Sorry to hear the news. I interviewed with Earbits at one point and they seemed like really good guys. If I may offer some gentle post-mortem constructive criticism:
Earbits seemed very focused on their value proposition to musicians. Their goal seemed to be "the Google AdWords of Music", but here's the thing: if you want to become the Google AdWords of music, you first have to become the Google of Music. The value proposition to the listeners is key.
To their credit, Earbits did have a value proposition for listeners: music discovery. But this meant their competition was Pandora, music blogs, Pitchfork.com, word of mouth, and all the other ways we find music in the 21st century. Another commenter here says "music is a tough nut to crack," but the real issue here is that music discovery is a tough nut to crack.
You could counter that Earbits differentiated itself by focusing on independent, unsigned artists; that's a noble mission, but if you're going to commit to that as your value proposition, you have to ask yourself if there's a market for it. Is finding unsigned artists really a pain point for most music listeners? I'm not convinced.
Anyway, sorry it didn't work out. Wish you guys the best of luck in your future endeavors.
You're spot on. Unfortunately, our approach was a double edged sword. No company who licenses a big catalog of music first ever survives to tell the tale. But building a two sided marketplace meant splitting half of our already thin resources in half, switching back and forth between pleasing listeners and pleasing bands, and we just weren't able to build the consumer experience necessary. In retrospect, had we focused on mobile first, built mostly listener features until that product was great, then focus on the artists, we may have had a better shot. The problem with that is, had we not built enough stuff to wow the bands and labels, we would have never gotten the kind of artists we did. We had to prove two different concepts on 1/100th the budget of our competitors, who only serve one side of the market.
Music is a tough nut to crack. The industry players feel burned by every technological innovation, from the CD to Napster. The status quo rejects technology because it undermines business models and threatens to put new people in charge.
It helps to be Dr. Dre when starting up and trying to break into such a mess. Or you can sell a big chunk to the labels (Spotify) so they can feel comfortable that the latest disruption won't be the end of selling musical bytes.
Not knowing anything about the industry, why do we still need music labels in 2014? My understanding was that before digital, their primary role was to provide distribution. The artists could not afford things like burning and shipping CD's, etc. However, no anyone can set up a distribution channel on the web for extremely cheap (probably cheaper than the equipment the music is recorded on).
I suppose promotion is a part of it, but where is the meritocracy? Should we all be just listening to "good music" and the artists get rewarded directly?
Well, if meritocracy is the ideal, then sure, it's nowhere to be found. However, imagine if you put together a kick ass SaaS product that is super useful to thousands of companies small and large. Then suddenly you can't just put it out in the wild and see how it does. First, some executive somewhere has to look at it, use it for 10 minutes, then either approve or disapprove of it. And if the exec disapproves, you have no choice but to start building something brand new. Doesn't that sound like bullshit?
You can be meritocratic about music, the same way you can be meritocratic about things like web browsers, or cars, or fine art. You know quality stuff when you see it. You do still need an efficient way to discover good stuff, but that's where services like Spotify, iTunes, etc. can really shine. Why do we need a label as a middleman between the artist and iTunes? What value will the label bring vs just throwing all music at iTunes and seeing what sticks? What kind of a refined musical appreciation talent do the label execs have that they can decide what I should or should not hear?
The truth is that labels aren't needed if you are a savvy business person as well as a musician, but most musicians are not. They need help understanding how to advertise, where to do so, and they need leverage in order to get better deals. More importantly, whether they need these things is secondary to the fact that most of them don't want to do these things themselves and it would be a massive distraction from the main goal of making awesome music.
Interesting. My understanding was that Maclemore et al actually challenged this model by hiring parts of a label to do the parts they themselves could not do and in that they ended up retaining more ownership. The analogy would be that they got (paid) advisors instead of taking on VC money.
The way you put it does make more sense: marketing, distribution, finding gigs is not what musicians do best, so they outsource that job and pay for it with "equity"/creative control.
