thereport ISSUE 424 | 02 SEPTEMBER 2019

Fresh start Rightsholders want to nurture the next generation of inventive music/tech startups – so how well are they doing? 1 After bumpy times in the past, ISSUE 424 30.08.19 STARTUPS REPORT 2019 is a good time to be a music/ tech startup… isn’t it?

ver since music:)ally was founded in famous line about Hollywood – ”Nobody 2002, one of the key pillars in our knows anything” – applies just as well to editorial coverage has been our the task of spotting successful music/tech curiosity about new tech startups startups. But what music:)ally does know is Eoperating in and around music. that whenever we’ve been curious about One of those startups is now a $26bn+ startups in the present, it’s given us useful public company, but in the run-up to its insights into the future of this industry. launch in 2008 it was still an under-the- Countless features that are core to radar Swedish startup happy to give its today’s music-streaming and social- CEO’s mobile number to music:)ally when media platforms, for example, were first we emailed to find out what the company dreamt up by startups whose names was up to. “If tomorrow at 3 UK time if are long forgotten now, or developed by good for you please call Dan on +46…” people who’d honed their ideas in the It’s not just the likes of SoundCloud, music/tech sector. Plus, talking to those Deezer and Kickstarter who we first founders and developers has always given covered as fledgling startups with us a useful, external perspective on the big ideas: in our lifetime, Facebook music industry’s responses to the last two (founded: 2004), YouTube (2005), Twitter decades worth of digital disruption. (2006), Instagram (2010) and Snapchat The latest manifestation of our music/ (2011) have all gone from ‘this could be tech curiosity is this report. We’ve interesting’ startups to digital giants. explored the current strategies of the That said, we’ve also written about three major labels when it comes to many hundreds of music startups that… investing in and engaging with startups, didn’t become giants. In fact, most of and we’ve dived more deeply into Warner them ultimately disappeared without Music Group as a case study, in the words trace, although some – Qtrax, Beyond of three of its key biz-dev executives. Oblivion and Crowdmix to name but three, However, we’ve also offered a group with PledgeMusic currently threatening of startups a safe space to vent – to join them in the hall of infamy – went anonymously – about what they see as the down in very public flames. continued challenges of working with the That’s the pitfall of getting excited majors. It’s fair to say they didn’t hold back. about fresh new startups: often the Plus we’ve chosen 20 of the startups quality of execution doesn’t match the who we’ve written about for the first original idea; if it does, often there isn’t time in 2019 that show most promise, a sustainable business model; if there is, and – just to show we embrace our past sometimes the timing is just wrong; and overexcitement – we’ve taken a look back even if it is, sometimes… well, sometimes at our 40 ‘ones to watch’ picks back in

report things just don’t work out, and even with 2012, to see how many survived, or at hindsight it’s hard to say why. least made an impact in some way after Screenwriter William Goldman’s they shuttered. :) the 2

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have been driven from the west coast of the US, where the key western music and tech communities rub shoulders. There are some common threads between all three majors’ recent investments: an A&R-esque percentages game of urgently scooping up emerging tech talent; the need for data-driven artist discovery; finding technology that creates new music better, faster and more cheaply; and, to satiate a long-held urge, attempting to create platforms that connect labels directly with fans. There is also evidence of a thoughtful, pragmatic long game being played using the streaming dollars that are sluicing through the majors’ artfully-dishevelled corridors. Rather than scrabbling around for the Next Big Thing, the labels are quietly seeking unsexy, powerful, niche pieces of technology to augment their existing businesses.

Warner Music Group

WMG is perhaps the most publicly-bold of the three majors when it comes to tech investment, and its approach seems to less ‘give music/tech startups a miss’ and involve three main points of engagement. more ‘you were right to give Crowdmix a At a corporate level, WMG has made miss’. From angel-focused early funding high-profile investments in startups which to more-serious Series A rounds, there make sense to their core business: buying Major miners continued to be plenty of activity. data-driven A&R service Sodatone and The major labels are digging deep, wide and early, hoping This hasn’t just been about angels investing in AI-powered mastering company and VC companies though. With growing (turned distributor) Landr. to hit a rich seam of smart (and unsexy) startups revenues from streaming services swelling Meanwhile WMG Boost, the seed-stage their coffers, all three major labels have investment fund set up by the recently uring the fallout of 2016’s multi- other music/tech startups. However, one upped their efforts to invest early and firmly departed Ole Obermann and overseen by million pound tragicomic disaster of the failure points at Crowdmix was that in music/tech SVP, global digital business development

report Crowdmix (read more here), you’d its main investors were from an unrelated For this report, music:)ally has tried to and head of innovation & emerging have been forgiven for expecting industry: property development. identify some of the wider strategies behind technology, Jeff Bronikowski, has just Dthe toxicity to have a knock-on effect for For savvier investors, the message was the major labels’ investments, many of which invested $2M into Artiphon, the innovative the 3

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one-size-fits-all music smart-hardware As VC and tech soothsayer Mary maker. Meeker pointed out in her 2019 Internet WMG is also entering its third year Trends report, the companies that connect of association with the Techstars Music with their customers directly, and analyse accelerator, which enables WMG to rustle their data well, tend to exhibit the kind of around in music-tech’s grassroots. The perky growth curves that major labels love. label’s involvement with Techstars Music was spearheaded by Alex Kamins, WMG’s Sony Music Group VP, global Digital Business Development. His enthusiasm for Techstars is derived Sony Music, according to a well-placed from a combination of unearthing innovative source, has in the past had a slightly businesses, learning new practices, and less coherent overall strategy than the helping demystify the music biz for startups: other majors. But now a combination of “One of the tenets of our group, and why an expanded involvement in Techstars, we do Techstars, is to lift that shroud of spearheaded for Sony by Brad Spahr, and a mystery that has forever covered the music West Coast-based team creating a clearer business: how it works, how it’s structured, overall startup investment/involvement how the rights work, how to actually get strategy, aims to change this. content deals - and we really try to be Until now, Sony’s startup investments transparent and open minded.” Dai has specifically praised WMG CEO hypothetical scenario - consider paying have been a more localised, piecemeal, And speaking of mystery, there’s one Steve Cooper, telling Alleywatch that the for gig tickets, merch, and even streaming traditional affair - with some notable more interesting investment that WMG has two companies “really saw eye-to-eye on itself with something similar to TAP - is not successes. made on a corporate level. In the last 12 the potential of strategic partnership and too far-fetched. Like WMG, Sony Music is a partner in the months, WMG has contributed to funding collaborations between Hooch and WMG.” Cutting out transaction fees, ticket Techstars Music accelerator programme and rounds for three very different startups. Another music biz connection on services, and the pesky anonymity that this year is actively strengthening this role, While investments in Aaptiv, (https://aaptiv. Hooch’s advisory board is Teymour comes with cash or third parties - whilst involving both the US and Japanese arms com/) a fitness app combining workouts with Farman-Farmaian, who spent 14 months keeping fans in a hot state of interest of Sony Music Entertainment as well as the music, and Artiphon are fairly clear, it’s the as Spotify’s chief marketing officer and with a built-in “rewards” system - would Sony Innovation Fund (SIF). investment in Hooch.co, a $9.99-a-month chief acquisition and retention officer back be a useful future service for WMG. The latter invests on behalf of the food and drinks rewards app, that could in 2011-12, but is currently SVP and head And - again, hypothetically - companies wider Sony Corporation across a startup- point to some more complex longer-term of USA at bitcoin wallet company Xapo. taking part in Techstars Music - like the salad of tech sectors - entertainment, thinking. music:)ally was not able to get This summer, Hooch plans to launch on-demand t-shirts and merch startup manufacturing, fintech, Internet of Things someone from WMG to speak on the record its own blockchain-driven stablecoin (a Inklocker - could also slot into this (IOT), artificial intelligence, VR, AR and so about Hooch. cryptocurrency pegged to a stable asset framework. on - and has in the past backed music/tech The Hooch app allows subscribers like gold or fiat currency) called ‘TAP’. It With this kind of joined-up thinking, companies Shazam and Roli. to book discounts at 100,000 bars and will be a rewards system, payment system, you can imagine a label-customer SIF’s strategy in the music space appears restaurants - including the headline- and crypto drinks token all in one. relationship where the fan stays close to to be a series of safe-looking bets: its mid- grabbing promise of a free drink every The reasoning behind WMG’s the artist, is rewarded for their loyalty, July contribution - along with WMG - to the

report day - because, Hooch CEO Lin Dai says, investment in a company that is busy with all purchases and data are syphoned $26M Series B investment round for the telephoning a restaurant the old-fashioned creating its own currency for the food through the label, not siloed in third party AI-mastering and digital distribution service way is “a terrible experience for Millennials.” and beverage market is unclear, but one platforms. LANDR being a case in point. Similarly, May the 4

