Legacy , Music Business

In music, the LongTail still won’t work without a head and a body: Announcing big changes at Sonific (Over & Out)

Sonific_graveUpdate: Sept 10, 2008: Sonific is over, for good. Thanks for waiting.

My music widget startup, Sonific, just announced that it is going offline on May 1. Below are some snippets from my announcement, all other details are on Sonific’s blog, here.  This obviously a tough development but we are hoping that while this door may be closing now another may open up.

Sonific.com will go offline on May 1, 2008  A message by Gerd Leonhard, Co-Founder
& CEO

As a consequence of a the unworkable
music licensing situation and the resulting lack of solid revenue
modeling Sonific’s founders and investors have decided to temporarily
take Sonific.com and Sonific.net offline.  While we are looking for
other ways to realize our vision we are also open to talking to any
interested party that may have use for Sonific’s user base, content
relationships, technologies or distribution network (please contact us
anytime to find out more). Together with some other partners, we may
also investigate the concept of making Sonific a paid-for service that
is provided to artists, record labels and other content providers on a
white-label basis.

Here are some background details on our decision:

1) There are countless startups
providing access to any and all music streams without any license
whatsoever. However, when we approached the major record label decision
makers in order
to obtain licenses for some of the music in their catalogs we have routinely faced demands for very large cash advances and fixed per-stream minimum payments,
pressure to give them ‘free’ company equity, and requirements of utterly bizarre usage restrictions.
It seems that the industry’s major stakeholders still prefer
this turf to remain unlicensed rather than to allow real-life, workable and market-based
solutions to emerge by working with new companies such as Sonific. This is not the way forward.

2) We therefore had to realize that a
company that wants to provide interactive streaming music services must
either a) risk the constant complaints of their users, due to the lack
of hit content  b) proceed to use any and all music (this is routinely
done by allowing users to upload their own MP3s) without the required
licenses, and therefore be at the total mercy of the record labels at
some point in time, and c) build a huge audience very quickly, based on
having the content available – permission or not -, and then very
quickly sell themselves to a large company that will take care of
placating the labels while the money is plenty and the pockets are
deep. 

Unfortunately we don’t
like any of these choices. 

The bottom line is that this industry is
certifiably dysfunctional and that we do not see a plausible path to
take at this time. We neither want to engage in so-called copyright
infringement nor do we have millions of dollars available to buy our way in when it is abundantly
clear that doing business under the existing rules of the major labels
will simply amount to economic suicide.

Almost a billion people now use music to
stream on their blogs, social network pages, home-pages and user
profiles – this is indeed a veritable gold mine for music marketing and
selling, and it can make serious money for artists and composers. Yet,
the established players in the music industry are still looking to
simply squeeze ‘permission fees’ from companies that want to serve this
market, instead of building new opportunities together. 
Maybe,
just like Radio over 100 years ago, a plausible conclusion may just be
that this must apparently be done without permission while the industry
catches up – but we shall leave this for others to explore this theme
.

We want to thank all our partners and
the many artists, independent record labels as well as the few major
label new media people that dared to try us anyway, and the leading
music aggregators that have provided the over 200.000 songs that
Sonific has offered until now.
We also want to thank our faithful users that played our music every
day, and the over 80.000 people hat have signed up for our service, and
we apologize for having to pull the plug on you. We hope to return in a
different incarnation; please stay tuned via our blog.

Gerd Leonhard
Co-Founder & CEO

Update: if you are looking for alternatives to Sonific, try this list

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