Lessons Learned by Streaming Startups

Startup.com

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I read two “lessons learned” articles last week about founders of Internet radio platforms. One was a story of success, with tips on starting a digital business from Tim Westergren, the founder of Pandora. The other is the perspective of failed streaming audio startup Imeem‘s founder Dalton Caldwell.

Westergren’s advice struck me as much like the man – he recommends inspiring co-workers, believing in your ideas, seizing the moment by being flexible enough to adapt to big new trends (as Pandora did with smartphones, apps and mobile), but wise enough to manage innovative new ideas so that the pace is reasonable. In terms of investment, raise funds early and often – well before you think you should, he recommends.

Caldwell’s tone is noticeably more negative – not surprising given the end of his startup story with Imeem. Imeem was sold to MySpace last year for what was rumored to be a very small amount of money, and then shut down. Music licensing is the big problem – “he said record industry executives aren’t trying to be jerks. Instead, they’re in a tough situation because their revenue is shrinking rapidly”. Caldwell actually thinks the Pandora model stands the best chance for success against the high royalty rates, but only for a large player – he’s not sure there’s a place for a small startup anymore.

So, wisdom aside, I’m marveling at the fact that the industry has matured so that we actually have entrepreneurs with track records to offer historical perspectives on business models and industry trends. It’s way to early to say there’s no room for little guys – we’re still waiting for the next online streaming service to mount a serious challenge to Pandora. But in the meantime, there’s good stuff to go to school on in these two examples…

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One response

  1. Sounds somewhat like the hype surrounding the two satellite radio services back in the late 90s. We wondered which one would survive until they were merged (by force of investors) into one. Now we wonder if one can survive. Hot, new concepts look their best great just after there is a death in the ring. “Now the other, stronger player will survive and we will just see who can rise to challenge them.”

    Or, like satellite radio, maybe no one will rise. Maybe there is no business plan that works. Just because more than one player jumped in doesn’t mean there is a business there. Time will tell.

    5 years from now we could all be holding the music we need in the palm of our hand and streaming it from a cloud in the sky that is owned and operated, as a co-operative, by and of all music sources. And we won’t need a middleman like Pandora to take their cut.

    Tim Westergen is, like the satellite radio guys, puffing more hot air than one man should be allowed to blow. And why not? Like the sat radio guys before him, he needs to stroke the investment community with tales of how hip and forward thinking they all are for seeing the future! Again, it’s a replay of satellite radio in which MANY, MANY investors lost their asses and never made a cent. Investors: watch your wallets. And be caeful not to let your rockstar sized egos get the better or you.

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