Is Music 2.0 At A Crossroads?
COMMENTARY: About six months ago we began hearing that venture funding for music 2.0 startups was drying up. The risk vs. rewards ratio just isn’t there compared to other investment opportunities. (Universal, WMG and Sony of
course continue to hand out funds in their usual "late to the party" fashion.) Now comes word that Pandora may be among the first to fall victim of the royalty wars and Muxtape has been at least temporarily been shuttered by the RIAA.
Those with the "next great idea" in music technology often tell me that labels make draconian demands if they respond at all, forcing them to drop the "ask for permission" business model in favor of "beg for forgiveness later" mode. In fact, one’s first letter from the lawyers of an industry trade group or label has become a clear sign that you’re gaining traction.
Of course, music’s elders are worried about revenue. But can emptying the pockets of the industry’s sons and daughters to pay for the sins of the fathers possibly be the answer?
Pandora and MuxTape both enable music discovery. The former at least has been willing to pay it’s fair share for the privledge since the beginning. Rather than waste time playing whack-a-mole with every startup around the globe, why not make short term or percentage based deals that allow the better sites and services to find footing. To do so will require changes in both business practices and law, but the alternative is to leave music discovery and consumption to the pirates. – Bruce Houghton
Great question and one that every music startup is facing. But maybe a better question is this: what is the way that works for a music service to make money? That’s the one we ask everyday to make sure we’re on track. And there are some proven models out there that are working.
As much as cutting edge people seem to rail against it, it’s pretty proven that a la carte pricing on downloads works. It’s pretty proven that subscriptions don’t (yet). And we’re getting signals that internet radio does not work either (as a business anyway).
So – while I think the problems with the labels is real, there is also real money to be made out there with tried and true models and that you can still innovate within those models.
As an avid, lifelong music fan, I am not surprised that so many platforms are springing up to meet the needs of all people with similar passion. That is why I am very angry about the ‘catch 22’ which big record companies are causing by neither creating nor allowing new creativity to take place. It is so obvious that those executives are not even music fans themselves.
Although there are many “social” music sites, I don’t the various music discovery sites really embrace what Music 2.0 is really about. I believe its about collaboration and blurring the line between artist and fan. Why not harness the social tools to help artists collaborate on music, and then bring fans into that collaboration?
In order for a music 2.0 site to make it these days, I think they have to focus on unsigned/indie labels. The majors are stubborn and a pain to deal with, and usually this pain is more than its worth. Of the millions of musicians around the world, only a small portion are signed to majors. Groups like Merline have shown that by aggregating the indies, their collective strength is bigger than EMI! Throw the unsigned artists in there, and that’s a huge group of musicians.
So, why try and focus on Major artists? Create a music 2.0 site that has significant and distinct value propositions for artists and fans. Figure out a creative way to monetize that relationship (which should be easier to do since you’re not dealing with the majors), and you’re ready to roll.
Then, after the model has been proved successful, the majors will come. They will absolutely want to get a piece of that pie for their artists. This is music 2.0.
Very true Bruce. Hopefully Tim Westergen’s most recent public outcry will make a difference, and lead to collaboration between all sides.
I agree with Josh above. It’s frustrating to see the ridiculous claims the majors and RIAA file against innovative and positive music industry contributors such as Pandora and Muxtape. If the record execs actually cared about the music industry and it’s fans as a whole, they would do what it takes to keep efforts like Pandora sustainable entities.
Gavroche – I think AmieStreet & Popcuts, a brand new startup out of Cali, offer alternatives that satisfy some of the recommendations you bring up. It’s great to see innovative ideas, and hopefully some of these will fully catch on.
can’t agree with ya,bruce
enough about ‘music discovery’ — there are a zillion blogs + myspace + imeem + lastfm + xm + sirius + conventional radio that are about ‘music discovery’ why do adam and josh think that muxtape is not out to make a dollar, just as they accuse the major labels of doing ?