Editor’s Note: Up until a week prior to the summit, I wasn’t planning on going to San Fran, so I enlisted my good friend Justin Travis to cover for me. More importantly, huge thanks to Brian Zisk for welcoming SoundCtrl to San Fran and congrats on the success of the 9th “Episode”, as he likes to call it.
On September 12, 2011, hundreds of the most cutting-edge folks in the music business gathered for the SF Music Tech Summit. The conference represents the intersection of technology and the music business, and who better to give the keynote than Pandora founder, Tim Westergren. His keynote naturally sung the praises of radio, though I use the term loosely since what he described is not radio in its traditional sense. Tim’s belief is that internet radio, with its ability to make offer more socialization and personalization, will make radio better. Looking at the numbers, radio won’t be disappearing any time soon. The average music listener spends 17 hours per week listening to music, and 80% of that time is dedicated to radio. We should obviously consider the source, as Tim is the figurehead of the most popular internet radio service, but the numbers are compelling. turntable.fm, a newcomer to the internet radio scene, offers tremendous socialization and is spreading like wildfire.
The obvious issue with internet radio services is copyright. Luckily Michael Robertson, a seasoned entrepreneur with a proven track record of getting sued by the labels (see mp3.com and mp3tunes.com), was on hand to deliver some sage advice. Essentially, if you’re building a B2C service, get whatever compulsory licenses you can, and respect DMCA takedown notices from rights holders. Otherwise you’ll waste too much time and money on negotiating deals with the individual rights holders and you’ll never launch. However, if you’re building a B2B service (like panelist Darryl Ballantyne’s LyricFind), you need to absorb the risk and not pass it on to your clients, so you must negotiate the deals yourself. The hot startup of the moment, turntable.fm, is reportedly in talks with the labels to license content directly, which is a smart move. While it will likely cost a bit of dough (they just raised $7mm), it will protect them in the long run. They obviously couldn’t have negotiated deals before their recent success and fundraising, so timing is an important consideration as well.
I’d be remiss if I didn’t mention everybody’s favorite topic of late: mobile. The mobile panel had representation from not only heavyweights such as Verizon and Microsoft, but Steve Jang from Soundtracking (editor’s note: one of the winners of this year’s FlashFWD) was on hand to provide a startup’s perspective. One takeaway from the discussion was that there must be enough value to a mobile service to make it worthwhile to the broad consumer market. This is obvious to the panel and attendees, which are early-adopters, but everyday consumers must be able to see the value easily before they’ll join or pay for a new service. The conversation quickly moved to “is $10/month too expensive for a music subscription service?” The general consensus was “yes”, though I have to disagree. Paying Rdio $10/month gives me access to hundreds of dollars worth of music each month that I otherwise couldn’t afford. And now MOG and Rdio are announcing free, ad-supported versions to compete with Spotify. Spotify, a household name in Europe, has struggled to gain significant traction in the US, perhaps to a cultural difference in how Americans think about ownership of music.
On another panel focused on guerrilla marketing, talk quickly turned to labels and their role in the business today. Ethan Kaplan, former SVP of Technology for Warner Brothers, dropped a couple valuable insights on the crowd. Comparing labels to venture capitalists that fund startups, Ethan noted, “A label is a VC with the worst terms.” They basically structure the deal so they won’t lose any money if the artist fails. It makes increasingly less sense for new artists to pursue major label deals, especially with the powerful reach possible with twitter and facebook. Mr. Kaplan had another piece of advice when it comes to social networks, metaphorically stating that facebook delivers something to a person’s kitchen table, and twitter delivers it to their doorstep. Artists cannot ignore either one, but it’s important to tailor one’s messaging according to the channel.
Finally, if there was one consistent theme throughout the day, it was the underlying concept of simplicity. Too many people (both musicians and startups) have, in the spirit of innovation, been trying every new technology and social network in an effort to capture more share of mind than their competition. Now as a result, we’re all suffering from social fatigue. As a fan, I don’t want to have to dig around dozens of social networks to try and find that new artist a friend told me about, or have to deal with their poorly designed website so I can hear their new single. Technology is supposed to make people’s lives easier, not more complex. It’s a complex task to make something simple, but those who can will ultimately win.