What music startup founders often get wrong

Doing a consumer facing music startup is hard. Especially if you don’t understand what gives music value.

One of the hardest aspects of building music startups is the fact that you’re dealing with a two-sided marketplace scenario. This means you have to build up one side of your marketplace in order to attract the other. It requires creativity, or a lot of funding, in order to build up the music side of your marketplace in order to attract the consumers.

This two-sided marketplace makes decision making more challenging: when to focus on what? How do you convince artists to use yet another platform, before it can really show its value through a well-populated marketplace?

But that’s not the number one thing people get wrong.

The number 1 thing music startup founders get wrong is overvaluing their content

This is the most important lesson I’ve learned while working on 3 different music streaming startups and a bunch of other non-streaming music startups. Music in itself has little value to a user (bear with me). Your value proposition needs to be better than: “come here, there’s music” and often times music startups don’t have anything better than that.

People don’t care about the music. They don’t have a problem listening to music. And if they do, they’re likely not aware of it.

Ironically, when doing consumer-facing music startups the music is an extra. It’s assumed it’s there. Not having good music on your service will kill you, but having it does not distinguish you. It’s the same with restaurants: we don’t visit a restaurant because they have the best food necessarily, but because it’s around the corner, they have something we feel like, the staff is nice, etc. Music, on a music service, is like the basic expectations of what we expect in a restaurant: food, drinks, a place to sit, and a toilet. Not having music, like not having toilets, will kill you, but it’s not the reason why people visit you.

This is why so many music discovery apps fail, why so many social jukebox or recommendation apps fail: people don’t need more content. Music’s availability is not where the problem is, the context is where the problem is.

Building music startups is about the functionality you add. That’s what people pay for, that’s how people stick to your platform. Not the ideals of better-paid artists, not ‘high quality streaming’ – these are basic expectations by now. People need to find a very simple answer to the question: what can they do with your service that they can’t do elsewhere?

Then the next question is whether it’s distinctive enough. I think that’s why high quality streaming startups tend to remain marginal: lossless streaming on its own is not enough to convince large consumer segments. It has to be about behaviour, about function. By now, lossless streaming isn’t hard to find, so people look for the checkbox and then look at what else the platform has to offer.

At the peak of its popularity, Crazy Frog as a track on iTunes was $1. As a ringtone, it was $3. The functionality is what made it valuable. (hat tip to Ed Peto for bringing this up)

I also think 360-degree concert videos are not distinctive enough from other types of video. As a matter of fact, I think the inconvenience of them outweighs the value when compared to other types of concert videos.

Let’s widen the perspective.

The value of music is elusive

A single song can mean the world to someone. It can help sell millions of products, it can inspire revolutions.

But in an ocean of millions of songs, that are easily accessible, its value is close to zero for a person as a consumer. This is why nobody cares about your free download anymore.

So how do you get the value out?

You use the music to create the environment in which you shape the type of thing people are willing to pay for. Going back to the restaurant metaphor: music means your walls, your tables, your staff, your bathrooms, your building, your ambiance. People pay for that, but indirectly: by paying for the food you serve them in that context.


Just to be really clear: I think music has immense value and I dedicate most of my waking hours to it. When I talk about ‘value’ in the above piece, I talk about it from the consumer perspective, from the marketing perspective, and as a USP for a product. I am not saying that people are not willing to pay for music. Millions already are, every month, through streaming subscriptions, but also digital and physical sales. And that’s where the problem begins for music startup founders: if people are already paying for music, what more can you sell them?

The short answer: sell functionality that augments experience and behaviour.