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On one hand you have a huge market, ripe for disruption, with high barriers to entry. Seems perfect for a startup. On the other hand, you have these enormous o

by far33d 16y ago

On one hand you have a huge market, ripe for disruption, with high barriers to entry. Seems perfect for a startup. On the other hand, you have these enormous obstacles: upfront payments, minimum revenue guarantees, arcane and complicated reporting and security requirements, and strange nuances and differences in costs based on how you are using the music. It's a major pain in the ass. All of this takes time away from building something people want. If you are lucky enough to find your product-market fit, the barrier to entry will keep competitors away and you'll have a huge head-start.

replicatorblog 16y ago
I think the big issue is that it isn't that big a market. When you factor in the COGS of label music, the market size relative to available profit is actually fairly small no matter what barriers you build. To Dalton's point there are other interesting markets with barriers. For instance Scrapbooking is a $3B market, 1/3 the size of the music industry by revenue, with 2 tech players. One tech product in Scrapbooking generates $300MM in revenue and faces almost no competition. Arts & Crafts is a $32B industry. Toys is ~$30B, Jewelry is $60B, the list goes on, but there are SO many big markets that are ready for technical disruption that are ignored because they aren't very sexy.
- dalton 16y ago
  YES, THANK YOU. One of my personal goals for doing the talk is to get people thinking that way. I wish someone would had gotten me thinking that way years ago. I wanted to put a quote from Aaron Patzer in my talk, but didnt have enough time. Here is the quote: "For other entrepreneurs aspiring to such an exit Patzer advises solving a real problem. “When I founded Mint there were a ton of startups in the social networking space, and in streaming music,” he says. “I found something that was a real problem for me and I knew for millions of others, and I solved it.”
  - replicatorblog 16y ago
    Totally agree, I made a presentation called "Web 3.D" which basically talked about how lucrative opportunities existed in areas where web service overlapped with physical goods. If you start at slide 35 in this presentation, I made a visual comparison of industry size vs. number of market entrants. Music, a shrinking $9B industry has hundreds of startups. Jewelry, a $60B industry has 2. There are some good reasons for this, but the industries are imbalanced. http://www.slideshare.net/josephflaherty/web-3d-presentation?from=ss_embed http://www.slideshare.net/josephflaherty/web-3d-presentation...
pg 16y ago
The problem is, the barriers in this particular market involve people suing you. That's not the kind of barrier startups are good at.

by far33d 16y ago

replicatorblog 16y ago

I think the big issue is that it isn't that big a market. When you factor in the COGS of label music, the market size relative to available profit is actually fairly small no matter what barriers you build. To Dalton's point there are other interesting markets with barriers. For instance Scrapbooking is a $3B market, 1/3 the size of the music industry by revenue, with 2 tech players. One tech product in Scrapbooking generates $300MM in revenue and faces almost no competition. Arts & Crafts is a $32B industry. Toys is ~$30B, Jewelry is $60B, the list goes on, but there are SO many big markets that are ready for technical disruption that are ignored because they aren't very sexy.

dalton 16y ago
YES, THANK YOU. One of my personal goals for doing the talk is to get people thinking that way. I wish someone would had gotten me thinking that way years ago. I wanted to put a quote from Aaron Patzer in my talk, but didnt have enough time. Here is the quote: "For other entrepreneurs aspiring to such an exit Patzer advises solving a real problem. “When I founded Mint there were a ton of startups in the social networking space, and in streaming music,” he says. “I found something that was a real problem for me and I knew for millions of others, and I solved it.”
- replicatorblog 16y ago
  Totally agree, I made a presentation called "Web 3.D" which basically talked about how lucrative opportunities existed in areas where web service overlapped with physical goods. If you start at slide 35 in this presentation, I made a visual comparison of industry size vs. number of market entrants. Music, a shrinking $9B industry has hundreds of startups. Jewelry, a $60B industry has 2. There are some good reasons for this, but the industries are imbalanced. http://www.slideshare.net/josephflaherty/web-3d-presentation?from=ss_embed http://www.slideshare.net/josephflaherty/web-3d-presentation...

pg 16y ago

The problem is, the barriers in this particular market involve people suing you. That's not the kind of barrier startups are good at.