Wow, talk about music news this week. Muxtape got its wrist slapped by the RIAA…
…but there are new music start ups to pick up where Muxtape left off (if it’s in fact dead, and not a publicity stunt).
Music startups are not for the faint of heart or the shallow-pocketed. Spiral Frog has spent $12 Million and hasn’t even launched. They were reported to be looking for a further $25 Million. And that’s pre-launch.
8Tracks has spent about $80k to get the service to where it is today, but has a special license that they’re using currently.
I’ve been watching several guys here in Europe, but see real business model challenges to ad based music services given the royalty rates that the majors are looking for. Silicon Alley Insider has a good overview of why the current licensing model is broken. They calculate 1 ad per song to break even, we’ve run some numbers and they look higher than that to us- which means if it doesn’t work at 1 ad per song, then things just go downhill from there,
Add in the fact that WalMart is pulling/reducing its music inventory, which can’t be a good thing for the Labels either… all of which leaves me scratching my head as to where these guys plan on making money (Not online and not in store- that doesn’t leave many options.)
So what’s next, who’s going to start the Music Revolution (or has it already quietly begun)?
(thnx to datsuncog for the tape pic)