Burned by the Glare: 8 Spectacularly Over-Hyped Music Startups

If only hype could build a sustainable business model.

Here are 8 of the most spectacularly over-hyped music startups that ultimately crashed-and-burned.

 

(1) Spiralfrog (2007-2009)

The ad-supported messiah never turned into a prince,

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 despite searing levels of adulation.  And, searing levels of cash-burn: at the time of death, estimates of squandered financing and debt approached $50 million.

(2) Imeem (2003-2009)

Groundbreaking in many ways, Imeem was also struggling under back-breaking major label licensing deals.  WMG was one sorry licensor and stakeholder; MySpace ultimately purchased the company for well under $1 million.  Total funding reportedly approached $25 million.

(3) BurnLounge (2004-2007)

Sort of like Amway for paid downloads, but no one bought the toilet paper.  An FTC pyramid scheme investigation seemed like a bad sign – especially for investors like Justin Timberlake and Shaq, part of a group that plowed a rumored $40 million into this pyre.

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(4) DataPlay (1999-2002)

Just like a CD, but much, much smaller.  The DRM-heavy DataPlay discs required entirely new players, and ultimately, a smaller trash can.  But, not after some positively ginormous investments topping $120 million from the likes of Eastman Kodak and Intel.

(5) SACD, DVD-A, DualDisc Formats (1999-?)

Still known by some audiophile fanatics and format historians, these glorified CDs were set to spark another disc boom.  The Wall sold more than 800,000 SACD copies*, though Pink Floyd could probably sell that many wax cylinders as well.

(6) Seeqpod (2005-2009)

Playable search is still a great concept, but majors failed to see the magic.  Microsoft was apparently interested in buying the distressed company; a deal never materialized.

(7) Odeo (2005-2010)

Part of a bigger podcasting explosion that never quite ignited, Odeo was actually co-founded by budding Twitterer Evan Williams.  The site was sold in 2007, and mysteriously went dark this month.

(8) Project Playlist… 

Perhaps a premature death warrant, though a $28 million-plus bankruptcy is rarely a sign of life – especially in this environment.  Though of course, stranger things have happened…

 *being fact-checked, see comment below

23 Responses

  1. CTyankee

    Do us all a favor and add freebie nightmare Spotify to this list right now!

    Even more over hyped than Spiralfrog ever was.

  2. JacksonL

    Let’s feed the poor instead. I’m laughing AND crying at the same time.

  3. alden

    the real problem is that vc’s like to pump the crap out of every startup just to see if there’s something worth putting money into. so spiralfrog might have worked – if it was grown slowly – though most likely ad supported is worthless. and the same is true for a lot of the others, but vc’s always demand that money be pushed into the idea and blown out of the water – and that means full on PR and media baiting – just to see if you have a google or youtube on your hands.

  4. @musicregistry (via Twitter)

    I had forgotten about some of these!

  5. Jon

    I find it hard to believe that anyone who’s used Spotify would call it overhyped. I can’t imagine a better platform arriving any time soon. And now that it incorporates local files, I’ve dumped all of my other music software. Soon as Spotify Premium is available in America, I’m tossing my iPod in the trash. They’re doing everything right. And I can’t wait to put down the cash for a year subscription.

  6. Universal Indie Records

    Burnlounge.. wow! Lol. That was more like a cult because the people championing Burnlounge sure as hell drunk the Kool-Aid. I remember arguing with these “cultist” across a multititude of forums.

    They really thought they were “owning their own music stores” and that “this was the great equalizer to the itunes evil”. They ranted on about “starting their own business” with just no clue about how much they would actually make off a download. The only way to make money was to sign up other users(suckers).

    Adios Burnlounge. You won’t be missed.

  7. Universal Indie Records

    …and Data Play! That sounded like a bad idea from the inception. With customers begining to migrate to digital formats from phyiscal formats.. what do they do… through another incompatible physical format into the mix.

    Whoever invested in that DESERVED to lose money!

  8. GreGG

    Interesting, but the question is “so what?” Should we rejoice or cry that so much energy and money has been burned? What does it tell us about the sate of the music industry?

    People behind those and many more [now we know] unsuccessful startups wanted some change, proposed something, believed in their products… They failed, but should we call them losers? Who is the real loser here?

  9. @kamzou08 (via Twitter)

    The Wall sold more than 800000 SACD copies…

  10. @thewordpainter (via Twitter)

    how about qtrax? oh yeah, they’re still kicking…?

    • Jaclyn

      I was thinking QTrax too – for the MIDEM 2008 debacle alone it deserves to be on here.

    • presnikoff

      Yes, Midem 2008 was the beginning of quite a fiasco wasn’t it. But, alas, it looks like they’re still fighting the good fight.

  11. Sam MgGee

    It was Dark Side of the Moon that sold 800K – The Wall was never released as SACD – though that would be welcome by the multichannel surround community.

  12. marchante20

    This just further illustrates the fact that those with the capital don’t always know how to capitalize. It seems that most of these companies failed when they tried to osmosize with the “majors”.

  13. @ChrisKnab (via Twitter)

    Flashback: remember Spiralfrog or Imeen? See what happened to them and other startups

  14. oyster

    Hey you have to put SPOTIFY on this list! It’s technically pretty good but the business model is woefully flawed – this baby’s going to crash and burn in spectacular fashion! Get the popcorn….

  15. @digisingle (via Twitter)

    Overhyped music start-ups… Remember these?

  16. Brian Rawlings

    Why doesn’t someone try to run the music business as a business? The models that have come and gone are all victims of insanely bad creative decisions. Even the comments on this board go back to Pink Floyd. The A&R departments and the lazy artists are equally to blame. Why would I go to any trouble, learn a new consumption method, subscribe to a new service or purchase new hardware to listen to Justin Bieber. There are massive quality opportunities in the business of music today, but, quality of the product, patience in marketing, and a revised understanding of music in the sociology of modern listeners must precede. The dinosaurs of the record business are still begging all of us to return to 1983. PS, artists could start by playing music to humans and building an audience….I’m just saying.

  17. kbdben

    Bottom line, it is the music. Bottom line, the music should

    be MUSIC, i.e. have character, taste, strong melodies, create a mood going forward toward something meaningful.

    What has happened to us in this age of glorifying technology, i-Toys, lack of discipline. Music used to matter. Not anymore.

    Even the Beatles must be turning over in their graves. HELP