Stifling demands have meant most investors are unable to turn a profit and have thereby turned to other ventures like Twitter and Facebook where they are able to build a viable business model.
The RIAA has claimed for several years now that it finally gets it, that it’s working to build viable alternatives to illegal file-sharing for music fans to enjoy in order to answer previous criticisms that it had none.
But, as we’ve all witnessed, it’s been a slow march to reality, and even now it doesn’t quit understand what music fans have wanted since Napster’s birth back in 1999. It’s the combination of community and selection and it’s what’s made BitTorrent tracker sites like Waffles.fm, What.cd, and OiNK before them so wildly popular.
We have yet to see any legal site of the sort and now it seems we can see why.
For according to an article on CNET, investors who used to put money in digital music startups have left for other areas like Twitter or Facebook where they are able to build a viable platform around the core product.
“There are not a lot of entrepreneurs involved in this space,” said David Pakman, a music industry veteran and now venture capitalist at Venrock Associates. “Investors lost a lot of money in this space. “The loss for the industry, he said is that entrepreneurs have moved on to areas like Twitter and Facebook.”
He said of at least 109 venture-backed digital music startups that he knows of, less than five have turned a profit.
The reason?
“What the music industry never encouraged or even allowed was building an ecosystem around its product,” he added.
Most digital music services face the daunting task of securing permission to even sell music, let alone a brokering a deal that makes the venture profitable.
It’s no wonder the best they’ve come up with so far is Apple’s iTunes, which even they seem to despise because they’re only getting a percentage of profits rather than the whole pie.
So with investors apparently turning to other areas with less hassle music fans surely can expect more of the same bland digital music services (imagine a legal What.cd!).
Great job once again RIAA.
Stay tuned.
jared@zeropaid.com
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This is part of what frustrates me most about the music industry is that the powers that be are still way too cautious with their product and the end result is their own profits are hurt. For example, if I discover a (typically foreign) artist or song through illegal downloads and I want to support the artist and buy their music, 7 times out of 10 the music is available on UK/US iTunes but missing from Australian iTunes.
I am a customer willing to exchange money for music sitting in front of the *World Wide* Web, why can I not purchase exactly what I want? The Internet is the best promotional tool creative industries have ever seen, with the ability to distribute any given product all over the world, and yet these artists are being held back by their industry’s licensing restrictions. Let’s not even go into the amount of time it took for “iTunes Plus” to happen.
“He said of at least 109 venture-backed digital music startups that he knows of, less than five have turned a profit.”
The reason? Lack of customers. Simply, lack of customers, and VC knows it so they go elsewhere. I’ve seen plenty of startups with full access to music from dozens of RIAA labels. But no one comes. Why pay when you can get it for free? This is obvious.
“The reason? Lack of customers. Simply, lack of customers, and VC knows it so they go elsewhere.”
The article stated “less than five have turned a profit”. This does mean lack of customers, but more expenses than revenues, idiot.
“I’ve seen plenty of startups with full access to music from dozens of RIAA labels. But no one comes.”
Do you expect anyone to believe that outright lie of yours?
“Why pay when you can get it for free?”
This is the same typical argument used repeatedly by those who do not understand economics and cannot fathom consumer behavior. Not everything is determined by the price of some item, dumb ass.
“This is obvious.”
You’re an imbecile for thinking everything that you find obvious to be correct.