Crowdmix Goes Belly Up – Music Social Network Raised $20 Million But Never Left Beta [Mark Mulligan]
Much ballyhooed music social network Crowdmix has entered Administration, the UK version of bankruptcy. The unlaunched startup claimed that it would revolutionize music marketing, but industry consultant Mark Mulligan says Crowdmix was likely always doomed to failure and looks at why.
By Mark Mulligan of MiDIA
Crowdmix was one of those start ups that promised to change the world. It was going to be a social network focused around music that would transform how people discover music and how audiences and influencers interact. Now it is going into administration.
Crowdmix suffered from many things, not least a confused value proposition that no-one outside of Crowdmix seemed to be able to explain properly (so it failed the elevator pitch test). But more importantly Crowdmix failed because it played the venture game too faithfully. In the current venture environment, you need to be a ‘game changer’ to unlock significant scale investment. Which is fine, except that only a tiny handful of companies are ever genuine game changers. So what happens is that too many companies try to live up to inflated promises rather than focusing on building viable products and business models. Every company has to be the ‘Uber or Snapchat of [insert industry]’.
Crowdmix convinced itself it could build an entire new social network around music. It couldn’t because of 3 reasons:
1. Music is fundamentally not important enough to enough people to build any sort of scale of social network around it
2. As Google learned the hard way, there is only room for one major scale social network
3. Social networks are yesterday’s technology. They are how Digital Immigrants and older Millennials interact digitally. Messaging apps have replaced social networks for Gen Z and younger millennials
The average life span of a digital music start up is 5.8 years with an average investment of $79.7 million (though those numbers are skewed up by Spotify’s $1.6bn). Crowdmix made it to 3 years and through $18 million, so below average on both counts. It was a nice enough – if slightly confused – idea that made the simple mistake of believing it could change the world.