My understanding was that Maclemore et al actually challenged this model by hiring parts of a label to do the parts they themselves could not do and in that they ended up retaining more ownership.
...which makes it sound like they have a lot of business sense. Many don't.
> What kind of a refined musical appreciation talent do the label execs have that they can decide what I should or should not hear?
I think you misunderstand music as an industry, and you definitely stopped reading after the GP's first sentence. Label execs have very refined taste -- for one, specific thing: finding "artists" that have broad appeal to a target demographic. And even that's a Silicon Valley-esque "lost money on 99, made money one 1" kind of situation.
Music needs labels for the same reason startups need VC: they have resources, connections, and expertise not often found within (bands|founders). Yes, it is possible to bootstrap in both situations, and yes there are companies trying to disrupt that model in both spaces. But it's not the status quo.
Heh, you are absolutely correct. I know nothing of the music industry beyond some very basic knowledge. That's why I'm asking these questions.
So you are saying that if I'm a kick ass singer, and have recorded a few original songs that I put on, let's say, YouTube, then to move on up I need to do a whole lot of marketing and hustling to get the right people to listen to me? Moreover, are you saying that it's a whole lot easier to have someone with all those connections to do it for me? And the way this someone gets paid is by taking a percentage of anything I create? I suppose that makes more sense than the view I had of things and explains why even today we still have music labels.
"then to move on up I need to do a whole lot of marketing and hustling to get the right people to listen to me? Moreover, are you saying that it's a whole lot easier to have someone with all those connections to do it for me? "
I suspect that's largely true. Even for the people who could do it, the more they do that, the less time they have for actually working on their product/craft/music/act.
It is true. As much as any other industry, the music industry is entirely about connections and who you know. This is an interesting article about the biggest new pop music station in the UK, and how they go about dealing with playlisting (effectively choosing who gets to 'make it')[0].
Especially at large UK festivals like Glastonbury with a broad appeal, it's the acts that are playlisted on BBC that will be playing the festivals. It's not just that that's where the audience is, but it's the echo chamber effect caused by the fact that that's where the industry's ears are, from the pluggers, to the PR men to the festival organisers.
The funny thing is that in my experience this pattern even holds true for niche scenes like math/post rock or metal, just with a different centralized power broker (be it a label, radio station, magazine or booker).
Like tech startups that are beholden to the VCs because they're capital starved at an early stage, the speculative nature of music (I think) is why power tends to accumulate in the places where influence and capital lie.
Distribution is a solved problem, however the promotion side can't be glossed over. Sure I can self distribute a track, but it does no good if no one ever hears it and wants to buy it.
I listen to jazz on Earbits for a bit 4-5 times per week. Really enjoyed it, but it seemed there were limits to what I could discover but was fine cycling through a lot of the same stuff.
None of the social features or other genres really enticed me so I was doubtful the model would scale. For example, I listen to a lot of electronic music and there's no reason why I would go to Earbits over SoundCloud, YouTube, TheFuture.fm, or other sites. Unfortunately since it was so listener-centric without enticing social or discovery features, I didn't see how it could be a differentiator (other than some quality music from artists you've never heard of).
Indeed, Jonathan. Our big problem was needing to satisfy two sides of a marketplace with half the resources of most startups. I mean, we certainly had other issues, but it was definitely this lack of expected features (due to low tech resources) that made it hard to compete with larger services.
As the former builder of a music start-up that failed I am really sorry to see them go. If you are going to go down this route make sure that you watch http://www.justin.tv/startupschool/b/272178844 Dalton Caldwell's excellent speech on the subject.
I'm sad to see earbits go. It was a great idea and a great service.
Joey, we traded a few technical emails around when you started, and I
wish you, Yottam and the others the best in your next endeavor. Also,
thanks for regularly being the "voice of reason" on HN in regards to
questions about the music industry.
I'm still curious about one thing; two-sided market? Are you using this
phrase as the simple way to say it, or do you really think it's a two
sided market. I've always seen it as a multi-sided market.