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store or thrown away the box. Combining these types of technologies, plus a crypto payment system, could (very hypothetically) leave Sony with something similar to Hooch on its hands, incentivising fan behaviour and sopping up swathes of user data in return for tasty rewards - something that majors have traditionally had to watch other companies do. In an age of increased twitchiness around issues of privacy, tracking technologies might feel intrusive - but nonetheless one that many people may still be convinced to accept, especially in return for exclusive rewards from, say, Calvin Harris. Recent Accenture research suggested that three-quarters of retail customers are willing to share their data in return for personalised experiences, with a startling nine out of ten preferring brands that provide personalised offers. It’s clear why any steps towards a direct fan connection are so appealing: if the investments in Swedish sampling clearance majors can directly link the superstar with service Tracklib and the video service the superfan, they can start accessing the Mainstreaming (https://mainstreaming. super-data. tv) have clear relevance to Sony Music’s businesses. Universal Music Group But that doesn’t mean that the ostensibly non-music business investments should be Universal’s approach to startup investment ignored, and two other investments from is broad, international, unsexy, and a little earlier this year into Miles and Adrich could disordered - and that’s actually a good thing. prove to be an example of Sony exhibiting Based on the startups with whom UMG the same kind of broader thinking as WMG is keenly rubbing shoulders, you might be may be with Hooch. forgiven for thinking that there may not be According to The Verge, Miles “tracks so many earth-shattering new ideas left on your every move in exchange for deals and the horizon. UMG appears to be aiming for discounts”, while Adrich describes itself as practical, niche, smart, slightly unglamorous

report “the world’s first Smart Consumer Usage startups, with the apparent intention of Tracker,” basically tracking a product’s use augmenting its business piece by piece - in the real world, even after you have left the again, with the aim of direct fan connections, the 5

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and direct access to fan data, at its heart. music. (A similar approach is also a key UMG has many fingers in many pies, component of WMG’s offering to startups, baked to many recipes. The strategy is for the same reason.) This loosening of slightly different in each implementation: licensing restrictions for startups that fulfil at in-house incubator Abbey Road Red certain criteria is seen internally at UMG as a the company takes a small percentage key tool to win over small, ambitious music- of ownership in return for startups’ tech businesses. participation; the Capitol Innovation Center If a startup develops well, the desired is an LA-based “collaborative workspace” outcome is then managed similarly to an for artists and tech-heads to mash ideas; artist on an A&R development deal. UMG and the Universal Accelerator Network is sees the tech business like the music a self-explanatory and growing series of business: a human industry that relies on partnerships with tech accelerators across trust, care and a team of like-minded people the globe - the most recent being MAP in (and, yes, money.) Melbourne. So when the time is right, UMG intends to These accelerators, centres, and be there to continue the right partnerships incubators are awash with the traditional into its business - and that it considers Innovation License. with the right startups, having established startup brew of hackathons, pitch UMG to be primarily a referrer of high- This license - which grants startups the relationship early on. This intention is not sessions and mentorship, and the aim is interest startups to the accelerator. The access to all wholly-owned UMG and necessarily hard-baked into an accelerator to place UMG at the “B of the Bang” when accelerator then sees this recommendation Universal Publishing data and copyrights agreement, but there is some give-and-take something new emerges from startupland’s as a positive sign to invest money, which - was created after UMG saw a number of expected. For example, Capitol Records primordial soup. would be coupled with UMG’s support in the interesting startups wither on the vine when gBETA accelerator is free, but the label Thus, the Network gives Universal an form of feedback, label connections and its met with the complications of licensing “reserves a participation right to invest in envious “Tech A&R” scouting network, and participating startups’ next financing round.” gives the company early opportunities with One final important consideration about a glut of innovations in AI music composition UMG’s startup-investment strategy is this: like Spreadmix (APX, Berlin) and Cooljamm with parent company Vivendi preparing to (Berkeley), as well as in live gigs via Tremolo sell off up to 50% of Universal Music Group (MAP) and Gigz.fr (Paris); plus some quite if it finds the right buyers at the right price, specific marketing tools like Project 5 it would be understandable if UMG were to (Shanghai) and cross-platform playlist tighten its belt and watch the bottom line syncing tool Soundsgood (Belgium). hawkishly – which could have implications The Universal Accelerator Network’s for splashing cash on risky startups. depth of involvement with the accelerators in However, Universal’s overall strategy the network – the strength and arrangement appears appropriate for the times in which of this partnership – varies from location to the company finds itself: a multi-faceted location, but typically the investment from attempt to innovate and strengthen an UMG is a nurturing and enabling one, rather already strong position by applying the tried-

report than financial. and-true A&R techniques of the music world One accelerator in the Network explained in an industry that is now as much tech as it that UMG makes no financial investment is music. :) the 6

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investments in startups - from a business development perspective, what’s WMG’s In focus: Warner Music Group strategic approach, when balancing those three areas of development? Music Ally digs deeper into WMG’s strategy, talking to three of its key staff Oana Ruxandra: I’ve been incredibly impressed with the enormous amount of proactive work that the Innovation team within my team has accomplished over the last year. The team’s focus has been on understanding the burgeoning trends within music’s future. We are focused on what comes next after all-you-can-eat streaming models and we have some amazing partners with which we are innovating. We are also looking to invest in startups and the entrepreneurs that run them because they have the vision of the future; we are focused on deepening WMG’s roots in that community. Of course, the goal is to, ultimately, generate value for our artists and our songwriters, and to protect our IP. That is fundamentally what we, as a team, are drivine towards across everything that we do within the innovation space:: i.e. continuing to develop and drive new sources of value for the artists that we serve. I’m going to stay primarily quiet during s noted in our overview of the lights in biz-dev. All three were enthusiastic about what this discussion; my team has my full three majors’ strategies, WMG They were: Oana Ruxandra, fresh from they saw as WMG’s nuanced, inquisitive support and will lead from here. has a multi-faceted approach to her promotion to lead WMG’s business and “lean-in” approach to engaging with its engagement with music start- development whilst also serving as the notoriously unpredictable startup music:)ally: You’re dealing with a tech world Aups. To find out more about the specific executive VP of new business channels and world. where things happen very quickly. Are you strategic thinking behind WMG Boost, its chief acquisition officer; Jeff Bronikowski, looking more at long term view - the five to involvement in Techstars and to discuss SVP, global business development and music:)ally: Oana, congratulations on your 10 year period, rather than shorter term?

report some of the less obvious benefits of plug- head of new technology and innovation; new job - when it comes to investing in tech Jeff Bronikowski: I think we’re looking at ging into the startup ecosystem, Music and Alex Kamins, WMG’s VP, global digital music startups - WMG Boost, the TechStars both. TechStars Music and our Boost fund Ally spoke to a trio of WMG’s leading business development – innovation. involvement and other collaborations or are really oriented towards early-stage the 7

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seed investments and it’s not likely that Alex Kamins: I think our involvement with Bronikowski: I think throughout the they would have a material impact on our the startup community with programs like labels’ histories, they’ve tried over the business in the very short term. TechStars has been enormously beneficial last decade or so to establish tighter But certainly over the five-year time for the culture of Warner Music Group. relationships with bands through their horizon we would expect to reap some One of the main reasons we engaged email and CRM and through social benefits from an investment made at in TechStars music was because we media. But even through social media, that stage. Maybe not material revenue wanted to infuse the WMG culture with it’s not quite as direct as you might hope benefit, given the scale of our company the entrepreneurial startup mentality - so for. And with our distribution partners already, but certainly they could impact that we could better understand what’s being between us and fans, it certainly is the business in terms of the way we happening in the larger, broader digital rational for us to want to have that type of discover artists, or work with artists media ecosystem. relationship. and creator services, or enhance our Historically, legacy media companies Probably the second or third biggest ability to connect with fans, or generate follow the trends that consumers and tech category through our Boost applications is new revenue streams from new ways to companies start - and historically, legacy companies that want to help us foster that interact with our content. media companies have struggled to catch relationship with fans. And it’s certainly We really feel like we’ve benefited from up. Infusing our corporate culture with something that we’re very interested in the exposure to new business models, and that startup mentality has fundamentally doing. the new areas where entrepreneurs see changed the way we do business, the way opportunity in music. There are thousands we work with startups, and the types of music:)ally: The music tech space has of entrepreneurs out there who see deals we put in place. rapidly gone through a series of giant opportunities to make businesses, to work but fundamental leaps in the past: with artists and labels, or to work with music:)ally: The types of companies Jeff Bronikowski downloads, file-sharing, streaming services, others across the whole value chain that you’re involved with are multifaceted digital distribution, and so on. But the we’ve not [historically] entirely focused on and connected to the music business in it’s touring, or merch, or marketing music, collaborations and investments you are from our “Big Company, Big Artists” perch. different ways - is that because you see it exploiting music, consuming music, and doing are with a large number of smart-but- We’ve had over 200 applications to as much as a tech business as it is a music platforms like Spotify... there’s just a niche technologies. Are you looking for lots our Boost fund, and TechStars music business? lot of different handles to pick up in the of niche ways to make connections, and not generally gets about 500 applications Bronikowski: Yes it is. I spent a few years music business. And so we see that by the one big “unicorn” win? for each TechStars Music class. We’ve out of the music business, but what really breadth of companies that we interact with Bronikowski: I think we’re we’re looking really gotten to see a broad range of the brought me back to the music business - much more than you might see in the film at both. We do make acquisitions - in the companies that are exploring interesting was how intellectually stimulating it is - or TV business. case of EMP, that was a pretty significant opportunities. because there’s so much vibrancy and acquisition. But we think that relatively So we make seed investments... and entrepreneurialism. I thought back to my music:)ally: One key area seems to be smaller investments made early is a good we make larger acquisitions where we can time at Universal Music Group where we the direct-to-fan connection. Historically way to get an inside look at how things slot them into our business in the short- were approached by so many different the connection between artist and fan evolve. to-intermediate term. That’s acquisitions companies that wanted to work with us. has been through third parties, and a lot We don’t think that from a $250,000 like UpRoxx for creation of content and And I think it is because the music of your investments and collaborations investment per se we’re going to have video, or our acquisition of e-commerce business is such a hustle business. There’s could potentially open up a more direct immediate impact on our overall

