Music Startups: Has the Meltdown Begun

Spotify continues to burn through money. Deezer is bleeding. Tidal could very well be sold to Samsung at any moment. Rhapsody is losing $3 million a month. Rdio was sold to Pandora for parts. And speaking of which, is Pandora for sale?

Things aren’t looking good for music startups. Are we witnessing the beginning of some kind of meltdown? takes a look.

Startup founders also overestimated just how much music matters to the average person. When you love music, you surround yourself with similar people, and that creates a confirmation bias — everyone wants to share playlists and discover new bands just as much as you and your friends! But really, they don’t. The average consumer is happy to listen to the radio or Pandora, see a few concerts or a festival once a year, and leave it at that.

Founders also overestimated the amount of money in the indie music space. While there’s certainly a layer of unsigned bands with professional aspirations, many more of them are just playing music for fun, or to meet people and be part of a community. They take it seriously, up to a point, and might release music and tour and want to cover costs, but they also know it’s a hobby and passion and will never be a viable living.

Being in the middle of the music startup meltdown right now is terrible, full stop. It’s never fun when people lose jobs and companies close, and it’s going to get worse before it gets better, and the next few quarters are going to reveal even more turmoil in the sector. But it’s not like the internet is going to be turned off for all time; plenty of startups rose out of the web 1.0 collapse, and just as many good ones will come in the future (even in the midst of the downturn, startups like Jukely, Crowdmix, Vadio, and Patreon were funded and are moving forward).

Read the whole article here.

Alan Cross

is an internationally known broadcaster, interviewer, writer, consultant, blogger and speaker. In his 40+ years in the music business, Alan has interviewed the biggest names in rock, from David Bowie and U2 to Pearl Jam and the Foo Fighters. He’s also known as a musicologist and documentarian through programs like The Ongoing History of New Music.

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