YouTube, because we're still making some money. … We came into this with zero knowledge of how the music industry actually operated, we carved our own path and way of doing things."

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Their growing roster of artists was suddenly getting regular cheques from YouTube and other services such as Bandcamp. The artists began to rally together on behalf of the label, collectively buoying one another's projects and regularly collaborating. The Monstercat community was born.

The label mostly focuses on singles, and since July, 2011, has dropped three new tracks every week. They declined to sign any of the artists to lengthy contracts, giving them full freedom over their work – an intellectual property policy they still hold today. After finishing school in 2012, the founders decided to move the company to the west coast, settling on Vancouver. There, they began to build an empire, one stream at a time.

Their early streaming work inspired them to develop a digital royalty "funnel" platform that shows a breakdown of exactly how much an artist makes from each track they've created. The system pays royalties to more than 200 artists monthly from a growing number of digital streaming and sales sources. It's a totally transparent platform that, Darlington and Paunonen say, is getting serious attention from the majors.

For their artists, that approach is a career-defining one.

Martin Vogt, a 22-year-old who records as Haywyre, dropped out of college in Minneapolis last year to make music for the label full-time. The trained jazz pianist was studying the business side of music, producing electronic music on the side, when after a summer internship at Monstercat, the label's staff encouraged him to drop out and go pro.

"I wasn't really sure in what capacity I wanted to be involved in the music industry," he says. But Paunonen, Darlington and their team saw his potential as an artist. They convinced Vogt – and his slightly reluctant parents – that he should give it a shot.

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After a few weeks of thought, he moved to Vancouver last fall and dove in. Today, he produces glitch-hop songs rooted in the jazz he grew up playing. Monstercat's lax artist contracts, clear income system and monthly payments have made him confident he can do it for a living. "What they do for artists is pretty unique," Vogt says.

So, too, is the community that's built up around the label. "It's a community of creative people who do what they want for a living," he says. "They're the kind of people you want to work and play with."

Monstercat's attitude toward copyright has only improved the collective's morale. By encouraging sharing and collaboration, the label has fashioned itself as a place artists want to flock to.

"If you just introduced a track to 100,000 new ears," Darlington says, "you just did that label a solid. … We need to revamp the way things are done, and make it so that people are more open to sharing content, working together on content and creating new content that comes from deviations of past content."

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