report and merch company EMP and even an a number of different ways to interact with link. Would it be fair to say that one of the company. But what we learn from acquisition like Sodatone, which is used fans, or to interact with artists. There’s dream goals is for WMG to have a more working closely with that company on by our A&R team to discover artists. several different lines of business: whether direct connection with the fans? the inside over the next year or so could the 8

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help us shape our broader strategy going - and in most cases short term - licensing forward. frameworks. For startups that need So that’s why we appreciate the focus content, that’s absolutely game changing. on the breadth and approach with an open One of the key pillars of our approach mind: we’re not just looking at a handful to the startup community is our of round holes and looking for round pegs partnership with Techstars Music. We just to pound into them. We’re going to keep finished the third Techstars class, but we an open mind to see how our square pegs started talking about it four and a half Oana Ruxandra evolve into other shapes! years ago - so we’ve been an adamant supporter of the program. music:)ally: Is this process like the tech equivalent of A&R? You’re simultaneously music:)ally: Can you give an example of how embracing lots of start ups all over the that would work with a startup that comes world, seeking out potential, and then to you and says, “we’ve got this great idea working with them to develop it. It seems but we just can’t make it public because of like the music industry might be quite well licensing,” - how would you respond in that placed to use those A&R skills, albeit in a sense? tech environment. Bronikowski: Our team has an orientation Bronikowski: I would say it’s a bit like towards revenue generation. Our primary that. I mean, our A&R people try to sign focus is business development. And so artists they love - and we try to sign we’re constantly balancing companies entrepreneurs we love. We’re also trying to that come in the door and have revenue, invest in entrepreneurs in a way that fits scale and audience with companies that an overall strategy. So I would say there don’t have funding or audience but is are certainly some parallels. something we see and believe in. Ruxandra: We’re looking to be innovative, got to pay” - you’re actually working with One of the day-to-day challenges of our we’re looking to be nuanced, and we’re them to make that licensing work with your music:)ally: How does WMG work with job is balancing that mandate to generate looking to lean in: both for the benefit of business, and their business and users too. the start ups in a day to day sense once revenue with the 5-to-10-year vision of our artists and also, for the benefit of the Kamins: For a startup that is in the music- an investment or collaboration kicks off? seeding the next wave of music and tech community. related space, a music license is the Is the “investment” advice, finance, or music-related startups. We spend a lot Warner is definitely arms-open right ultimate startup capital. Cash is fungible, connectivity? of time with founders looking at revenue now in terms of trying to get people and in theory, there’s ample supply of Kamins: It’s a little bit of everything. We models and business plans, and make involved, interested, and working with it, but our content is a scarce resource mentor, we bring insights and expertise, sure we’re putting in place deals that are music to innovate. Our artists are looking and is a catalyst for a variety of startups, we help to make connections and sustainable. for innovation, the tech community is, and so we take that responsibility very, very introductions with folks in our network - A short term windfall of a couple we are as well. So that’s the big goal here: seriously. both inside and outside of Warner. Where of thousand dollars is not going to to be creative and nuanced and to not be We are incredibly passionate about appropriate we bring to bear the IP and meaningfully impact Warner Music tied to one mandate and one model. startups and entrepreneurs. We love assets that we, and only a handful of Group, but putting in place a flexible our jobs.

report others, have access to. This is really the enough license that creates a sustainable music:)ally: So it’s quite collaborative: you’re We have fun doing what we’re doing, benefit of being in this program: having business will mean there’s a long-term not just saying, “Here’s the initial license and meeting the next wave of innovators access to the sort of experimental, flexible partner for us. and when the initial license is up, you’ve and entrepreneurs is incredibly rewarding. the 9

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music:)ally: Over the last few years The blockchain is certainly a music:)ally: In conclusion, in the medium-to- mention it just yet, but it’s an area that there’s been a sort of virtual gold rush fundamental technology that is going to long term, when looking at the work WMG we’re pretty excited and intrigued by. in blockchain startups. And looking at be important across a number of different is doing, what would count as success, if this year’s wave of TechStars companies industries. One of the challenging things this series of programs goes the way you Kamins: To build on what Oana said, there’s definitely an absence of the word about blockchain and the music business hope they will? we’ve been very successful at building a “blockchain” - but it is still technology is not just tracking the data, but getting Ruxandra: I believe we’re already strong network across the VC community. that’s going to play a fundamental role in good data in the beginning. That’s been successful today in this program of I don’t think we are under any illusions the music business in the future. When you a bugaboo for the industry for a long innovation because we are definitively that while content deals and access look at a piece of technology with a lot of time, and I think easier tools for artists in the conversation, we’re rolling up to artists can be game-changing for hype around it, do you look at the longer and labels and services - whether built on our sleeves, we’re spending time and startups, they need capital to keep the term view of how it will fit into the bigger blockchain or not - will certainly help that. resources, and we’re working with an lights on. picture? Or do you want to get in quickly? enormous number of entrepreneurs to We can bring to bear assets that no music:)ally: With that in mind, Facebook educate them and, also, to learn from one else can, but we also realise that Alex Kamins has launched their cryptocurrency Libra them. So, I would count that as a success. outreach to the venture community - a and Spotify is already onboard with that. The next step is to define strategy and community which has historically shied It opens up a market to 1.7 billion people themes across the various buckets of away from music-related startups - is one without access to traditional banking - is tech innovation in which we are working. of the most important parts of our overall that something which is exciting for WMG, If we can align strategy in innovation with strategy. We have an incredibly strong in terms of direct payments, etc? our artists goals and values, that is an network from established firms to music- Bronikowski: Yes, I think it is. Anything accomplishment. But, today, WMG is part specific venture funds like (John Acquviva that increases the number of people who of the conversation and, we are ensuring and Richie Hawtin’s) Plus 8 Equities can pay for a service - especially a digital that music is a part of the conversation, (https://plus8equity.com). service - is a space that we’re pretty and that is a success. So the VC community outreach is interested in. a very important part of supporting I think Facebook’s blockchain effort Bronikowski: Another shorter term the ecosystem and making sure they is pretty much geared around giving success is that we see a lot of interest understand how we’re thinking about access to people without bank accounts and a lot of entrepreneurial energy going these spaces, and that they understand and giving them a way to transact on a towards a particular area, and it piques our level of commitment to innovation and platform. So for Spotify, that opens up our interest when we see that. [We then change. millions more paid users, and I think that’s know] that’s something we need to get great. closer to or make an investment in, and it Bronikowski: We feel like we have put Apple will probably be attempting to do becomes either part of our business or a a lot of time and effort into this space the same thing with its Apple Pay platform new revenue stream - or we make a larger but that it’s really paying off. We are Kamins: I think there’s an old saying in and I think that’s great too. acquisition in the space. seeing things earlier and from a different Venture: “being early is the same as being Whether [cryptocurrencies like Libra] If it were to play out that way, we would perspective than we might have done if we wrong!” But we don’t necessarily have end up being the way we pay artists or be very happy that we had taken this lean- weren’t so focused on leaning in. the same goals as a strictly financially- whether fans can use it to direct money to in approach, because it would give us an It’s too early to assess the financial motivated venture capital firm, so we’re artists, who knows - I think that’s a little bit edge on our competitors and continue to aspect but over the next few years

report OK to be a little bit early on things. if we further out. But when Facebook dives into position us at the forefront. hopefully there will a better-than-modest learn a lot from a modest investment then something like that, it’s something worth There is one sector where that is capital return… yet what we’ve already that’s probably a worthwhile thing. keeping a close eye on. happening for us right now - I can’t gained in knowledge is super-valuable. :) the 10

