In recent years, Berlin has become a ‘world media city’. Our thesis is that a key reason for this development can be found in its dynamic subculture. In the 1990s the club and music scene thrived, in particular in the deindustrializing inner‐city areas, thereby paving the way for large media and music corporations to move to Berlin. The rise of the Berlin techno and electronic music scene, and recently also of hip‐hop, to a successful cultural district, is therefore closely connected to the urban transformation since the fall of the Berlin Wall, as well as to the increasing importance of the ‘creative class’ in the local economy. The article examines the connections between the specific local urban environment of the city and the development and rise of its creative and subcultural milieus. The relation between subculture and the music industry, however, cannot simply be described as a commodification of underground and its use as a brand name. Rather, it highlights the fact that flexible integration of the creative districts of subcultural music production is becoming one of the new organizational models of the industry.