MOG CEO David Hyman Responds To imeem’s Dalton Caldwell

http://techcrunch.com/2010/10/21/music-startups-can-work-mog-ceo-david-hyman-responds-to-imeem%E2%80%99s-dalton-caldwell/

by px • 16 years ago

27 16 16 years ago

techcrunch.com

pg3• 16 years ago

Actually Dalton was careful to qualify what he said. He never said music startups were impossible. His message was that, given the uniquely horrible obstacles in this domain, you'd be stupid to start a music startup when you could instead start one in some other domain where the obstacles were merely the obstacles all startups face.

Everything we've seen confirms what Dalton said. If we published anti-rfses, this would be the first. Avoid starting startups that handle label music.

randomtask• 16 years ago

> If we published anti-rfses,

Actually that doesn't sound like a bad plan. Dalton Caldwell's talk was full of sage advice only a veteran could give. Perhaps other areas have similar obstacles that are not apparent to people looking to startup?

abstractbill• 16 years ago

How far out does the infection spread? For example do startups like Songkick have these kinds of problems, or are they far enough away from the nasty stuff?

pg3• 16 years ago

Songkick and thesixtyone both seem to be fine. It's not music startups per se that are dangerous, just music startups that touch label music in some way.

far33d• 16 years ago

On one hand you have a huge market, ripe for disruption, with high barriers to entry. Seems perfect for a startup.

On the other hand, you have these enormous obstacles: upfront payments, minimum revenue guarantees, arcane and complicated reporting and security requirements, and strange nuances and differences in costs based on how you are using the music. It's a major pain in the ass.

All of this takes time away from building something people want. If you are lucky enough to find your product-market fit, the barrier to entry will keep competitors away and you'll have a huge head-start.

replicatorblog2• 16 years ago

I think the big issue is that it isn't that big a market. When you factor in the COGS of label music, the market size relative to available profit is actually fairly small no matter what barriers you build.

To Dalton's point there are other interesting markets with barriers. For instance Scrapbooking is a $3B market, 1/3 the size of the music industry by revenue, with 2 tech players. One tech product in Scrapbooking generates $300MM in revenue and faces almost no competition. Arts & Crafts is a $32B industry. Toys is ~$30B, Jewelry is $60B, the list goes on, but there are SO many big markets that are ready for technical disruption that are ignored because they aren't very sexy.

pg3• 16 years ago

The problem is, the barriers in this particular market involve people suing you. That's not the kind of barrier startups are good at.

ABrandt• 16 years ago

Handling label music is without a doubt a dead end. Startups who rely on doing so are certainly increasing their chances of failure; there is too much evidence available to dispute this. However, you can build applications that make use of label music without actually dealing with the labels.

I'll preach the benefits of using the Echo Nest's platform[1] (which MOG uses for their playlists) until I'm blue in the face. They established a partnership a while ago with other music startups to provide label music access to startups. Through Echo Nest, startups can use label music in their applications by taking advantages of deals with companies such as 7digital (http://www.prnewswire.com/news-releases/the-echo-nest-and-7d...).

There's countless obstacles to reaching a repeatable and sustainable business model in the music industry, but these obstacles can be overcame. All industries put up such obstacles to new entrants. Is this not what startups are all about?

chrischen• 16 years ago

I've also been told countless times not to deal with music startups. While I do agree that building a business that tries to prop up the record label's business model is bad, I think there is lots of potential in the space given the supposed decline of the record labels and the huge and rising popularity of music.

MOG CEO David Hyman Responds To imeem’s Dalton Caldwell

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