"Now is just a great time to start a music company. The record labels have embraced subscription services in a very big way—as the future of the industry.
Subscription is not a great business at 100,000 subscribers. The cost of goods is too high. But it's an amazing business at scale. To get to scale, you have to build for the way that the majority of people consume music, not the way early adopters do. If you go to the middle of America, many people have never even heard of subscription music services. That's an opportunity. What people need is a mainstream, easy-to-use, easy-to-understand experience—built not only on suggestion but intuition.
Up until this point, the industry has been scared of evolving. When I was general manager at Yahoo Music, back in 2005, I wanted to be on the same page as the labels, to help make the subscription model better. And we had the right notion: unlimited streaming for $5 a month and a portable tier for $10 a month. But the response from both Yahoo and the labels was: We're not willing to change. Yahoo said, 'You're crazy. We're not paying that much to the music business.' The music business said, 'You're Yahoo. We want more money.' I was stuck in the middle.
The landscape has fundamentally changed in the past five years. I think all of us who have been doing this digital music thing have had an impact. There's a lot of experimentation that still has to happen, but we've at least shown the way."
[Photo by Jessica Haye & Clark Hsiao]
A version of this article appeared in the May 2013 issue of Fast Company magazine.