When I think about all the specialized skills (and equipment) that goes
into music, both recorded and live performances, it always seems to have
a mind boggling number of sides. Worse yet, the various sides tend to be
in competition (labels versus artists, consumers versus distributors,
sound and instrument equipment manufacturers versus ...). Though some
truces and alliances exist, each of the many sides is vying against the
others to get paid.
I recall reading one of your very early blog posts where you mentioned
the vast amount of effort you put into advertising and marketing your
own band, and this gave you the idea for earbits. Essentially, the
marketing and advertising you did for your own band was in competition
with the similar efforts of labels/promoters for other bands.
Am I wrong in thinking of music as a highly complex, intertwined,
multi-sided market?
Nah, you're absolutely correct. And in fact, it's crazy because one single song can have 3 writers, 8 performers, a record label, 2 publishers and two different performance rights organizations all with a stake in that track. But, we paid standard rates to publishers and only needed to convince the owners of the master recording to license the music to us, which is usually a label or band. Then we had listeners. We were mostly just trying to please those two groups, but that's because we paid the publishers outright.
Really liked the service and even found a few artist I happened to like very much.
If Joey is reading, I was waiting for the day I could buy Groovies. We shared a few emails regarding some things about the site but I never wrote to you about this.
Wish you guys all the best in your future endeavors.
"our concept does work...but...we simply needed a lot more capital"
This sounds like the old dot-com boom excuses of the early 00's. Popular service or not, if after almost 5 years you're still relying heavily on recurring investor capital for day-to-day operations and not bringing in sufficient revenue to at least cover basic expenses, unless it's high-tech biomed or pharma, it typically isn't a viable business model for a startup. Maybe this would have worked out for them 10 or so years ago, but not so much any more.
You're right, which is why Pandora has been relying on investor capital for over a decade, and Spotify is right behind them. They haven't had a profitable year yet and they don't have a viable model.
Our business model, on the other hand, would be highly profitable at anything over about $1M in annual revenue, up to $100M, without playing any commercials. The problem was not our business model, as it is for most companies in our space. It was our inability to scale the audience to the point of sustaining $1M in annual airtime sales because the product wasn't yet sticky enough. That was a factor of being underfunded and trying to do too many things at once.
The capital thing wasn't an excuse. We tried to start a far more difficult business than (also failing) companies in the space, with a fraction of their capital. If we had an engineering team of 10 people and a ton of money to acquire content, there is no question we could have built a stickier service, and the unit economics were already great.
I would actually put music in a similar class to biomed/ pharma. I think music is probably worse though, even with another 5 to 10 years to capital it is entirely possible that it could still be to early and fail.
Music services right now don't make good returns and at the same time short change artists. The issue is that in general people just won't pay the same amount for music as they used to. While we have that and entrenched labels it is going to be very hard. Over time hopefully the labels influence is broken down an we end up with something more sustainable.
I agree. That was my point that music is too entrenched of an industry for a startup to change it overnight. They took on more than they could handle which is a flawed business model, yet they still call it validated and proven in their parting blog post. This is not exactly accurate seeing as they are shutting down - it's like calling a rocket that blew up a few seconds after launch a "proven, viable" design.
At least biomed and pharma startups have arguably the potential for a beneficial impact on society at large to justify the long-term capital infusions, whereas a service like this is more of a convenience or recreational product at best.
After this sad announcement, I've revisited Earbits. I love the listening experience as I did before.
Sure some technical details where a show stopper for me, i.e. no email account, gamification/social currency had no effect on me and the lack of a proper mobile app.
But I overcame those obstacles: I’ve created a Facebook account for Earbits and I was automatically recording the playlists during the day so I could listen to them during my commute.
I think that the loneliness was far more important.
I never met or connected with other users that were listening Earbits too (I’m in London, UK).
Maybe the traditional listening radio experience was missing; with a DJ, a voice, a brand (Earbits) we can stick on.
It’s one thing asking people to connect with an artist, but clearly it’s another to create an Earbits community.