ISSUE 424 30.08.19 STARTUPS REPORT Music Ally’s startup picks of 2019 The most promising new firms we’ve written about for the first time this year Super Hi-Fi Jambl as well as industry bodies the RIAA and A slight cheat, as we ARIA among the partners for the project, Jambl is a music-creation spotted this startup in which already claims to catalogue more app offering drums, bass, September 2018. But it’s than 2.5m albums and singles; 1.9 million chords and melody, with this year when we’ve seen songwriters and 5m production credits. the app also capable of Troy Carter what it’s up to in music. The https://jaxsta.com shooting videos to go US firm wants to make music-streaming with those tunes. It was joint winner of sound more like radio, with an AI capable Voisey Midemlab’s music creation and education of dropping in idents, interview clips, category in June. news and sports stories and other content Voisey is a music-making https://www.jambl.app between songs. It has early deals with app that gets people to sing iHeartRadio and Peloton, plus a strategic or rap over pre-produced Wave partnership with Universal Music. beats, then create one- http://www.superhifi.com minute videos (including Wave has raised just Q&A split-screen duets) to share with friends. under $5.7m in seed Q&A is part distributor, part management Musiio It’s a cross between Smule’s Sing! funding to launch a service company, co-founded by Troy Carter. It’s Karaoke and TikTok, which soft-launched that includes an app to signing and developing artists, but with an Musiio has developed AI in Norway in December 2018, then in the stream music and guided ‘upstream’ deal with Atlantic Records for those technology that can scan UK in January 2019. Apple’s Platoon is a meditation, but also a physical element: who want a major-label deal as they grow. and tag catalogues of partner, with founder Denzyl Fiegelson an a vibrating pillow. Wave is commissioning music: capable of being investor in the company. original music for the app too, which will Legitary used by streaming services https://www.voisey.app use a $9.99 monthly subscription to make to power discovery, as well as labels trying its money. Legitary’s business is to sort out their metadata. Boomy https://wavemeditation.com making tools to help people http://www.musiio.com check the validity of the Boomy is a company Amazer royalties they are being Jaxsta working on AI music- paid from streaming. A creation technology. Amazer is a social-videos streaming-ready alternative to traditional Jaxsta is working on a “Generate beautiful, app focused on K-Pop, auditing. It uses machine-learning huge database of music creative songs in seconds which has been working technology to detect anomalies in credits – from artists with artificial intelligence - for your fans, with artists like Steve Aoki companies’ streaming royalties. It won the and songwriters to your friends, your business, or just for and Monsta X to get fans

report marketing and data/analytics category at producers and engineers. you.” It’s in private beta. uploading their dancing and lip-syncing Midemlab in June. It launched in public beta in June 2019, https://boomy.com videos. http://www.legitary.com with Universal Music and Warner Music https://amazerlab.com the 11

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Replica Tunefork Crush Oben Replica’s core technology Tunefork is “an audio Pitched as “the music app Oben is working on takes a few minutes of personalisation technology with a heartbeat” it blends a technology called speech, and creates a that allows the user to find Spotify with artists’ social- ‘PAI’ - Personal Artificial ‘replica’ voice for that his unique earprint, and media feeds – Instagram Intelligences, digital person which can then be adjust any audio content to stories for example. The avatars based on real written a script to say anything. Replica his needs” – mainly for deaf and hard-of- idea is to help people keep more up to people, with AI technology powering their is launching a product called ‘Studios’ hearing people. date with their fave artists’ socials, while interactions with humans. The idea being which will help people do this for their http://www.tunefork.co.il listening to their music. that celebs will be able to create their own own voices. Games are one use, and https://www.crush.fm PAIs to interact with fans in the future. It personalised radio and podcast ads Big Ear Games has created some for Chinese girl-band another. But musicians could also “licence HyperSpace SNH48 already. their own voices at scale — creating Big Ear Games is https://oben.me new revenue streams for themselves... developing a mobile music- An Austrian company because their voices can now scale like learning game to “help touting ‘blockchain- software”. music fans and especially enabled attention economy https://replicastudios.com music learners to explore solutions’. But for once, this how music works, and then make music”. one has an actual deal with Dadabots It combines music-based ‘puzzle sets’ with a major label. HyperSpace is working with a simple music composer. Universal Music Austria on a project called Dadabots is a team http://www.bigeargames.com Amplitude, which “is testing HyperSpace creating neural networks as a platform for artist promotion and capable of generating 24- Sensorium Corporation content publishing” – complete with its hour streams of original own AMP cryptocurrency. music, be it technical death Sensorium is a music’n’VR https://site.hyperspace.app metal or free jazz (their two high-profile company that has created projects in 2019). virtual recreations of Ochre https://dadabots.com venues like New York’s Barclays Center and clubs It began five years ago Mila Ushuaïa Ibiza and Hï Ibiza, where it has as a division of bleep. filmed shows by dance artists like David com, Warp’s cross-label Mila creates brain-training Guetta and Eric Prydz. It’s working with indie online store, but games with music playing another music-VR startup, Redpill VR, and now Ochre has launched a key role. It’s aimed mainly the pair raised $70m of funding in June in key markets in the US and Europe. It at children and teenagers this year. offers a range of flexible services such with learning disorders. http://sensoriumxr.com as fulfilment, store management and It was part of the Techstars Music logistics for D2C offerings.

report accelerator’s 2019 cohort. https://with-ochre.com http://mila-learn.com/en the 12

ISSUE 424 30.08.19 STARTUPS REPORT Startups have their say Entirely off the record, music/tech startups tell us what they like – and don’t like – about dealing with the music industry

he major labels are making large, with this turn of events, right? music:)ally a large Series A round. Some are among All independently highlighted what they clear, “open-arm” gestures towards spoke to a bunch of them - under conditions the darlings of their cutting-edge fields. A saw as the same problems - and there startups and music technology. of anonymity - to find out. few have taken part in major-label affiliated were a lot of them. Their innovation teams are very The startups we spoke to operate in accelerators. Some needed music licenses From these startups’ perspective publiclyT engaging in a kind of tech A&R and, different facets of music tech, at varying from majors to operate, and others didn’t. at least, labels - and their publishing as our interview with WMG’s team indicates, stages along the perilous path to success. All expressed exasperation, extreme divisions - have to make fundamental

report cutting-edge innovation is being discussed One quickly raised millions. One has made cynicism, and deep disappointment when changes if they really want to embrace at the highest levels. an early splash and is making tentative describing their experiences with major startup innovation. So music-tech startups must be happy steps towards funding. One is poised to raise labels. The main complaints from startups were: the 13

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l Majors are riddled with old- protecting their jobs.” fashioned thinking that doesn’t work in Feedback wasn’t entirely negative, and a startup’s world almost all praised - and expressed sympathy l Majors have a structural aversion to for - the people working in the majors’ taking the kind of risk that is needed innovation departments and tasked to liaise to bring reward from working with a with startups. startup However, praise for these individuals was l Majors’ and publishers’ current often tempered with frustration that this approach to licensing doesn’t merely support and enthusiasm could not be carried make it hard for startups, it kills them through to other people or departments that before they can even get off the could make meaningful action take place. ground Here’s the story of one founder who l Promising developments vanish into raised significant money for a successful deathly silence as soon as a startup is music-tech app: passed from Innovation departments “We launched our app without any to other departments or territories licensed music - and we got good feedback l A lack of understanding, at a Complaint 1: Majors are afraid of Majors suffer from what for our proprietary technology. There were corporate level, of a startup’s needs, risk and decision-making is timid I call ‘Innovation Theatre’. They similar, inferior products with licensed music time pressures and budgetary that were making money for publishers and want to be seen to have people on restraints. Every single founder we spoke to criticised we assumed it would be easy for us to speak l Majors are not structured to expedite the internal structure and decision- the cu"ing edge because it looks to publishers and find a similar deal. the kind of change that tech promises, making process of majors as being slow, good to the press “There was no ‘how-to’ guide to speaking and are not setup to synchronise with disorganised, timid and old-fashioned. to publishers: just finding out who to connect startups’ fast pace and comfort with They all thought that company-wide with, and how, must have taken about three failure changes are needed if they really want to up a good game and suffer from slowness - months! collaborate with startups. just like any major business. “Even then, our initial period was a waste: The majors have admitted that they have One founder, having built and launched But this founder - well versed in the we were given an appointment ten weeks previously dragged their heels when a novel music-tech product, described only “failure is good” startup mantra - expressed in the future, with the wrong people - the connecting with tech innovators and negative experiences with majors, and exasperation at what they saw as majors’, meeting was a huge waste of time. In the certainly appear to be putting a lot of time, was hugely cynical about their macro-level “timidity across the board. People are not end, it took over a year to get the attention of resources and smart people into making enthusiasm for embracing new technology. empowered to be innovative. They play it the relevant people.” amends. “Majors suffer from what I call ‘Innovation extremely safe. They don’t want to take risks Change is happening, albeit slowly. All the But is their newly-acquired appetite to Theatre’. They want to be seen to have at an individual level or company scale.” founders we spoke to identified individuals “move fast and break things” for real or is people on the cutting edge because it looks “We, for instance, built a use-case for who they believed were passionate about it just for show – especially now that their good to the press. And for employees, our tech which showed how it was low-risk music technology and were interested in time-tested reliance on licensing is raking in connecting with startups and talking up new for them and could only provide a stream of making true, game-changing innovation mountains of cash? ideas makes them look good to their boss. great, valuable data. But even then, nothing happen. What they need, our interviewees

