Another Music Tech Startup Killed By Licensing
Wahwah.fm was a cool concept – turning the music stored on your iPhone into an online radio station that got broadcasted out to the world (or to just those near your location), and allowing users to create Facebook events to list their broadcasts for others whom they could interact with via the app. It was a cool idea, until the German company struggled with licensing issues so much that it ended up crippling them.
Wahwah.fm, peaking at 50,000 users, was powered by the streaming service from UK’s 7digital. Despite having their entire catalogue at their disposal, Wahwah.fm still had to obtain the rights to play songs in the U.S. and Germany. In doing so, the company adopted a radio-licensing model that effectively meant that it should pay lower royalties because it did not provide interactive or on-demand streaming.
“We licensed the whole thing as non-interactive streaming – a radio license – but it was not enough to provide the user experience we envisioned,” said CEO Philipp Eibach in a report first published by GigaOM. “People could only tune in to listen to something live, but they couldn’t listen to the song afterwards, or skip tracks.”
The radio model approach, while initially a clever maneuver, also brought with it the headache of constant renegotiations with labels and PROs. Eibach mentions obtaining licenses, but only having them valid for just a few months and having to renegotiate over and over again.
“There’s so much grey zone,” he said. “You talk to them and they don’t have a clue about new models, and are suspicious of new things.”
As the struggle with licensing continues to wave many tech startups away from entering and sustaining themselves in the music space, visionaries like Eibach are left with a bitter taste in their mouths and are discouraged from helping to advance a space that so desperately needs people like Eibach seeking to create new models.
Eibach intends on returning later this year, but this time plans to collaborate with an existing on-demand streaming service such as Spotify or Simfy – looking to “effectively outsource the whole licensing thing”. As advice for tech companies looking to enter the music space, Eibach simply said, “Overall, don’t do music.”
He suggests that a company look closely and gauge if it’s worth going into an ongoing legal struggle to make their product work.
“Sometimes you have more freedom if you do the legal stuff on your own, but it means more hassles,” he said.
Many feel as though a positive change is on the horizon for our industry, but as long as old mentalities continue to persist and penetrate into new innovations, we’ll only be left with more Wahwah.fm’s – companies seeking to innovate, to help advance the space; only to be shot down by the ways of yesterday.