Music Startups without the Music

Sarah Lacy of BusinessWeek laments in the context of the Grokster vs. MGM case, “It takes guts to be a startup in the music sharing business these days… there are also a lot of pitfalls.” Indeed, the legal copyright risks involved with the peer-to-peer file-sharing leave startups with a potential minefield to navigate. Even as Mercora approaches addressing these issues from a “radio” solution and others are planning to leverage Snocap’s technology in their “safer” peer-to-peer offering, the difficulty in playing in this arena is apparent. Yet as the music industry continues to move towards full digital distribution, I believe that there are other areas where startups can capitalize on opportunities in the music space:

Recommendation & Discovery – How do music listeners find and discover new music? Startups like Musicmobs, Audioscrobbler, Savage Beast, and many others offer consumers music recommendations (direct and via distribution channels). Some services plug directly into iTunes to gather listening history & preferences, and others gather data in other ways. Some engines base recommendations on what other users with similar habits listen to, and others try to directly discern qualities inherent in the music itself. All in essence are taking a step towards what I’ve called predictive personalized media.

Piracy Interdiction & Enforcement – Instead of facilitating the piracy of music, MediaSentry (recently acquired by SafeNet) and BayTSP operate on the other side of the coin. In addition to monitoring P2P networks for copyright infringement, these firms help their clients in the interdiction and enforcement of infringers.

Band Promotion – A company called Sonicbids offers independent artists electronic press kits. Bands and solo artists use this product to promote themselves to local venues and music festivals.

Local Show Calendars – While not directly focused on the music space specifically, vertical search engines like EVDB log and facilitate discovery of local music events.

Band Community – The social aspect of music is a compelling one, and while MySpace has a strong offering community features around bands and other music artists, there is probably room for additional innovation here.

Plus, of course, there also DRM offerings and other software infrastructure pieces as well. Certainly the above list is not exhaustive, but is rather a reflection of the possibilities available for music-related start-ups other than delivering and/or distributing the music. The point I am trying to make is that as music continues to transition to pure electronic distribution, new business models and alternative revenue streams will emerge. And there are opportunities for start-ups to capitalize on this trend outside of merely offering the music itself. As an avid music listener, I am personally excited about the technologies and services that help me find, share, and experience music.

David Beisel

David Beisel is a co-founder and Partner at NextView Ventures. He has been focused on early stage Internet startups his entire career, both as an entrepreneur and venture capitalist. As an investor in the digital media space, David was most recently a Vice President at Venrock and previously a Principal at Masthead Venture Partners. Prior to becoming a venture capitalist, David co-founded Sombasa Media, an e-mail marketing company best known for its flagship product BargainDog. Sombasa was successfully acquired by About.com where David served as Vice President of Marketing. David holds an MBA from the Stanford Graduate School of Business and an AB in Economics, magna cum laude and Phi Beta Kappa, from Duke University. He also founded and leads the Boston Innovators Group, an organization which holds quarterly entrepreneur events drawing a thousand attendees.

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