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Never do a music industry startup unless you have a billion dollars, can raise a billion dollars, or plan to be acquired by a company with a billion dollars to
by sgentle 9y ago
Never do a music industry startup unless you have a billion dollars, can raise a billion dollars, or plan to be acquired by a company with a billion dollars to spare. That's the table stakes for going toe-to-toe with the big three.
They'll bleed you to death with licensing fees, deputise you into their copyright enforcement police, upload their songs to your platform on one hand while suing you with the other, and all the while cry about how extracting monopoly profits is so much harder than in the old days.
Just go disrupt something safer, like organised crime or the international diamond trade. At least with those the law probably won't change out from under you.
- Kenji 9y agoSeems to work for Bandcamp though (which I love by the way).
- thirdsun 9y agoThe difference is that Bandcamp doesn‘t need to make deals with major labels. Instead they have smaller and larger labels as well as independent artists coming to them. I really don‘t understand why Soundcloud tried to get into general, mainstream music streaming. Keeping their niche as paid host for DJs, radio shows, independent artists and small labels should have been their main focus. As a paid service for listeners (in contrast to artists) it simply can‘t compete with Spotify, Apple and others.
- cupcakestand 9y agoBest comment in the thread. It shows that one of SoundCloud's key problem is an oligopolostic industry they are dealing with.
- lukaslalinsky 9y agoSoundCloud's key problem is that they couldn't stay small because of VC money, not the music industry.
- wodenokoto 9y agoThey couldn't stay small due to user influx. They couldn't sustain their music offering without deals with the music industry. VC money is just something they needed because they couldn't do any monetisation without deals with the industry (too much of their content is non-fair-use derivatives of the big 3's copyrighted content) and they obviously can't stream millions of hours of music without some sort of money.
- skewart 9y agoI'm not so sure that's true. Their key problem is that they didn't understand how much value there is in up-and-coming, amateur, and underground music. The record labels only have power when it comes to their catalogue. SoundCloud could have truly disrupted the labels by providing an alternative way to promote, monetize, and discover music. But they somehow got off that track.
- wolco 9y agoAnd that is the big loss. Having a place where one could discover new music has so much value over being served the same songs by the same few artists
- vec 9y agoDoes it though? I'd like this to be true, but in practice it seems like most people (me included) strongly prefer hearing songs they already know most of the time, enjoy songs more with repetition, at least up to a point, and are more than willing to learn to like almost anything with high enough production value. Some people are music snobs as a hobby and most go on discovery quests from time to time, but it honestly seems like most people most of the time want music they don't have to think too much about or devote too much attention to. Indie-only channels can't really deliver that.
- jamescostian 9y agoI think most people like variety. Yes, some people always listen to the same 50 songs, and some people never listen to the same song twice. But most people don't go their whole lives without expanding their musical tastes. While iTunes and Google Play gave chart toppers the spotlight, SoundCloud turned amateurs into professionals. "Nobodies" could put their music on soundcloud and get them streamed millions of times, and that recognition could eventually get them a chance to sign on a dotted line
- lukaslalinsky 9y agoWhy do these two groups of people need to be served by the same service? Why couldn't there be a site for young producers to easily publish their music online and connect with the fans? If I make a song, I can't even imagine what would it take to get it to Spotify. I'd probably have to pay some agency. SoundCloud with its community is the perfect tool for this.
- qrbLPHiKpiux 9y agoI would never consider doing a music industry startup due to BitTorrent.
- skrebbel 9y agoWell, Spotify managed just fine. They didn't have those billions when they started out in Sweden.
- bogomipz 9y agoDid they manage just fine? They had to cut the same extortionate deal with the big 4 records labels and give them an equity steak in the company as well[1]. Given the recent figures I think the jury is still out on whether Spotify and this whole "the more we make the more they take" business model is actually sustainable: "In 2016, Spotify lost just over $600 million ($601.4 million), up significantly from 2015's losses of just under $258 million. This means losses increased by 133%."[2] [1] http://www.swedishwire.com/jobs/680-record-labels-part-owner-of-spotify http://www.swedishwire.com/jobs/680-record-labels-part-owner... [2] https://www.forbes.com/sites/hughmcintyre/2017/06/15/spotify-lost-more-than-600-million-from-3-3-billion-in-revenue-in-2016/#38fc54617008 https://www.forbes.com/sites/hughmcintyre/2017/06/15/spotify...
- rythie 9y agoWho said you need billions to get started, you need a billion to keep going, when the music industry notice you. Spotify have raised $1.56bn to date: https://www.crunchbase.com/organization/spotify https://www.crunchbase.com/organization/spotify Which included $1bn in debt just last year: https://techcrunch.com/2016/03/29/stream-with-the-devil/ https://techcrunch.com/2016/03/29/stream-with-the-devil/ They wouldn't have raised that, if they were "just fine".
- deleted 9y ago
- elmar 9y agoDalton Caldwell at YC Startup School 2010 did a great presentation on the subject talking exactly about the nuances of the music industry. https://www.youtube.com/watch?v=wTOlrN5-UGU https://www.youtube.com/watch?v=wTOlrN5-UGU In October 2010, Caldwell spoke at Y Combinator’s Startup School event at Stanford University about the failures of imeem and of the challenges still facing the music industry. At the event, Caldwell delivered a cautionary message for entrepreneurs interested in music startups. Caldwell criticized major music labels for holding too much power, focusing mainly on the industry’s licensing deals for content. He said that the current state of the industry made success for startups bleak. While some commentators praised Caldwell for his harsh but realistic insight on the digital music startup industry, many critics (notably David Hyman, CEO and founder of MOG) felt that the lessons learned from Caldwell’s experience with imeem did not accurately portray the industry as a whole.
- elmar 9y agoStartups CAN Work: MOG CEO David Hyman Responds To imeem’s Dalton Caldwell https://news.ycombinator.com/item?id=1817845 https://news.ycombinator.com/item?id=1817845
- pmarreck 9y agoCan't someone start a brand new music business model from scratch?
- meowface 9y agoI can't really imagine how. Content needs to be licensed if you want to profit off of it legally, and I'm not sure how you can disrupt licensing unless you already have many billions of dollars to throw around.
- nitrogen 9y agoStart a new "label" the way Netflix and Amazon have their own productions.
- johncolanduoni 9y agoBoth of which definitely fall under "billions of dollars to throw around".
- jasonlaramburu 9y agoMusical talent is not equally distributed. The Big 3 offer the most talented and/or trending artists (who are often struggling financially) a path to riches and fame that is difficult to refuse. Until a startup can replicate or disrupt this model, the labels will always have a monopoly on the best talent.
- deleted 9y ago[deleted]
- untilHellbanned 9y agoMusic marketing isn't equally distributed.
- jasonlaramburu 9y agoIt's not just the marketing. With enough VC funding a startup could build an equivalent or better marketing apparatus. The Big entertainment companies have a monopoly on key distribution channels: radio, tv, in-store, stadium shows etc. The succesful startup will be the one that builds an entirely new distribution channel for musical acts.
- ahmedfromtunis 9y agoSoundCloud was so close to be that startup.
- yuhong 9y agoThe fun thing is how this is thanks to an economy based on consumption and IP, making higher profit margins good. My favorite however is the Betamax case from the 1980s. I wonder how lawyers took over in the first place.