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Lively Runs Out of Money and Shuts Down…

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At the beginning of the year, Ari Herstand posted a positive review of mobile concert app Lively on Digital Music News. Shortly after that Lively raised $2 million, hitting a total of $2.65 million in funding. Lively’s founder and CEO Dean Graziano told GeekWire that the company had turned down three acquisition offers. In May, Lively hired Scott Kawa – a music/tech executive with 14 years of experience.

The future seemed promising for this startup.

Now it is apparent that Lively should have taken an acquisition offer. The company has just laid off most of their staff and is shutting down.

Graziano says the company ran out of money and did not have enough time to raise more. He told The Seattle Times: “The label deals took a little bit longer than we had hoped“. He also says that the company needs to raise one million dollars to stay alive. Let’s face it, that probably won’t happen.

It doesn’t seem like Lively saw this coming. Just two weeks ago they were releasing a Kindle version of their app.

Nina Ulloa covers breaking news, tech, and more. Follow her on Twitter: @nine_u

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Comments (18)
  1. SimpleCrew.com

    They raised $2M at the end of January and burned through it already? That’s 5 months?!

    How the @#%^ did they manage that?


    Reply
    1. Anonymous

      1. Legal
      2. Developers
      3. Hiring execs with experience that command a big salary, and signing bonus
      4. Wooing/Buying out labels/publishers


      Reply
      1. jw

        This really doesn’t seem like a space with all that many legal issues. Nothing to do with labels, anyhow.

        More likely, they bought a bunch of equipment. A nice video rig can run close to six figures, & that’s just a tip of the iceberg when it comes to this stuff. That & they over hired & built a nice venue for no apparent reason. This reeks of a bunch of video & sound guys getting together & going, “Wouldn’t it be awesome if…” There’s no demonstrated demand for this type of service. The notion of “Why hold your cell phone up at a concert when you could pay $10 for a ‘professional’ video recording of the show?” seems to completely miss the point of how/why people are capturing these moments. That is to say that a 3 camera shoot isn’t reliving the concert in the same way that a cell phone video from exactly where they were standing is. An on-the-fly, 3 camera shoot is in no man’s land between a properly produced concert dvd & a self-shot cell phone video.

        Not to mention this type of service just doesn’t scale. Quality video costs way too much to be profitable on a show-to-show basis.

        This was never going to be a profitable venture. Maybe if you set up at festivals where you can spread the setup costs across dozens of acts, but even then it makes more sense for someone like Bonaroo to stream the video itself for ad revenue, because they have the brand awareness; Lively would be mooching off of Bonaroo’s following in that scenario.

        But if anyone has the contact info for these investors, I have a handful of really expensive vanity projects I’d like to get off the ground.


        Reply
        1. Anonymous

          Actually, the geek wire article is stating that the label deals were necessary to create primary and ancillary rev streams….


          Reply
          1. jw

            This is a different situation than, say, Spotify, where they had to negotiate use of the catalog in order to do business. The sound recordings that the labels own aren’t involved here.

            What blaming the labels says to me is that they needed a certain-sized audience to make this service cost-effective, and they weren’t having much success approaching the artists directly. So they needed agreements with labels that would force or at least encourage the labels’ artists to participate. And yet they weren’t getting agreements there, either… the bottom line seems to be that artists & labels didn’t see a value in the product. They’re just trying to offset the blame.

            At least that’s the way I interpret it.


            Reply
            1. Anonymous

              I actually think it’s a bit more akin to the Spotify situation in that they need the majors to get behind it from a co-branding and marketing standpoint to gain ubiquity and scale quickly (which you mentioned), though there’s also the fact that this would likely fall into a re-record scenario regardless of if it’s not the master sound recording rights they’re after.

              This will also likely tie into the pub and composer share from a sale or streaming standpoint.

              I’m sure the need to scale quickly and build overall brand ubiquity via majors was a big part of their original pitch to secure the initial seed, and was likely a combination of low balling the estimated buy in to labels as well as some frivolous spending.


              Reply
        2. KnowSomething

          jw Friday, June 13, 2014

          “This really doesn’t seem like a space with all that many legal issues. Nothing to do with labels, anyhow.”

          Reply jw Sunday, June 15, 2014

          “This is a different situation than, say, Spotify, where they had to negotiate use of the catalog in order to do business. The sound recordings that the labels own aren’t involved here.”

          When was the last time you read a major-label recording agreement?

          In a typical deal, during the entire term of the agreement, the label owns ALL recordings made by the artist. that includes any recordings of live shows.


          Reply
          1. tippysdemise

            Correct, and just the publishing clearance side of something like Lively would be an absolute nightmare.


            Reply
            1. jw

              I stand corrected.


              Reply
      2. Willis

        While those are normal areas for spending, I’d suggest that they blew through the investment due to poor management, strategy and vision. Smooth move.


        Reply
    2. Hard Truth

      They did it by spending an obscene amount of money to host a SXSW party nobody attended.


      Reply
  2. jw

    No surprises here.


    Reply
  3. Anonymous

    That’s too bad. Seemed promising, but this screams of mismanagement. How do you run out of that much money in such short time? I mean, I know how, but let’s get smart here! They hired a few too many people initially and didn’t have the necessary components to get off the ground.


    Reply
  4. Ray

    You can pretty much find any concert you want there. No need to use a special app. It wouldn’t have mattered if the labels were on board. The fans are at YouTube.


    Reply
  5. Dan

    Eventually the whole world will realise that these ‘consumer experience’ Aps are a total waste of time and money.

    I was at a recent tech music meet where all sorts of people pitched their aps / sites and to a man they were all about pushing info to the consumer – who gives a shit? We are bombarded with these types of crap.

    The fact that these tech fuckwits are able to con people out of $2.3M and still not have enough money to make their little ap work just shows you want a load of shite this whole area is.


    Reply
    1. Nina Ulloa

      yeah, let’s just throw out our computers and go back to the good ol’ days


      Reply
  6. annbee

    If an artist is on a label, the label gets to decide if their recorded performance is released. And the label usually is earning the artist’s side of that revenue, too, so they have a big stake in getting the right deals in place for their artists. In my experience with concert audio, the labels’ “uniform” response was “no” and anything other than a refusal to participate had to be negotiated one at a time. Very tough model.


    Reply
  7. soniquarium muzika

    Classic Pump and Dump. 2 million in a first round of a raise is very weak. 2 million does not last long, as you can see. I can’t comment on their “Burn Rate” because I have no idea the true cost of their over head.
    However, seems to me that these guys were amateur’s in the money raising game. Hype will raise some but then you have to continue to search for more funding.

    They are just another stat. Most of these ‘Start ups’ never make it past their first round. The fact that they were offered to be acquired, early on leads me to believe one of two things. 1: their model was worth acquiring by a company that had cash to spend, to develop and to sustain the overhead. So, the chance of profitability was there. It was the mistake by LIVELY to not sell. This is the biggest mistake most startup’s make. They all think they are the next “Facebook” or Amazon. Ego’s get in the way of smart decisions.
    2: The model was pure hype and after the offers to buy, smart money dug deeper to find that LIVELY was not worth additional capital and did not continue to chase them, meaning Angle and VC money saw the same thing. So, the nail went into the coffin.


    Reply

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