Thursday, May 17, 2007

Music Mashups as a Business

I love music 2.0 mashups... I've written about a bunch. Most started with someone just pulling together a couple of sources of information to solve a specific personal need. The next logical step? Turn it into a business.

I've been lucky enough to see a handful of new ones that have yet to launch (and some that have). Some are move evolved than others... but the basic concept is the same. Build a music destination without actually having any content themselves. YouTube, Flickr, these companies get the users to provide the content (and/or usage data). Then these tertiary aggregators suck in all the content via open APIs, stitch them together, scatter some ads around the dynamically created pages, and voila... instant business. Most of the companies that are doing this now are small startups. Some haven't even launched, but are in acquisition talks with major media companies.

What a great business model. The fact that they are leveraging freely available/syndicatable content to fulfill an music consumption experience is smart. No licensing costs to them - no legal liability for the "gray" content that they surface. Of course, the labels are going to figure this out and start to try and figure out how to get a piece of the action.


Unknown said...

I like music mashups too, but there are 3 problems trying to make money from them.

- terms of service - most web services providers state that only non-commercial use of the web service is allowed. As soon as you scatter around those ads, you are at risk of having your access to a web service cut off.

- performance - most web service providers limit the frequency of calls that you can make. Amazon and both indicate that you should call their services no more frequently than one per second. This leaves you with a site that won't scale. You'll have to serve up stale, cached data, or you will have very slow updates or you will have to violate the TOS and risk getting shutdown.

- reliability - web services are provided without any warranty as to their reliability. With a mashup built on top of multiple webservices, the chances that at any one time, one of the services will be offline.

I've seen lots of music 2.0 mashups, but I haven't seen anyone make money from them.

jherskowitz said...

Great point on the terms of service. That then leads these guys down a path were they strike commerical agreements with each of the "sources" that gives them guaranteed quality of service and professional grade webservices. I'm assuming that, YouTube and others would gladly trade that for a percentage of ad revenue on the mashup site. That doesn't enable these tertiary aggregators to make "money for nothing" anymore but still provides them no risk and only upside.