The following MBW blog comes from Nikhil Shah, Co-Founder and Commercial Director of Mixcloud (pictured). MixCloud connects listeners to new music and ideas through radio shows, DJ mixes and Podcasts uploaded by over 1 million curators. Here, Shah discusses how streaming music services can build their businesses in a sustainable and financially sensible way…
There’s been much discussion of late about the challenge in building a successful streaming music company.
Sure, it’s difficult, but Mixcloud has been working hard at this for nearly a decade, learning some hard and valuable lessons along the way.
We’d like to share some of the things we’ve learned about how a streaming music service can grow whilst remaining self-sufficient, disciplined, and most importantly, a valuable service for creators, fans, and the industry.
From day one, music services must understand the value of the music they offer and the responsibility they have to obtain licensing deals – either via collection societies or directly with the rights-holders – so the people behind the songs get paid.
Music rights are extremely complex. Each individual track often has multiple rights owners, often fragmented by territory; some licenses must be worked out directly rather than through collection societies; and different rates and business models may apply depending on the type of service you are building and how you are “exploiting” the content.
“Paying artists is absolutely critical to the sustainability of every music platform and the culture as a whole.”
In the first year of Mixcloud, my co-founder Nico Perez and I essentially became part-time music lawyers! It is important to invest the time in properly learning how music IP works.
The more you understand the complexity, the better business decisions you will make.
Paying artists is absolutely critical to the sustainability of every music platform and the culture as a whole. As a DJ and record label owner, this is of particular importance to me. If the artists behind the music are not getting paid, the scene is negatively affected and the platform itself is at risk of collapsing.
We also believe that more streaming music companies ought to be built and managed in a responsible way.
A lean team, careful management of costs, and effective monetization of the platform can go a long way in keeping streaming services afloat.
Silicon Valley often preaches “scale first, revenue second.” This is simply not the right approach in music.
It’s not fair for creators and creates too much risk for young companies, which in turn imperils the creators who feed them.
“Silicon Valley often preaches ‘scale first, revenue second.’ This is simply not the right approach in music.”
We created Mixcloud as a solution to these problems. We wanted to bring the world’s tastemakers together and give them a place to express themselves, explore their passions, and share their creativity.
We’re focused on audio culture at its best — longform content, DJ mixes, Podcasts, live sets, and more — and we’ve worked hard to get licenses in place with appropriate collection agencies as we’ve built proprietary content ID technology that can determine individual tracks in mixes.
In these ways, Mixcloud can ensure that all rightsholders get paid.
We’re also built on a reliable and diversified business model that generates revenue from advertising and branded-content partnerships.
We have self-funded the company so we can remain independent and do right by the creators who fuel it, and we know it’s important to carefully manage any capital that is invested in the business, whether it’s ours or someone else’s, due to the cultural value amassed on the platform.
Millions of creators, curators, listeners, and all of our brand partners have helped turn Mixcloud into a vibrant creative community.
“We’ve done things differently, going down a path of steady, patient, and responsible growth whilst many of our peers have raised lots of capital, only to overspend and implode.”
We’ve done things differently, going down a path of steady, patient, and responsible growth whilst many of our peers have raised lots of capital, only to overspend and implode.
This was the right thing to do both for our company and for the creators who have helped us build a platform that benefits from and contributes to culture in a meaningful way.
This, in our opinion, should be the blueprint for any company that has such a symbiotic relationship with art and culture.Music Business Worldwide