report And why did every single startup But when it’s passed onto senior staff it goes happened. Even with no material risk to the said, is to be able to quickly move things bemoan the “structural failings” at major nowhere.” label, they still don’t take risks because they along without getting bogged down. Which labels? So far, so what, perhaps: major labels talk don’t want to be seen to have failed. They’re brings us to... the 14

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You can be in the crazy startups. I’ve almost run out of money and situation where a major wants scrambled for cash to survive so many times. to do business but their own We want to make money for them!” publishing department won’t – “You might make a deal with a publisher, but then, two years later, you’re half way because they worry that a license through that deal and you’re still negotiating might set a damaging precedent another deal with a major – with the same name as the publisher – for their licenses. So then you secure the label deal, but the and infuriating internal bickering. publisher deal expires – and then you need “You can be in the crazy situation where to renegotiate again. Why aren’t they talking a major wants to do business but their own to each other? It’s crazy!” publishing department won’t – because they “The standard timeframe is 18-24 months worry that a license might set a damaging to get deals done. I wish I’d known this at the precedent. Or you may end up with a major start and I would have raised more money to getting stuck in a disagreement deadlock survive.” with its own publishing department over the This death-before-birth scenarios is a terms of the contract.” very real one for any cash-strapped startup. Once an issue passes from the Empathy for the reality of startup life, one enthusiastic, fast-moving Innovation founder, explained, is needed: departments to the legal department, they “Startups need to move quickly and say, things grind to a snail’s pace - and even nimbly, but labels won’t offer quick licensing Complaint 2: Legal purgatory senior staff can’t move things along. Our solutions. I daren’t think of the number of their own publishing departments, in founder continues: brilliant tech solutions that have died in this and licensing lethargy a stalemate where neither party can “I would speak to Chief Innovation protracted process.” The startups that needed any form of agree, leaving startups - who have short Officers at majors - C-level people - about One other founder said that, to make a licensing agreement - that is to say, most of runways - withering on the vine. progress on a licensing deal, and it’s a truly innovative music-tech app, the license them - voiced the sort of frustrations which l Catch-22: They’re pessimistic - the ludicrous situation: they say, ‘I can’t get an needed is beyond the reach of mere mortals allow this writer to use all the key dystopian cash that tech has showered on the answer for you, my hands are tied.’ Because and scuppers ambition: literary analogies: majors may, ironically, make them more it doesn’t matter how excited they are about “If it’s an app, it’s available anywhere, so resistant to innovation, as they revert a startup, as soon as they hand proceedings we need worldwide rights; and for the app l Kafka-esque: They say that majors’ to their traditional approach of finding over to the legal department for licensing to work, users need access to any song they legal departments are slow, legacy- ways to wring money out of licensing. agreements, it’s like swimming through want - so we’d need the whole publishing thinking stumbling blocks: Innovation treacle.” catalogue, worldwide. The biggest, most Departments have good intentions One founder reserved special opprobrium The licensing conundrum dominated complicated license!” but their hands are tied as soon as a for majors when recalling the process conversation with all the startups we One founder suggested this solution startup needs to progress to a licensing of acquiring licensing agreements, spoke to. The frustration is palpable in this to the tortuous licensing problem: “The

report contract. describing their interactions with Majors founder’s explanation: majors won’t offer simple, flexible licenses to l Doublethink: They are confused by as a nightmarish, years-long “purgatory” “It takes so long - years - to do anything startups because they’re terrified of setting a major labels being at loggerheads with of endless delays, confused messages or to make a decision, and it kills so many precedent. the 15

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“But they could give innovation depressing rollercoaster ride. “I dream of a one-stop shop: one they don’t have to do anything or change. departments their own legal teams that “We had a great initial experience. The contact at a major or publisher. You have Everything is working for them. So they are could quickly offer limited-term, non- innovation department made it easy to to repeat the same process over and over not incentivised to innovate. It’s boring.” precedential test licenses to startups which collaborate, and gave access to the type of with different people. It’s such a waste One founder pointed the finger all the allow them to get on with creating new senior people who can make a difference. of resources. And there’s no reason for it way to the top: “I think that when [senior income streams for the major.” So we got excited... and then the shit began. because eventually they offer you a deal you label staff] talk up their ambitions for A string of founders we spoke to outlined We got passed to someone elsewhere in can’t change anyway!” true innovation - real change that sets exactly the same solution: labels need to the business, and because they were not Another founder puts the responsibility- new precedents - they’re merely paying be braver, and offer simple, quick, licensing in those exciting initial meetings, they just roundabout down to an indecisive approach lip service: they know that, in reality, solutions so that startups can get off the didn’t care. to ownership: majors don’t work in a way that allows this ground and start making money for the “So we got promises and enthusiasm “There is a ‘pass the baton’ mentality. innovation. They’re scared of risk.” rightsholders. and then they stopped answering our No team seems to know where innovation Another was scathing about majors’ lack emails - they’d moved on. By this point we should sit. You end up with a situation where of understanding of how startups work: Complaint 3: had put so much time and effort trying everyone agrees it is a good idea but no “Beyond the Innovation departments, majors to make things work for the major, and one is willing to be accountable for it, which don’t understand the pressures that startups Endemic structural failings and it was for nothing. And this was the best means it doesn’t happen.” work under. They don’t get the idea of long- communication breakdowns experience we had with the majors!” term monetisation. Projects that create big Another European founder was Complaint 4: Majors want innovation take time - but labels demand confounded by the “cognitive dissonance” of numbers, growth and revenue now. the success startups bring, majors’ internal practices: “I don’t think labels truly believe in tech “While we worked with some really good but they don’t want – or innovation and they don’t chase or adopt people, the whole experience of dealing understand – the risks changes. There’s a culture of fear: you fail, with the majors was tortuous. Simply put, you lose your job. So no-one takes risk.” there is no joined-up thinking for startups The common response to the suggestion And what is the experience of working in that require rights. We waded really quickly that major labels are keen on innovation one of the many major-backed accelerator into legal hell, where every single licensing was cynicism: they said that despite majors programmes like? One founder discovered eventuality was agonised over. having Innovation teams, their business that it was the key to making good, deep “And a startup’s Series A funding might model means that they cannot truly embrace connections to the people who can make a hinge on this licensing contract being in new tech meaningfully. Majors, they said, difference… and that’s when it went wrong: place. Startups don’t have the runway to are living in the past. “They gave us lots of support, wait. Old-style thinking in legal departments One founder put it this way: “They talk development and access to some really cool, Major labels can be huge, often unwieldy is stymieing the opportunities that their own about wanting to work with innovative helpful people. Our most important gain businesses, and this, our startup founders innovation departments create.” startups but their behaviour says otherwise. was that the programme had strong links to told us, means that unless you’re a big- Complaints about communication and Labels and publishers will ask for huge labels and publishers, which helped us get hitter like Spotify, your precious startup decision-making were almost always advances up front just for the licenses, for meetings to arrange licenses.” can quickly slip through the gaps into an blamed on this old-fashioned thinking instance - but how can a startup afford that? “But when we finally had the meetings, endless void. and pass-the-buck mentality. It’s an Another was more blunt: “Majors say the publishers wanted a huge share of

report One mid-stage startup founder, based in anathema, says one successful founder, they want innovation but they don’t want to the income from our app. Only a small one of Europe’s startup capitals, described to the fast decision-making culture of the change the structure of their businesses to percentage of our users were paying to use their relationship with one major as a tech world: help innovation. Streaming is growing so fast, licensed music, but the conditions of the the 16

