Talking Turntable: How Not To Launch A Music Tech Startup
Launched in 2011, Turntable.fm represented a new way of listening to music socially online. Although it initially gained a great deal of traction among users, Turntable could not sustain its growth and was forced to shutdown. This discussion with founder Billy Chasen sheds some light on exactly what went wrong.
Guest Post by Stephen Phillips on SocialShorthand.com
Formed in 2011, Turntable shot to fame with a completely new immersive musical experience. Its clever use of game mechanics created an engagement around music that had not been seen before or since.
Music fans loved it, the labels were excited, the press sang its praises, and investors rushed to the table. It was highly social, it was super addictive, and it was heaps of fun.
Yet in just under three years, it was all over. So what happened? I got a chance to speak with Billy Chasen (@billychasen) and ask the man himself.
What I Learned:
If you are running a music startup right now, or you're thinking about starting one, Billy paints a picture of what can happen if you succeed.
You can be too Addictive
Turntable was so engaging and so addictive that users simply burnt out. Billy speaks of noticing that phenomenon very early on.
Ryan Hoover (@rrhoover) wrote a great analysis of the Turntable engagement model on Quora. http://www.quora.com/Why-is-Turntable-fm-so-addictive
You can be too Sexy
Turntable raised a big early round ($7M) at their peak, struggled to maintain that growth, making it really hard to raise more money. With great power comes great responsibility.
Legal Distracts Product
Making your music app legal costs a lot of time and money that could be invested in product. For Turntable, this stalled growth at the worst possible time, just while they were red hot.
Making Money is Hard
Even for huge successes like Spotify with more than 20M users, making money is hard. For music startups with 1M to 10M users, it's really, really hard. There is not enough money in the industry to support the emerging tech. Turntable couldn't find significant revenue.
Virtual Concerts are Coming
The impact of music is amplified when experienced with other people. The energy of live performance enhances the pleasure for everyone. And the closer you are to the performer the more intense the experience.
Turntable Live showed great promise, but virtual concerts need VR or Holograms to really take off. We need new tech that delivers a more intimate connection with the performer.
Stephen : I was reading through the history of Turntable last night. It seemed like you guys were on fire. What happened?
Billy : Growth stalled while we were busy building systems to support licensing. It just took so much time. We had to build so much infrastructure. We had to reengineer a lot of stuff, and all that time was spent on things that dug into the time that really should have been spent on making the product better. And people saw that. People said that the product hadn't changed for more than six months, but what they didn’t realize is how much we were doing on the backend.
We had to record what songs were played, what royalties were required, matching that on audible magic, properly crediting people. Of course that stuff needs to happen, but it really got in our way and hurt our growth, and what eventually started happening was our growth stalled, which is the curse of startups.
We had a very core, loyal base, but we couldn't really open it up to more people, couldn’t get our international stuff done in time, so, we kinda lost it from there.
Stephen : What was the attitude of the labels when they first came to you? Were they looking for a cut in the company? Did they want to shut you down? What was your sense of what they wanted?
Billy: Sure they took a cut of the company. They took some equity. And they don’t really do anything for that, just agree not to sue you.
The labels were excited. They weren’t upset at us, but they had their teeth out. They were excited, but they were showing us, you have to play ball with us, otherwise, we are going to destroy you.
Stephen: How soon after launch did the labels reach out to you?
Billy: Pretty much instantaneously. Once we started going viral. Everybody wanted to come to the table very quickly, negotiate equity, get a cut of our advances.
We claimed we were under DMCA radio rules, which we were because everybody in the crowd would not know what the next song was. But our whole problem was the DJ was picking the next song, which was basically on demand. So that little contingent was what needed to get worked out with the deal.
We had to make special deals, that weren’t exactly on demand deals, which would have been way more expensive and hard to get, but they weren’t radio play, they were somewhere in the middle. So it took a lot of time.
Mainly because they didn’t want to do any deal that would set a precedent and make future deals difficult. Even though all the deals are supposed to be confidential, they all leak, because everyone who works for the labels, they shuffle around from one to the other. So everyone knows, what everyone else is getting, even though these are supposed to be confidential deals.
Stephen: So when it went viral at the start, how crazy did it get for you?
Billy: It was pretty nuts!
Stephen: Lots of music people and artists, or was it mainly the tech crowd?
Billy: In the beginning, it was a very big tech crowd, because it basically went viral off a Techcrunch post (http://techcrunch.com/2011/05/20/turntable-fm/). We went viral during the summer of 2011. The first post was about, 'this is what Chris Sacca does on a Friday night’.
And it was him, and a bunch of us hanging out on a Turntable room, at that time you had to know someone to get in, some exclusivity, and that was through Facebook, so after that article, everyone started hitting it, some could get in, some couldn’t get in, it quickly became kinda elitist in that way, but then slowly, friends of friends would get in, it grew very quickly, til pretty much anyone could get in.
