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Some fellow entrepreneurs had an awesome idea recently to create a jukebox-like service for businesses, where they could get payed per request and pay a monthly

by ruffrey 11y ago

Some fellow entrepreneurs had an awesome idea recently to create a jukebox-like service for businesses, where they could get payed per request and pay a monthly fee for the streaming service. I coded up an MVP and we got a few customers that agreed it was something they would pay for, as long as they had a decent chance to make even a small profit on song requests. Once it looked like a viable product idea, the financial numbers guy did his magic and researched more details about how royalties worked. We got conflicting information from different lawyers and royalty aggregators. After a couple months of research we determined it was completely impossible to make a profit, until we hit maybe 5 million in revenue and could start to negotiate better rates with copyright holders. This assumed extremely cheap tech and bandwidth, and almost no salaries for us three founders. We killed the project because it became clear how sadly broken the music industry has become. They wanted about 50% of our revenue, no matter how we sliced the business model. We are totally miffed at how pandora or spotify survive.

k-mcgrady 11y ago
>> "We killed the project because it became clear how sadly broken the music industry has become. They wanted about 50% of our revenue, no matter how we sliced the business model. We are totally miffed at how pandora or spotify survive." Aren't Spotify running at a huge loss? I don't see how this means the music industry is broken. They are trying to get as much money for the content they own as possible. If they don't think your service is worth much to them they probably don't want to bother licensing you the content. Seems like simple business strategy. The problem is with your business - you need to find a way to make money. If a business can't make enough money to afford the thing it can't survive without then you have a problem, you can't just blame the problem on someone else. I get where you're coming from (they make it too expensive) but they have no need to license you content. In fact it just fragments the market more making marketing more difficult for them. I think ideally they would want one store where everyone goes for everything.
- disantlor 11y ago
  Startups and labels constantly jockeying for better position to maximize profits, etc etc and so on; the plight of the artist at the bottom of the food chain is generally brushed over, often with the supposed consolation that "it's never been easier to get your music into people's ears". That may be true in a technical sense but it's completely meaningless in reality. I've worked as a full time programmer to subsidize basically every detail of actually getting the music heard (recording, merch, subscriptions to soundcloud and bandcamp and tunecore, gas money for shows). Granted we're exactly striving for mainstream popularity but it's hard to even conceive of how we could possibly make enough money, split three ways, to sustain it without sacrificing most of the remaining hours to working to pay for food and rent; and none of us have children to worry about. Yet we press on, for nearly a decade, primarily because we love it of course but also people seem to think we're not half bad. I suppose all these discussions matter but I guess all I'm saying is if you really care and truly like a band (even a little) go to their website or bandcamp and buy a tshirt and a record. PLEASE. And just cut all this bullshit in the middle right out.
  - morgante 11y ago
    Maybe artists should accept the fact that the supply of music vastly outstrips the demand. 99% of consumers would be happy if there were only 10,000 employed musicians in the entire market.
    - williamcotton 11y ago
      You're looking at this completely wrong. Imagine you write a song. I take that song and I turn it in to a bunch of holes punched in a big long reel of paper. Now I put that reel in to a specially designed piano that will read the sequence of holes and use it to trigger notes. Now I sell that roll of punched holes. Do I need to give you any money? Imagine you write a song. I take that song and I record it on to thin plastic disc. I sell these plastic discs. Do I need to give you any money? Imagine you write a song. Someone else records it and I play that recording over a radio broadcast. I sell spots in the broadcast to advertisers and make a profit. Do I need to give you any money? Imagine you write a song. Someone else records it and puts that song on a website I run. I sell spots on the website to advertisers and make a profit. Do I need to give you any money? Imagine you write a song. Someone else records it and uploads it to their own website. They don't have ads. However, I have a website that indexes every other website on the Internet. I sell ads around the content that is returned in these search results, including your song. Do I need to give you any money? This has nothing to do with supply and demand. It has everything to do with people like me making money off of things that people like you made and if that is or isn't how we expect a lawful and just society to work.
- ruffrey 11y ago
  You're totally right though I should clarify what I meant by broken. There are so many hands in the cookie jar and so much bureaucracy with payouts that it takes millions of investment to get this business off the ground. And it wouldn't be profitable. It's a technically simple concept and we had this (albeit false) feeling that "this should be easy to do." I mean think about it, a DJ charging people for song requests would essentially run into the same problems that we did. We were just adding one layer to the business model and enough to try to cover operating expenses. There are jukeboxes that do make the business model work, but they are hardware that cost 10s of thousands of up front investment for the bar or coffee house. We found, in market research, that 100% of the surveyed businesses would use this kind of service, but they wouldn't pay more than $25 - $100 per month for it, absolute max.
frankdenbow 11y ago
Pandora has a statutory radio license that requires no negotiation, which is why you have restrictions on what you can play. The cost is less to them which is why they have survived.
cwyers 11y ago
The music industry is broken because they wouldn't give you a license to use their product at a price you wanted? And you shut the whole product down because you couldn't get the licensing, so clearly you have no product without those music rights. How is your idea adding so much value to these music catalogs that 50% of revenue isn't a good deal for you?

