MOG’s CEO Responds: Music Startups Do Work
In response to recent comments by former imeem CEO Dalton Cadwell that music startups face almost insormountable challenges, David Hyman, the founder and CEO of MOG wrote:
"…providing music content is a smaller-margin business. But, the addressable market is massive. Music consumption is at an all-time high and is most likely the second biggest leisure activity in the world behind watching television… It’s an industry in massive flux." (Read on.)
"Those with models that work can reap massive rewards through its tumultuous evolution. There are countless phenomenal businesses built on providing services and products on a massive scale with a small margin."
Go David!
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I was at the YComb talk and even got a chance to speak to Dalton afterward. There is no doubt that Imeem left a bad taste in his mouth but I think the point of his speech was more of a ‘lesson learned’ exercise for the programmers in the room. There are so many programmers who are just out of college and want to build a music startup but don’t realize the industry minefield they are about to enter. They also don’t understand the laws and deals the labels look for when you try to build a music startup that can scale to a massive audience. Pandora has been around for 10 years and is still only in the U.S. because of antiquated copyright laws, and only recently has begun to make a profit. The media, press, and everyone are coming down a little hard on Dalton, when I believe he just wanted to pass along what he learned to the next crop of young engineers temper their expectations.
The questions are what is the economic model in these music startups and what is the real spiritual motivation. Financially, it seems the goal is either the hope of some major acquisition or mostly or that the musicians themselves pay and folks have the audacity to say that a 20% gross cut is a small markup for what is largely a passive software tool.
Spiritually,I’d like to see committed individuals stay with their companies as the legends of industry did and do, rather than look at the next thing once they have launched or been acquired leaving their baby behind to stumble and die. For now it all seems like a series of college experiments, not much passion for the industry, just a temporary cool thing to do and wow a five year commitment is a long time? Get real, five years into this game, you still have no clue.
IMEEM offered nothing new, it was a total waste of space.
Artists and labels have to be less greedy and be realistic about the fact that less is truthfully more in todays music space.
Start-ups will fail if their value proposition is not:
a) sustainable / profitable
b) competitively superior / differentiated
c) flexible / adaptable with environment
d) current / trend-friendly
e) hard to imitate / barrier to entry
How many music companies possess these traits? Not many.
Constantine Roussos
.MUSIC
http://music.us
At this point, your on-line music venture will fail if you can’t successfully do one of the following:
1. Monetize “Free” via advertising, sponsorship, etc.; or
2. Offer a paid experience that is better than “Free.”