So then, from there, everyday more and more people started showing up, and we were just putting out fires on the backend, because I wasn't expecting it to blow up so quickly. We barely had our deals in place, our DMCA license was newly minted, we had Medianet off our back end, and lots of other stuff going on. It was a bit crazy!
Billy: He started playing around with it, and we raised relatively quickly after that. I think it was like a few months, as we kept growing. We were near peak growth when we did that round. We went around to a few different people, and Fred was one of the people who was very interested. He likes to be a user of the thing first, and if he is not a user, he’s not going to invest. Fred used it religiously, every morning he was in there.
Stephen: What are your memories of early user engagement?
Billy: The thing with Turntable was people saw a lot of novelty. It was nice and refreshing, people heard good new music, so that compelled people to use it. But the thing that always hurt us from the beginning, and we would see signs in the analytics, people would get this burnout, after a few weeks. Turntable takes a lot of time, its almost like a game, so it’s harder to do during work, it also looks like a game, so people might be scared of what their boss might say if they saw it.
There were signs, even very early on, that we had to either change the service, or find something that went beyond the novelty of just something new in music.
Stephen: But there was some passive experience wasn’t there, or did you always have to be active in the room?
Billy: You technically didn’t, but there was this social pressure to interact. It was a chat room, and nobody wants to be idle in a chat room, or why are you there? You could be in the room and not talk at all, but there was this pressure that people felt.
So we started building a more passive version of Turntable, and we launched it under a different name. We called it Piki, and it was basically Turntable, but a passive version. You pick the people that you really like, people who have the same tastes as you, and then you just click play, and it cycles through all of their songs. It had some medium success, but it was a small percent of the Turntable crowd that liked it, and we weren’t able to really grow it.
It took a lot of time building that, and when we were seeing that it was not having any growth, then it was even more down hill from there. Turntable is stalling, our label deals are taking a really long time, and Piki isn’t getting the traction we want it to get.
Stephen: Did you think that Turntable was stalling because it had reached the total market size for people who would invest so much time in this? How big do you think that market is?
Billy: I don’t think we saturated our market at all. I think there was tons of people who would have been interested in it, if they knew about it. But we do know the market size that listens to music versus the market size of people that want to actively find new music they really like, and discover new music, I think is very small.
That is why Pandora is such a huge thing, most people just want to put on background noise that they find pleasant, which is what a lot of people see music as. And I think that is the large majority of people. And today I think a lot of people are using Spotify that way, that is very passive, they turn on radio inside Spotify, or play artist radio.
Billy: It was my move to try and go after that larger market. Because if we were going to be a free service, and try to monetize on ads, or different kinds of one-off purchases, we need that larger market, a few million people is a great market if you can monetize them, to the tune of $10/month, but no one was interested in paying to use Turntable.
We eventually launched stuff in Turntable that we called Turntable Gold, it gave certain features, and we had a decent amount of people using it, but I knew it was always going to remain a small, intense niche of our total user base. There would never be enough people who would buy it, to turn the whole thing into a sustainable business.
Stephen: So you tried again with Turntable Live near the end?
Billy: Yeah so, we have six months of runway, nothing else is working, we have a new idea. The artists are making the majority of their money now touring, and if you can tour more, and can hit fans that can’t get to major cities, maybe you can monetize more online, and have concerts for fans, and they can interact with you.
I think it is a pretty solid idea. I think somebody can do it. Our biggest problem was we simply didn’t have enough time. We did maybe a dozen concerts, and we were building traction for it, but then we were out of money.
We would have had to have an awful, awful round, to try and keep the thing going, and at that point, we had started looking for acquisitions, but nothing really seemed appealing. We had a great team who could all get great jobs somewhere else, so instead of locking them into some job they didn’t want, we introduced them to the portfolio companies of our investors, and sure enough, within a week or two, everyone had new jobs.
Stephen: I think it is a fantastic idea. It’s got to be an idea that has to happen at some point.
Billy: I almost feel like VR may be the tipping point that makes it work. Creates the immersion the idea needs to take off.
Stephen: Yeah VR and Holograms, that is the way this idea takes off. When you can feel like you are sitting in the room with the artist as they perform in a virtual world. You get that feeling that you get when you sit next to someone really talented. The true magic of music, the connection with the artist, that hits you at a physical level. It’s hard to get that across on the web, in video, but in Holograms, it seems to come alive.
Billy: I agree with you. We tried to make it as close as possible. People could send photos of themselves, and we had them on a TV so the artist could see them, and call people out, we were really trying to make it two way. It worked a little bit. I think if we had more time we could have grown it, and people would have been excited by it, but it wouldn’t have tipped until the virtual tech became real.
Stephen: So what are you doing now?
Billy: I’m working with a couple of Turntable engineers, two of our best engineers. We’ve just been building random ideas, kind of like an internal incubator, we’re not incubating outside ideas, thinking of stuff we think should exist.
So we just built picnic.sh which lets you launch one page domain names very easily. It got a little buzz, but we haven’t really been pushing it. We are playing around with random ideas.
Stephen: Are you gun shy about the raising and VC thing?