ISSUE 424 30.08.19 STARTUPS REPORT Startups sometimes have unrealistic expectations of what it costs to do business with the music industry. You won’t believe how o#en I receive an email saying, ‘We think publishing deal meant we had to pay a huge you’re great and we really want to partner with you,’ and There are also other issues around labels slice of all of our income to the publisher - risking their most valuable assets - their IP - even if we sold merchandise with our app’s I know immediately that they don’t want to pay for my work in the wild. logo on, for instance.” “The major wants to protect their “Their argument for this was that the with major labels and publishers, they, the room with the person who can really relationship with the artist at all costs. Let’s licensed songs would bring users in - which understandably, were more even-handed, make the decision,” said our source. say a major allows all of their songs to go on is true to an extent. We suggested that they with criticism - and praise - for both sides. “Legal departments are not always a new platform on a test license. If an artist take a reduced initial percentage that would Our lawyer characterised some of adequately staffed at some majors: so then sees their song being used on a poor allow us to make a business that didn’t lose the startups’ complaints as (perhaps they prioritise jobs. A billion-dollar Spotify piece of tech and they think it looks bad for money - but we couldn’t even get them to understandable) inexperience on their deal will obviously take precedence. There them as an artist, they may be angry that the move by 1%.” part. And, just like the music business, the are loads of startups, and they may not label has allowed this to happen.” “They make it harder for smaller startup world has its fair share of overhyped be making any money. All the majors are Our lawyer saw a future where majors businesses than large businesses. The deal products and over-stuffed egos too: seeking to deal with startups, but they hear mutate as artists hold onto their rights would become more favourable to us as we “Some startups that raise a lot of money lots of flavours of the same ‘new’ idea.” - and suggested that startups should grew - but while we were small, they were have a terrible product and founders who “Startups that don’t need a licensing deal perhaps look to connect with them, and draining all our money - not allowing us to won’t listen. Majors are much maligned – probably don’t get priority because they not just the majors. grow! It’s so weird - it’s the wrong way around.” they’re not that bad. A lot of startups are don’t use licenses and majors make money “What will change is that there will be “They want innovation but the kind of quite naive about navigating the music from licenses. So they vanish in the system.” new types of labels. The artists and DSPs will licensing deals they offer kill innovation - industry and need a lot of education about Does our lawyer think that the universally- change things, not the major labels. The big why don’t they want to help new startups to who to speak to and what to do. They need a mooted idea of simpler short-term licensing question right now for labels is: what is your make them money?” good lawyer!” they said. to help startups off the ground is possible? rate of copyright acquisition? If that declines, Our startups’ warnings were clear: having “Startups sometimes have unrealistic Well, yes - and no. they’ll move away from a licensing business been presented with a glut of startups expectations of what it costs to do business “Majors could take less money, and to a services business. aiming to change the status quo to the with the music industry. You won’t believe license music with terms that are not so “It’s the artists who are starting to own benefit of the majors, the labels are blinking how often I receive an email saying, ‘We onerous to let startups live longer at the the rights: look at Chance the Rapper. I think at the crucial moment: erring on the side think you’re great and we really want to beginning… and different, innovative that startups and platforms that deal directly of caution, and funnelling startups into a partner with you,’ and I know immediately services could indeed be withering on the with DIY artists and help them with licensing licensing quagmire instead of taking risks to that they don’t want to pay for my work.” vine because of this approach,” they said. have a good future.” build a better ecosystem. And what of the startups’ universal “But majors have tried this to an extent complaints about licensing: the slowness with sandbox licenses, and often these don’t So what’s the solution? Counterpoint: startups can be of the process and the reticence to make work for anyone. The majors’ content is out a decision? there and they’re not getting paid - and they Infuriating slowness, shunning of naive and majors are simply “At the end of the day, the majors are may not even get good data in return. And if responsibility, maddening decision making… protecting their assets custodians of their artists’ IP and are out to the service goes badly, the major’s time has our startups’ complaints are reminiscent of make money for their artists. And licensing been wasted.” the annoyances musicians and artists have Are things really this bad? Blame can be is long-winded and labour-intensive in its “Even if the service goes well, the voiced about labels for decades. shared in both directions, as one prominent nature. A valid complaint from startups is startup then needs to transfer to a “grown- That said, if some startups are naive,

report music-industry lawyer pointed out in that labels can’t make a decision because up” license, and it might turn out that the unrealistic, and ego-driven, maybe the another interview with Music Ally. Having someone senior has their hands tied. The startup’s business model doesn’t work under majors are rolling their eyes in recognition in worked with startups seeking collaboration buck is passed but the startup can’t get in the terms of a real license.” the other direction too. the 17 Access at low cost would allow innovation, allowing startups to ISSUE 424 experiment more easily. But that won’t happen while licensing is the 30.08.19 STARTUPS REPORT starting point for all engagement. Majors don’t want to do this because it’s not in their DNA. They want innovation, but they have spent years It’s worth noting that Tuhin Roy, the working the other way – it’s like turning an oil tanker around One founder admitted that big picture executive who heads up UMG’s New ideas – the kind that startups love - are Digital Business and Innovation approach, One founder of difficult to make work; however, building said recently that he thinks that the a fully-launched tools that a label can use to get an edge over majors make, “collaborative contributions startup with a competitor could be a pragmatic solution. to the same goal of supporting [the] big ambitions “If a startup’s business model relies on entrepreneurial ecosystem.” is hopeful but being label-agnostic, then you’ll hit all the This “collective contribution” he’s pessimistic: roadblocks – the fear of collaboration or referring to is a reasonable claim in “Now that competition with the other majors halts the context of outreach: the majors are majors and progress. However, if a major thinks it scrambling to engage with startups publishers are can make your startup an internal tool, it via hackathons, collaborations with starting to come becomes much easier,” they said. accelerators, and mentorship. together under one Finally, one founder wryly saw abundant Back in 2016, former eMusic boss David roof, we’re seeing opportunity in these failings: “I love the Pakman – by then an investor – wrote a the first step to industry because there’s so much we can widely-shared blog post criticising what he effective change, change – it’s so bad! The industry has been saw as the recorded-music industry’s greed but much more is reluctant to embrace tech – it’s shocking. But when engaging with startups, claiming needed,” they said. I have seen a change: labels and publishers that “the high royalty rates imposed upon “I wonder what are becoming more open-minded and startups, even after clear signs over the Rob Stringer, working with new ideas to solve problems.” past 19 years that the strategy killed Lucian Grange Most other founders also acknowledged companies, has prevented a healthy and Stephen that things are getting better, and the ecosystem from emerging”. A founder who sought licences echoed Cooper would do if they knew how hard it changes they hope for might happen. And Three years on, the most commonly- Pakman’s thoughts, and warned of future really was to create an innovative startup in return, startups might need to accept that suggested changes from our startup problems for majors if they don’t change. in collaboration with a major? And do these the music business, despite its failings, is a founders build on Pakman’s concerns: “A startup needs two years to get going. CEOs really want to solve the problem?” complex licensing business, and that labels A much simpler, stripped back licensing deal One source with many years’ will always fight to protect their main asset. l Majors can’t have their cake and eat that helps the startup is needed. Support experience liaising between startups and Startups also admit that they could it: if they really want the positive effects them, and then renegotiate. We’re held rightsholders and who now works at a be better educated about how the music of startup tech, they need to accept that hostage,” they said. cutting-edge music tech startup, sees a business works at an early stage, and need DNA-level changes must happen. “This approach is going to come back long road to change: to accept the painful reality - for a while at l Majors need to stick their necks out, and bite them in the arse. They need an “Access at low cost would allow least - of working with huge, slow-moving and work faster, more decisively, more ecosystem of innovative businesses that innovation, allowing startups to experiment businesses. nimbly and embrace the risk that is work differently and they need to encourage more easily. But that won’t happen while Startups may always be the dog to inherent in the startup world. it. Everyone listens to music – they should be licensing is the starting point for all the majors’ cat, yet there are many ways l Majors and publishers need a realistic making much more money from their rights! engagement. Majors don’t want to do this the working relationship can continue approach to licensing: a faster, cheaper, This ecosystem could make it happen.” because it’s not in their DNA. They want to improve. But maybe the majors and

report simpler, and flexible approach in the It’s fair to say the seeds of change have innovation, but they have spent years publishers need to make the changes first, early years of a startup would allow been sown, and startups are starting to see working the other way – it’s like turning an oil while the going is good - or else face an innovation to flourish. green shoots: but how fast will they grow? tanker around,” they said. existential crisis in the future. :) the 18

