It's no secret that it's tough to make money in the music business, especially if you're a start-up trying to get consumers to pay a subscription to your service. In recent years, only Pandora has emerged successful at generating significant sums of revenue across the services that provide music-discovery (a la radio stations) or on-demand music services. And, most of Pandora's revenue comes from advertising. Not subscription. Nor from reselling songs.
So, how does Turntable.fm, the newest music-discovery start-up, plan on sustaining its business? You can learn about that in the second part of my interview with Seth Goldstein, co-founder and Chairman of Turntable.fm.
Here are some highlights:
- Relationships with record labels are very important to Turntable. "There are ways to build a music service without a direct relationship with them... You can pay the statutory rates as a DMCA compliant service," said Goldstein. "[But] it doesn’t give you a ton of flexibility. You’re boxed into a certain model of passivity." For instance, without a relationship with record labels, Turntable.fm cannot play music for international customers. Earlier on, the company had to shut off access to consumers in Brazil and Japan. The other reason to work with the labels is to have a relationship with the artists and become a platform to promote their new songs or concert tours. To date, Turntable has no relationships. But they're working hard on getting them.
- Why would labels want to work with Turntable? Turntable has sold more than $100,000 of iTunes music since launching four months ago. People go to the site to discover songs. To that end, Turntable is an important player in the promotion of artists and songs.
- Goldstein doesn't believe that selling music will be the predominant revenue driver since affiliate fees are so small. But he does think that there could be a way to sell virtual goods, such as upgraded, blinged-out avatars. Additionally, the company plans on focusing on helping to create marketing campaigns for artists to get exposure and create fans on Turntable.
Watch the interview to hear how artists are now leveraging Turntable.fm as well other ways the company is thinking of monetizing its service.
(Note: Be sure to watch Billy Chasen, the other co-founder of Turntable.fm, at this week's Venture Shift NY event on November 17. Get your tickets when registering here.)