For the longest time most VCs didn’t want to invest in music startups.
The biggest reason without question: negotiating or partnering with music labels.
Basically most VCs felt that the labels were mostly interested in protecting the status quo and litigation vs new ideas and new approaches. That’s certainly was how I felt during the Veoh days (we were veoh investors. Label kept suing even though the courts sided with Veoh. Legal bills were fucking nuts).
But even with all of the baggage music startups continued to innovate either by bootstrapping (hypem.com) or by finding VCs with the stomach to go for it anyway and those VCs and founders were rewarded (last.fm, myspace, pandora).
Today most VCs still don’t want to invest in music startups but it feels like it’s starting to change. thankfully.
There is so much creative ideas in this space to ignore including ( but not limited) Next Big Sound, Topspin, Bandcamp, ExFM, Soundcloud, rdio, and plenty of others.
And now this morning I read that DST is about to invest $100mm into Spotify. DST has the stomach and Spotify has the talent, ambition and cash. That could be a great combination.
The thing about music startups is that in some ways it’s all about the music and not about the music at all. What I mean about the latter is that ultimately we will all have access to all music. The idea of getting any special music rights ain’t happening.
So the most valuable services will focus on the delivering the best user experience.
Music is so important to me and so I’m thrilled to see all of this happening in the startup land.
(pls excuse typos and lack of links. wrote this quickly on my phone).