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Music Ally picked 40 new music startups and services wants to run socially-infused to watch in 2012. How many of them are still around? sites for stars, starting in 2012 with one of the biggest: Lady Gaga.” by more than one thousand And now? Despite its apps. monster client and $18.9m of funding, by 2016 Backplane Audiogalaxy ran out of cash and sold off its assets. Its URL is now We said: “The former P2P home to a blog with articles villain returned this year as a about weight-loss pills and scan-and-match cloud music ‘male enhancement’. service with radio-style mixes. Most intriguingly, though, it Boxopus proceeded to get bought by with giants like Tencent Music’s WeSing cloud giant Dropbox.” We said: “Boxopus put the wind up karaoke app. And now? Dropbox shut rightsholders this year with its combination Audiogalaxy down in early of BitTorrent downloads and Dropbox cloud Chirpify Ad Hoc 2013, and never really made storage, although the latter swiftly pulled the big move into cloud media-streaming its API access over infringement fears.” We said: “Chirpify launched to help We said: “An umbrella music blog that rose that some predicted from this acquisition. And now? Boxopus is still going as a ‘fast artists sell direct to fans on Twitter: music, from the ashes of Pitchfork’s Altered Zones and easy online torrent downloader’, but merchandise, whatever. Helping Amanda website, raising $37k on Kickstarter and rightsholders’ wind is now resolutely Palmer sell a $20 t-shirt every 30 seconds promising to ‘value quality thought’ as it down. one night showed its potential.” looked for a new spin on MP3 blogs.” And now? Still going, but pivoted to an And now? AdHoc is still going as a Changba “engagement loyalty platform” used by website and print zine, as well as putting marketers to run their campaigns. on hundreds of concerts a year in the US. We said: “Launching in May, this Chinese karaoke app signed up millions Chromatik Audiobus of users quickly, and thoroughly below the radar of the Western music industry. We said: “Chromatik was one of a clutch We said: “A genuinely big deal for music- It was the work of Beijing-based startup of iPad apps looking to disrupt the sheet- making apps on Apple’s iOS devices, Zuitao.” music market in 2012. It helps musicians connecting them together like ‘virtual And now? Changba reached the upload, record, annotate and share music Backplane

report cables’ so people can squirt sounds milestone of 100 million registered users – and was even used by American Idol’s between different apps to work on.” We said: “Picking up community platform in October 2013, and remains active and house band.” And now? Also still going, and supported Ning’s ball and running with it, Backplane popular – some achievement in a market And now? Chomatik was acquired in 2017 the 19

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by online-education firm TakeLessons, Drip.fm which shut it down that July. Its website We said: “Originally launched by indie label now points amateur musicians towards Ghostly to run its own subscription service, TakeLessons’ tools for finding local 2012 saw Drip.fm used by Domino and instructors or online classes. Skrillex’s OWSLA label as a way to connect with keen superfans.” CueSongs And now? Drip announced plans to shut down; was saved by Kickstarter, which We said: “The latest startup with Peter relaunched it, before later shutting it Gabriel’s backing is CueSongs, a clever down again and planning a relaunch sync-licensing platform focused on online with events firm XOXO. In June this year, and digital media projects, complete with a XOXO canned the project: “Ultimately, we full set of publishing deals.” couldn’t find a way to make the business And now? CueSongs still exists, viable…” representing a library of music from more than 150 independent labels and Gabuduck publishers. Former employees have also started their own music-licensing startups: We said: “Children’s apps are going to be ClicknClear and Lickd were both founded big news in 2013, and Gabuduck looks by CueSongs alumni. well-positioned to capitalise with a musical

DJZ twist: it licenses songs for kids to remix in Gumroad We said: “This was its playful iOS apps.” We said: “Like Chirpify, Gumroad wants to Turntable.fm co-founder And now? The list of children’s-apps help artists sell stuff to their social network Seth Goldstein’s new startups that didn’t make it is a long one, followings. Armed with $7m of VC funding, thing: a portal focused and Gabuduck is on it, with its apps long it handled hosting, payment and delivery on electronic dance gone from Apple’s App Store. for creatives.” music (EDM) with And now? Still going, and claiming to a brash mixture of gTar have generated more than $208m of editorial, video, DJ earnings for creators of all kinds. mixes and a novelty We said: “Another Kickstarter fundee (to messaging app.” the tune of $353k) this is a fully digital Mixta.pe And now? By 2014, guitar with a slot for an iPhone running a Goldstein was trying companion app that teaches people to play We said: “This iPhone app helps people to relaunch DJZ as in an inventive way.” build and share playlists, the innovation a “bottom-up remix And now? The startup shut down and its being that it taps into either Spotify or community” with app was removed from stores, leaving Rdio’s catalogue to construct them. One

report its own app called buyers cross to complain online. It later of the first apps built using both services’ Crossfader. Neither returned as a company called Opho APIs.” made an impact. selling a modular piano-keyboard. And now? It was inventive, but didn’t the 20

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catch on: although it’s been followed by while former client NOW That’s What I Call information from more than 360m pre- And now? It didn’t take off: Piki was shut similar services like Soundsgood. Music runs its own app now. 2013 accounts were hacked, and news down in September 2013, as its team in 2019 that the site had lost ALL the focused on a relaunch of their previous MPme MyMusic music uploaded to MySpace before 2015? social-music site Turntable.fm. That didn’t *coughs* Let’s move on shall we? take off either. We said: “One of the stars of January’s We said: “MyMusic came on like a gamified Midemlab startups contest, this iPad music search engine, rewarding users with Pheed Pipe app wanted to reinvent traditional radio, points for browsing videos, gig listings and suggesting stations based on a user’s other content, and providing additional We said: “The idea of paying for an artist’s We said: “With a founding team drawn habits and personal music collection.” recommendations in return.” tweets sounds barmy, but Pheed was a from Gracenote and Songbeat, Pipe was a And now? Another dot.gone, although And now? Good domain name, but like separate social network with individual Facebook-fuelled filesharing startup with in 2019 streaming services are thinking pretty much every gamified-music startup subscriptions for livestream events as well music in its DNA. That said, making it easy again about how they can take on radio. we’ve ever written about, this didn’t catch as text and pics.” to send up-to 1GB files to friends spooked on. And now? The idea of paying for an some rightsholders.” MusicQubed artist’s tweets absolutely was barmy. And now? There was no need to be (New) Myspace spooked: Pipe wasn’t a stayer. We said: “The company formerly known Piki as ChartsNow.mobi bagged a significant We said: “With Justin Timberlake as a co- Ptch deal in July to preload the UK’s entire Top owner and a slinky new design, Myspace We said: “This was the other spin-off from 40 singles chart on Samsung smartphones, won over a number of sceptics when it Turntable.fm in 2012: a “hand-picked We said: “Incubated by Hollywood studio then update it every week.” returned in invite-only beta in November. radio” app built on friends’ individual song DreamWorks, this was a neat social And now? MusicQubed is also a goner: Its full launch comes early in 2013.” recommendations. Like This Is My Jam but video app, with licensed music providing a liquidator was appointed in June 2018, And now? Apart from reports that personal mobile, in other words.” soundtracks, and a post-launch deal with report the 21

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EDM star Kaskade to upload backstage but it did raise $3m of funding, then crazes (Draw Something, anybody?) this Sonic Notify footage.” rebranded in 2013 as Wahwah after one passed, and the SongPop 2 sequel We said: “This startup had clever And now? Ptch was nice, but by buying German startup Wahwah.fm. released in 2015 didn’t really reignite technology – the ability to deliver media to December 2013 it got the famous death- There’s no trace of either brand now. it. The game’s developer, FreshPlanet, smartphones and tablets through sound knell for startups: an acquisition by Yahoo carried on though, and in late 2018 was – $4.25m of VC funding and a deal with – which shut the app down at the start of Songkick Detour acquired by mobile games publisher guinea-pig Interscope to test its music 2014. Gameloft. marketing potential.” We said: “This skunkworks project from And now? Rebranded as Signal360, it’s Pulselocker Songkick has the makings of something Songza now focused on ‘beacons’ technology and bigger: a way for fans to band together and Bluetooth-based marketing. crowdfund gigs in their town by the bands We said: “Former music search-engine they love. Watch for it in 2013.” Songza pivoted this year to a music SoPost And now? Songkick the company shut discovery app based on mood and context, down in order to focus on its legal battle signing up millions of users in the process, We said: “SoPost was another social with Live Nation, which was ultimately and capitalising on Facebook’s Open commerce (SoCo?) startup working with settled for $110m. Songkick the app Graph.” music artists in 2012, associating social was sold to Warner Music Group. And handles with real-world Songkick Detour? It was already history, addresses to send products although a few startups have taken a from Noel Gallagher and crack at the ‘gig-crowdfunding’ idea since. PIAS, initially.” We said: “Pulselocker was a very- And now? Music isn’t its innovative streaming music service for DJs, SongPop focus now, but SoPost has launching with 1m tracks available to cache grown quietly and surely locally on Macs for use when playing sets. We said: “Social music game SongPop with its online product- It cost between $9.99 and $69.99 a month.” launched in July, and had been played sampling business: And now? Arguably ahead of its time, by 30m people by the end of September, Hearst Magazines was given that in 2019 dance store Beatport is with Carrie Underwood, Alanis Morissette one recent client, and in launching a subscription service for DJs. and Enrique Iglesias all testing its promo 2018 Deloitte said it was No surprise: Beatport bought Pulselocker’s potential.” the 13th fastest-growing assets in April 2018, a few months after And now? Like other social-gaming technology company in the company had shut down. the UK.