Billy: No, I’m not. If anything, gun shy raising large rounds. I don’t want to do a large round until I know something is a bit more mature. Turntable series A was before the "Series A Crunch". Now investors are really looking for more mature Series A's, although they are still sometimes really crazy, if anything is hot, they’ll still dump in tons of money. So we raised a small seed round, from one investor, just so we can pay ourselves a salary and get some office space.
Stephen: I feel like I have interrogated you thoroughly.
Billy: I love talking about Turntable. While the end was sad, we had to shut it down, it was good times, I met a lot of great people, there are even some Turntable rooms that get together in person. It was a great time.
There is not too much regret or depression about it, other than it didn’t succeed, and turn into something that could live up to the promise that I’d promised people.
Stephen: Yeah I think I can very much sympathize and relate to how you feel. We had very much the same experience. Some regret, but not really. People from outside, like me, would say to you, Turntable was amazing, it’s amazing you couldn’t keep it going longer, and people said the same to me, but there are just reasons, that people outside can’t see, there’s life, there’s decisions and obligations, you end up having to do what’s best for the majority at the time.
Billy: And people don’t understand how much it costs to run these free services. It can’t go on forever like that.
Stephen: Man, the music industry, they are hard to love.
Billy: Yeah. They love you. They want you to succeed. But they won’t help you at all. After my whole bout with it, it’s been liberating to launch things, and not have to ask anyone’s permission. And it can be worldwide. For me personally, I love music, I’m still very passionate about it, but I don’t think I can launch something again in music until something changes.
Stephen: No one else has really explored the areas you have in music, to the level of success you did, and no one has done it since. It seemed so exciting at the time and so different to everything that was around. I’ve been in discussions with product guys at music companies, talking about social, and Turntable comes up all the time in discussions, people ponder it, what it meant, especially those guys, who have such a big audience already, that live stuff makes sense for them. And they are all trying to engage artists and get them on their platform. Anyway, I’m sure you’re aware that that would happen, that it is still discussed to this day.
Billy: It’s nice to hear. It’s interesting, because it’s now been officially closed for a year and change. I like that it lives on, that at least we made a small, little dent in the way people consume music and think about it. I hope that someone can iterate on the idea, not just clone it, but bring it to the next level, and get people that excited again.
From 2009 I led a music startup called We Are Hunted. It was one of the first music charts powered by social media and was a popular tool for music discovery. It was later acquired by Twitter in 2012. I worked on Twitter Music in 2013/2014. Since leaving Twitter I've been thinking a lot about new models for music discovery. This story is part of a series I am writing exploring the past and future of music app design. Enjoy!
Stephen Phillips @huntedguy
17 May 2015
Why Do I Like This Song
Official Turntable Investment (cached) – 13 Sep 2011
The last 3 months have been incredible. We've grown to over 600,000 people, sharing, talking and discovering new music with each other. Because of this growth and because we have so much to do and explore in creating the web’s first truly social music experience, we have raised 7 million dollars.
The round was led by Union Square Ventures and Fred Wilson will be joining our board. Our other investors include First Round Capital, Polaris, Lowercase Capital, and Benchmark. In addition, a small group of industry angels also participated, including Troy Carter, Tim Kendall, Guy Oseary, Vivi Nevo and a few others that we can’t name just yet.
Union Square Ventures Investment Announcement
Billy Chasen is one of the most talented web entrepreneurs I've met. He makes software that looks different, feels different, and is different. His Chartbeat service is the most elegant and beautiful analytics product ever created. I've wanted to work with Billy for years. But we never found the right project to work together on. Now we have. I'm very excited about that.
Turntable is where strangers play music they love to each other, talk, and in time become friends. It happens to me most mornings and it is a special experience and I'd encourage you to experience it yourself.
Turntable.fm Closes That $7 Million Round, Fred Wilson Joins Board
The line of investors trying to press their way into Turntable.fm's latest round of funding was appropriately similar to the line outside a crankin' dance club: a mix of money and celebrity. And not everybody could get in. But the funding finally closed, and it came in at $7 million, half a million less than the amount "confirmed" by Business Insider in July. Turntable had offers on the table for twice as much money, but they really wanted Fred Wilson of Union Square Ventures to lead the round. Wilson will take a board seat.
User Engagement Analysis by Ryan Hoover
I've been using Turntable.fm nonstop for the past few weeks and I've seen countless others admit their love and addiction. Seth Goldstein, Billy Chasen, and the rest of the team have created an innovative social experience. So what makes it so addicting?
– Gamified Social Interaction
– Real-Time Interaction
– Music is Universal, Expressive
Turntable.fm Shutting Down So Company Can Focus On Turntable Live Events Platform
Today, Turntable.fm has announced that it will shut down its 'virtual dj' product entirely to focus on its new Turntable Live platform, which attempts to replicate the ‘being there’ experience of live performances. TechCrunch broke the news of Turntable.fm’s live event pivot back in September, but today the company has acknowledged that Turntable.fm will be shuttered.