by ruffrey 11y ago

k-mcgrady 11y ago

>> "We killed the project because it became clear how sadly broken the music industry has become. They wanted about 50% of our revenue, no matter how we sliced the business model. We are totally miffed at how pandora or spotify survive." Aren't Spotify running at a huge loss? I don't see how this means the music industry is broken. They are trying to get as much money for the content they own as possible. If they don't think your service is worth much to them they probably don't want to bother licensing you the content. Seems like simple business strategy. The problem is with your business - you need to find a way to make money. If a business can't make enough money to afford the thing it can't survive without then you have a problem, you can't just blame the problem on someone else. I get where you're coming from (they make it too expensive) but they have no need to license you content. In fact it just fragments the market more making marketing more difficult for them. I think ideally they would want one store where everyone goes for everything.

disantlor 11y ago
Startups and labels constantly jockeying for better position to maximize profits, etc etc and so on; the plight of the artist at the bottom of the food chain is generally brushed over, often with the supposed consolation that "it's never been easier to get your music into people's ears". That may be true in a technical sense but it's completely meaningless in reality. I've worked as a full time programmer to subsidize basically every detail of actually getting the music heard (recording, merch, subscriptions to soundcloud and bandcamp and tunecore, gas money for shows). Granted we're exactly striving for mainstream popularity but it's hard to even conceive of how we could possibly make enough money, split three ways, to sustain it without sacrificing most of the remaining hours to working to pay for food and rent; and none of us have children to worry about. Yet we press on, for nearly a decade, primarily because we love it of course but also people seem to think we're not half bad. I suppose all these discussions matter but I guess all I'm saying is if you really care and truly like a band (even a little) go to their website or bandcamp and buy a tshirt and a record. PLEASE. And just cut all this bullshit in the middle right out.
- morgante 11y ago
  Maybe artists should accept the fact that the supply of music vastly outstrips the demand. 99% of consumers would be happy if there were only 10,000 employed musicians in the entire market.
  - williamcotton 11y ago
    You're looking at this completely wrong. Imagine you write a song. I take that song and I turn it in to a bunch of holes punched in a big long reel of paper. Now I put that reel in to a specially designed piano that will read the sequence of holes and use it to trigger notes. Now I sell that roll of punched holes. Do I need to give you any money? Imagine you write a song. I take that song and I record it on to thin plastic disc. I sell these plastic discs. Do I need to give you any money? Imagine you write a song. Someone else records it and I play that recording over a radio broadcast. I sell spots in the broadcast to advertisers and make a profit. Do I need to give you any money? Imagine you write a song. Someone else records it and puts that song on a website I run. I sell spots on the website to advertisers and make a profit. Do I need to give you any money? Imagine you write a song. Someone else records it and uploads it to their own website. They don't have ads. However, I have a website that indexes every other website on the Internet. I sell ads around the content that is returned in these search results, including your song. Do I need to give you any money? This has nothing to do with supply and demand. It has everything to do with people like me making money off of things that people like you made and if that is or isn't how we expect a lawful and just society to work.
ruffrey 11y ago
You're totally right though I should clarify what I meant by broken. There are so many hands in the cookie jar and so much bureaucracy with payouts that it takes millions of investment to get this business off the ground. And it wouldn't be profitable. It's a technically simple concept and we had this (albeit false) feeling that "this should be easy to do." I mean think about it, a DJ charging people for song requests would essentially run into the same problems that we did. We were just adding one layer to the business model and enough to try to cover operating expenses. There are jukeboxes that do make the business model work, but they are hardware that cost 10s of thousands of up front investment for the bar or coffee house. We found, in market research, that 100% of the surveyed businesses would use this kind of service, but they wouldn't pay more than $25 - $100 per month for it, absolute max.

frankdenbow 11y ago

Pandora has a statutory radio license that requires no negotiation, which is why you have restrictions on what you can play. The cost is less to them which is why they have survived.

cwyers 11y ago

The music industry is broken because they wouldn't give you a license to use their product at a price you wanted? And you shut the whole product down because you couldn't get the licensing, so clearly you have no product without those music rights. How is your idea adding so much value to these music catalogs that 50% of revenue isn't a good deal for you?