That said I’ve discovered :
- extraordinary artists
It’s one thing to help listeners to discover new artists, it’s another to help them to discover good new artists! To me that’s the curation miracle :-)
- extraordinary founders
I’ve been inspired by your journey like no other. I really wish you the best for the aftermath of 16 June. :-)
What a thoughtful comment, poub. Indeed, we wanted to get to having user profiles, playlists and other ways to interact with the community. That was the problem. We knew what we needed to build for our experience to be more sticky, we just didn't have the resources to do enough of it fast enough. The good news is, whatever we decide to do next can only be about 10x easier than what we just attempted. ;)
One thing that was special about Earbits was the quality control. My band submitted our music to Earbits and was rejected, but I have aspired since then to record something objectively good enough they would have to accept it :) I'm sad that that chance will never come now. What other music sites do quality control with humans screening the music? Does Pandora count? Magnatune also comes to mind, but they're a label, however unconventional.
Thanks for saying that, skyfaller. My co-founder was incredibly focused on curation at a high level. We often got notes from bands who were turned away that, upon listening, I thought...I would listen to this! So we tried to be flexible but we had to make sure people knew Earbits was a place of quality. Anyway, you have an incredible attitude about it. I'm glad you're able to take that feedback and do something positive with it. That is the sign of a great artist in the making.
I remember contacting Joey in the early days via Quora. And although I was also doing a music statup, he was nothing but really helpful. Sorry it did not turn out too good.
I still believe that music can be cracked i.e made profitable, in other non US markets (like Africa - South Africa) where almost 100% of the artistes are indie and you do not need to deal with strong and evil supplier power.
Best of luck homie and I look forward to seeing what you are up to next.
I really liked the concept, but I could never get past the "you must use Facebook to sign in" part. Listening without signing in was easy enough, but there were several artists/songs I would've liked to have saved for later, but was turned off when I found that an account required Facebook.
Earbits was always an interesting company. The central idea seemed to be "pay to promote", which initially sounded like a crazy idea to me. In hindsight, it was a good idea, as virool, another YC startup, is doing very well with that model for videos (including a huge number of music videos).
Anyone knows what's going on at thesixtyone? The site seems to be up and running (including pre-redesign version at old.thesixtyone.com), but I wonder how healthy is their ecosystem.
I wonder if there're any other similar projects that are still active.
Thanks, Neduma. Indeed, it's crowded, but that's not the reason these services don't succeed. Pandora, Spotify, Rdio, etc, all have plenty of users. They just don't have a sustainable model or approach.
Really sorry to see the flag go down. Joey, Ben, and Yottam are great guys. I've got nothing but respect for how long they kept fighting to make it happen. Music is a tough space and they were brave to enter that arena.
I don't doubt you guys will. If you stick together through the wrapping up and put half as much energy into a market that is more new-entrant friendly you will go places. Best of luck and really really sorry to see you guys throw in the towel.
How many tracks are there and is there a chance to release them to the public for free before shutting down? Would be sad to see indie music get lost in the storm. :(
Thanks, Dueprocess. We most certainly did, which is abundantly clear by the massive number of emails in my inbox from our artists right now. Heart wrenching.
Earbits seemed very focused on their value proposition to musicians. Their goal seemed to be "the Google AdWords of Music", but here's the thing: if you want to become the Google AdWords of music, you first have to become the Google of Music. The value proposition to the listeners is key.
To their credit, Earbits did have a value proposition for listeners: music discovery. But this meant their competition was Pandora, music blogs, Pitchfork.com, word of mouth, and all the other ways we find music in the 21st century. Another commenter here says "music is a tough nut to crack," but the real issue here is that music discovery is a tough nut to crack.
You could counter that Earbits differentiated itself by focusing on independent, unsigned artists; that's a noble mission, but if you're going to commit to that as your value proposition, you have to ask yourself if there's a market for it. Is finding unsigned artists really a pain point for most music listeners? I'm not convinced.
Anyway, sorry it didn't work out. Wish you guys the best of luck in your future endeavors.