Senzari And now? Songza as a company isn’t Soundrop.fm around any more, but together with We said: “Personal radio service Senzari another startup, Tunigo, its idea of mood/ We said: “Soundrop essentially built rolled out globally, aiming to prove Pandora context playlists would become a key Turntable.fm on Spotify’s platform as both wrong and work within European licensing feature in the modern streaming era. a mobile app and Spotify app, enlisting structures. Spanish deals with MTV and Tunigo was bought by Spotify, and Songza several big artists to host rooms, then

report social network Tuenti showed its local by Google, where its co-founder Elias rolling out an API for labels to build apps, ambitions.” Roman remains at YouTube Music in a starting with David Guetta.” And now? It didn’t prove Pandora wrong, product role. And now? After a couple of pivots, the 22

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SoundDrop is now a music distributor, case, a fantasy stock exchange where you haven’t been answered. It’s another with an emphasis on making it easy to buy songs then see their value go up (or startup (more a collective, in truth) whose license cover songs – thus aiming for down) according to their popularity.” members have gone on to do interesting YouTube musicians in particular. And now? The app was bought by things in the industry: for example, streaming service Rdio in 2014, as product lead J Herskowitz now works on SpotOn Radio part of a drive to improve its music- product for Spotify, while core contributor discovery features. But Rdio itself shut Syd Lawrence later founded messaging- We said: “Another way to listen to Spotify down at the end of 2015. ‘Fantasy bots firm The Bot Platform. music in a non-Spotify app – this time music’ is an app genre that periodically it was Pandora being disrupted, with a reappears though: a startup called Laylo Tracks.by beautifully-designed personal radio iPhone was a winner at Midemlab 2018 with a app made in Sweden.” similar idea. We said: “One of many services And now? Within a couple of months This Is My Jam helping artists offer content to fans in of the press excitement around SpotOn The Promo Bay We said: “The antidote to the idea of return for email addresses and Likes, Radio, its co-founders Peter Blom and ‘frictionless’ music sharing, This Is My Jam but this one attracted the likes of Lil Kristoffer Sommestat were both working We said: “Controversial? Perhaps, but more asked people to recommend one song they Wayne, Drake, Pitbull and Diddy shortly for… Spotify! than 10k artists and creators signed up to loved at a time, making the social sharing after its launch.” try to get their work promoted on The Pirate process much more meaningful.” And now? We never heard of it again, but Swarm.fm Bay’s legal giveaways section, which has And now? This Is My Jam was great, content in return for email addresses is an now spun off as a separate site.” but it was never quite a business. One idea that lives on: its modern incarnation We said: “And another innovative startup And now? The Pirate Bay proved extremely founder, Matthew Ogle, went off to Spotify being the pre-save campaigns that labels standing on the shoulders of Spotify – this hard to kill for music rightsholders, but The to launch Discover Weekly and work run for rocket-charged the discovery and social Promo Bay is long forgotten. on other algorithmic recommendation, Spotify. features of the streaming service, and likely before moving to Instagram and now influenced Spotify’s recent revamp.” TheAudience privacy-friendly recommendations startup Vyclone And now? More proof that standing on Canopy. The other founder, Hannah Spotify’s shoulders isn’t the route to a We said: “Nothing to do with Sophie Donovan, has worked for Drip, Vine and We said: lasting business model. Founder Peter Ellis-Bextor’s old band: this was one of now heads the startup behind video- “Video app Watts later published an honest blog Sean Parker’s stealthy startups working editing app Trash. Vyclone post about what happened. “Ideas were with celebrities to manage their social takes plentiful, but at every turn we encountered networking activity – sometimes sidelining Toma.hk footage either technical hurdles, competitive risks labels or studios in the process.” shot by or user indifference… Most of the ideas And now? Acquired by United Arab We said: “Tomahawk has grand ambitions: different we had were better off as side projects or Emirates firm Al Ahli Holding Group in creating a translation layer across all people in built into an existing service like Spotify or 2015, TheAudience remains active and streaming services. Toma.hk was a good way one location and stitches them together Soundcloud.” buzzword-tastic. “We are the world’s first in: a way to share links to songs that would into multi-angle clips. Ed Sheeran was Cultural Media Company,” explains its work in a variety of services, not just one.” the first major artist to benefit from its website. “We harness deep cultural And now? Tomahawk posed some marketing potential.” TastemakerX

report insight & immersive storytelling that important questions about the And now? Vyclone was an excellent app, We said: “This is the latest service trying to make brands valuable to media-savvy interconnectedness (or not) of the but it just didn’t manage to catch on, and turn music discovery into a game – in this consumers.” streaming space, many of which still shut down in 2016. :) the 23

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and music creation and education the majors shows there is still work to (Voisey, Jambl, Mila, Big Ear Games) do to swerve some of the dysfunctional to the obligatory VR and blockchain pitfalls of the rightsholder/startup upstarts (Sensorium and HyperSpace, relationship. respectively). At conferences, music:)ally regularly These are ideas, if not always business hears senior executives warning the models (yet) worth getting excited about. industry not to be complacent about the And remember: our criteria for inclusion seemingly-sustainable bounceback of in the 2019 feature was that we’d written global recorded-music revenues over the about startups for the first time this year. past three years. That warning should also apply to the way the industry works with startups. Yes, let’s celebrate the proliferation of accelerators and incubators; the emergence of labels as fully-engaged investors in startups; and the general desire for young music/tech companies to bring their ideas to rightsholders early without expecting to be squeezed for advances ‘til their pips 2020 vision squeak then tossed aside. What have we learned about music/tech startups in But let’s not allow those 2019 that will serve our industry well for the future? In 2018, we gave first-time coverage to celebrations to distract from tackling the TikTok, Canopy, Triller, ClicknClear, Big problems that still remain, particularly esson one: let’s never again speak Now for the more serious lessons. The Neon, Endel, Super Hi-Fi, Blink Identity, when they revolve around tension of the moment when it seemed like music/tech startups sector in 2019 is Lirica, Amadeus Code, Endlesss, Mubert between labels and (even their own) a good idea for music:)ally to choose exciting, and partly because some of the and Weyo, for example. In 2017 Amuse, publishers; or between the biz-dev and Myspace as a promising startup of most promising young firms are very- Soundcharts, Jaak, Stationhead, Popgun, legal/licensing teams within those labels. L2012. We’re suitably penitent now. deliberately NOT capital-E ‘Exciting’. Lickd, The Bot Platform, Amper Music, Or, indeed, any knowledge gaps and/ From Legitary going into battle with TheWaveVR, Blokur, WARM and Gimme or naivety within startups around what’s fraudulent streams or lost royalties, Radio were on our radar, meanwhile. necessary to build partnerships with the to Musiio’s AI-powered catalogue Those all still feel like young startups, in music industry. scanning, to Jaxsta’s music-credits the scheme of things. Still, the overall picture is positive. database and beyond, there are plenty Our features on the major labels show Heaven knows what we’ll make of the of startups trying to tackle important that the biggest music companies really 20 startups we picked out from 2019 so B2B challenges. have been upping their efforts to engage far if we look back at this report in 2026. There are also some big, whizzy more constructively with these and other But their technology and ideas – and

report ideas out there, from AIs creating startups. That’s encouraging. the willingness to engage with them by music (Boomy, Dadabots, WaveAI) At the same time, our feature where rightsholders – will play their part in the to synthetic reality (Oben, Replica) startups say what they really think about next evolution of the music industry. :) the 24 Music Ally is a music business information and strategy company. We focus on the change taking place in the Music Ally is an ISSUE 424 industry and provide information and insight into every aspect of the business, consumer research analysing 30.08.19 example of perceptive the changing behaviour and trends in the industry, consultancy services to companies ranging from blue journalism at its chip retailers and telecoms companies to start-ups; and training around methods to digitally market your best, with unrivalled artists and maximise the effectiveness of digital campaigns. We also work with a number of high profile music Andrew Fisher, events around the world, from Bogota to Berlin and Brighton, bringing the industry together to have a good CEO, Shazam coverage of the commonsense debate and get some consensus on how to move forward. Entertainment digital music sector”

ANTHONY CHURCHMAN STUART DREDGE Contact: music:)ally Business development Editor at large Studio 11, Holborn Studios, 49-50 Eagle Wharf Rd, [email protected] [email protected] London N1 7ED Tel: +44 (0)20 7250 3637 b www.MusicAlly.com e [email protected] EAMONN FORDE ISABELLE LJUNGQVIST

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