At YCombinator’s Startup School at Stanford University, the founder of the now-defunct music sharing startup Imeem, Dalton Caldwell, stated that “every time a founder does a music startup, a likely more successful startup dies.” (Follow the link to Mashable for the full article).
I think that any blanket statement is difficult to support, but I do understand Caldwell’s point of view. I do, however, take a slightly more nuanced stance.
First, I do agree that most music startups that seek to distribute, sell or provide major label content are in trouble from the start. Those companies just do not have the intellectual wherewithal to see how they can benefit from multiple forms of distribution.
I am not a person, however, that believes that major label content is necessary for a music startup. There was a line in the article that called the major label content the most popular in the world. That is only true because the majors have historically had the biggest bullhorn, but recent sales stats show that music popularity is clearly democratizing and will continue to do so.
With that in mind, I believe the model for a successful music startup should be discovery centric, not licensing centric. Similar to the modern online advertising world, if we look at the data of content consumption and audience profiles to get down to the granular level of what drives “listening intent”, a company could be a matchmaker for artists to their most likely audience. In that case, they are not only a benefit to the independent artists, but also the major labels, which I do not believe are necessary from a music quality standpoint but are helpful from a marketing one.
Also, by serving as an middleware, matchmaking engine, there is no need to license and the majors could ignore participation only at their peril, just as the advertising agencies did for a while in the advertising world and are not far behind the smaller upstarts.
As is my mantra it seems, I think there can be a lot of successful music startups if they focus on the middle ground to match any artist with targeted audiences, just as the real-time bidding systems (RTBs) and both Sell Side and Demand Side platforms have exploded in the advertising world.
I am not just talking about recommendation engines as that is only one side of the equation, but in matching those tools (ex. Pandora) with the dynamic audience consumption engines (ex. Shazam) for the benefit of both sides in real time.
I believe there can be a lot of success there and, if so, that could serve as the beginning of an ecosystem that allows for all music startups to win because they do not then need to go beg for a license but, instead, find and deliver audiences time and cost efficiently.