Million Media

See Things Differently

Where have all the music start-ups gone?


After 9 years licensing music, I finally left The Orchard last week. During 9 years at Sony and 4 with The Orchard I have met a multitude of start-up companies, including OD2, Napster, MySpace, iTunes, Last.fm, Limewire, Amazon and eMusic. I have, at some point, met them at either the early licensing stages or after they started trading. But, for every major service you’ve heard of, I also met a dozen new services. Technology covering P2P, super distribution, CD’s, loyalty cards, playlists, streaming, dual delivery, mobile, social networks and direct-to-fan. But, during my last months at The Orchard it was apparent the drop in new ideas, innovations or inventions being presented (with the exception of Mflow)

And last week, at an industry seminar, a very well connected music technology lawyer confirmed it – he reckoned he has not seen a new model this year!

So, where did they go?

We discussed it, and concluded, if you were a talented computer programmer, why the hell would you enter music?

If you invented the next Napster, Last.fm or MySpace what would you have to look forward to?

Well, first you might get sued. Or if you avoided that, you need to get a license. So next, visit a multitude of different labels and publishers. If you manage to see them you better have a shit load of cash to pay for the rights. And once you get a license, prepare to pay over most of your revenues to the rights owners. In fact, with one or two exceptions (e.g. Last.fm) I can’t think of many true start-ups who have been successful.

Datz – closed. Playlouder – hasn’t launched. Rococco – closed. Rhapsody – hasn’t launched in Europe. MusicMakesFriends – closed. Wippet – closed. Sonific – closed. Plus dozens that never even made the launch phase.

Successes?

Spotify? Got licensed because their founder, already a self-made man, had the deep pockets and tenacity to get a license.

Pandora – didn’t even launch in Europe.

I’m not attacking anyone here. Just pointing out that the result of demanding the highest rates possible, together with advances, per stream minima and suing every breach of copyright has had, perhaps inevitably, negative long term consequences.

Advertisements

About Neil

Neil Cartwright founded Million Media in 2006 with the aim to help people understand digital marketing and use it to their advantage. The vision hasn't changed but the technology has.

2 comments on “Where have all the music start-ups gone?

  1. Guy
    October 8, 2009

    It’s interesting to see so many start-ups coming and going I agree, but I don’t agree that there are none that have done well.

    http://bit.ly/4Bvbu
    http://bit.ly/3wSzlP

  2. Gunnar Ostergren
    October 9, 2009

    As the co-founder and CTO of Sonific I have to admit, your absolutely right. Upfront cash, large chunk of equity, per stream fees, usage restrictions, etc combined with the risk of still getting slammed with a lawsuit makes this a wasteland. Most investors will not touch anything music related. It’s simply much easier and safer for all participants to use their talent and financial resources in other areas. Still, I think there are ways to create new services/products. But you need a very strong and patient backer or a team that can run on fumes for a long time. Hard to find in times like these.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Information

This entry was posted on October 6, 2009 by in marketing.
%d bloggers like this: