BEASTMODE.FM nailed music discovery. Profit will be much harder ...

By Michael Carney
On December 3, 2012

It seems irrational at this stage of the digital music game for anyone to consider launching a competitor to Spotify and Pandora. Just look at the size of those two, and their struggle for profitability, not to mention the graveyard of would be challengers. But what if someone could create a business model around digital music that doesn?t require any licensing, and thus doesn?t require hundreds of millions of dollars to build? That would certainly be more interesting.

Los Angeles startup BEASTMODE.FM (currently available in public beta) thinks it?s done just that, and early user feedback appears promising. Getting to several million users, however, may prove a bit more difficult.

Beastmode is a music discovery platform built around top music bloggers. The platform aggregates the content of 2,200 curated music blogs and free-to-play platforms, including SoundCloud, YouTube, MixCloud, and Pitchfork, into a single music player. Based on how much effort they want to put in, users can consume this content in one of two ways.

The first, designed for the most committed and enthusiastic music connoisseurs, is to follow individual blogs in an RSS like experience, with new music added to the listening que as it?s posted online.

The second is is a more ?leanback experience,? much like the one touted by Pandora, ?where users can select a preferred genre, out of 64 different options, and receive curated content from across the company?s network that matches selection. Beastmode founder Matthias Galica compares this to a favorite radio station which you can listen to all day without any further input from the user.

All the typical bells and whistles are available, including playlists and favorites, should a user choose to log in. But consumption is available without even doing that much. Beastmode is currently available on the desktop Web and via HTML5 mobile Web. The company plans to release an Android app by the end of this week, and has an iOS app in development that will be released in Q1 2013 pending its completion and approval for the iOS App Store.

Unlike traditional terrestrial radio, Beastmode doesn?t play the same 12 song three times per hour. Unlike Sirius or Pandora, it doesn?t play commercials or require a subscription.

So that?s the good. Beastmode is free, easy to use, and offers a wide selection of the newest music as it hits the Web. Unfortunately, depending on your measuring stick, all of this may still fall short of producing a winner.

Much of Beastmode?s offering has analogs elsewhere in the ecosystem. HypeMachine, for example, offers comparable blog aggregation but is designed for the music maven rather than the mass market consumer. Similarly, blogs like Pitchfork and others have released apps based on the Spotify API which allow users to add their playlists, and stream their channels of ?recently added? or ?top rated? tracks. As my fellow PandoDaily reporter and all-things-music-expert Erin Griffith said to me this morning, ?It?s really hard to find a feature that Spotify doesn?t have, except a design that?s not hideous (which is ironic given the whole Swedish design thing).?

Like many others that have tried to tackle this problem, Beastmode risks offering more of a feature than a product ? one that the big boys could quickly duplicate. The nascent startup will need to continue adding additional value if it wants to be the default music player for tens or hundreds of millions of people worldwide. Without music licenses, that seems like an incredibly tall ask. The good news is that without these content costs, it will take far less revenue for Beastmode to become profitable.

This notwithstanding, Beastmode is likely to have a tough time making revenue based on this model. The company is planning to rely primarily on iTunes and Google Play affiliate fees from music downloads originating through the platform. Unfortunately, if the transition to streaming music solutions have taught us anything, it?s that music downloads are likely a declining opportunity, not a growing one. Beastmode has the potential to dabble in advertising ? CPM not interstitial ? but is rightfully cautious to do so, given the fact that its not licensing any musical content. Lastly, this absence of licenses mean the digital music holy grail of subscriptions are a non-starter.

For a point of comparison, consider Tomahawk. The entirely free service was started as a non-profit side project of its creators to aggregate multiple music services where a user has accounts to determine the best place to play a given song. If the decision to give this away doesn?t tell you about the brutal business prospects facing innovative music concepts, nothing will.

Galica created Beastmode in conjunction with the rest of his team from ShareSquare, a mobile website platform company he founded that has been seeing the market opportunity walls closing in around it for some time now. The ShareSquare guys appear to be completely re-energized by the Beastmode project, and existing investors will likely be pleased at the renewed opportunity to see any return from their otherwise troubled investment.

At the end of the day, like all consumer-facing startups, Beastmode?s success will depend on the equation between the cost of customer acquisition and the lifetime value of a customer. It?s far too early in the game for anyone to know exactly how this will shake out, but the company seems to have hit on an interesting model that will at least attract attention from curious music consumers and those looking for an easier way to discover and consume new music.

Michael Carney

Michael Carney has spent his career exploring the world of early stage technology as an investor and entrepreneur and has participated in building companies in multiple countries within North and South America and Asia. Ultimately, he is an enthusiast of all things shiny and electronic and is inspired by those who build businesses and regularly tackle difficult problems. You can follow Michael on Twitter @mcarney.

Source: http://pandodaily.com/2012/12/03/beastmode-fm-nailed-music-discovery-profit-will-likely-be-much-harder/

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