Monthly Archives: October 2010

The Perpetual Doom Of Music Startups? Define Doom.

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.

4 Take-Aways From PubMatic’s Ad Revenue Conference

The world of online advertising is much more nuanced and dynamic than I had given it credit for as the Ad Revenue conference in NYC last week taught me.  Below are a few of my take-aways, which I look forward to turning into business.

–          Data-driven world in need of Insight – Everything revolves around data to best put the right message in front of the right person at the right time in the right context.  While the industry is awash in data, however, the marketers and advertisers do not completely believe the metrics are right to give the level of consumer insight they would like, especially around brand awareness and related items.  As such, there is a need for better analytics that show the true purchase intent of consumers and the path to that intent.

–          Real-Time Bidding & Automated Exchanges are growing – A significant portion of the day revolved around the growth of Google-like auction exchanges both on the supply and demand side.  The key part of the message was that these RTBs (and related exchanges) were being employed increasingly by premium brand advertisers and publishers.  This shifts the role of the traditional Ad Sales person to focus on more complex and strategic sales while the basic fills can be completed by these automated systems.  The expectation is that they will account for 20% of ad fill by the end of 2011 and 50% in the next 5 years.  As you would expect, they are completely data driven.

–          Agencies and Publishers need creative support – With the growth of online video, in general, and video advertising, in particular advertising agencies are asking for additional support from publishers to help with video production for their campaigns with that publisher.   The reason for this seems to be the lack of dedicated expertise within the agencies that combine a knowledge of technology with video production for the online (and mobile) medium.

–          Local is a growth area – The rise of deep data has made local advertising more of an option for national advertisers who want to target locally and local publishers who want to attract a portfolio of community, regional and national clients.  The excitement around local is largely driven by its natural connection to mobile.