MIXCLOUD
“IT’S REALLY ONLY BECAUSE WE WERE SO PASSIONATE AND WORKED TWO YEARS WITHOUT A NORMAL SALARY, LIVING IN A WAREHOUSE, THAT WE MANAGED TO SURVIVE.”
the recorded industry might not be enough to survive on if you’re not a huge artist,” Perez says. “But there’s other means and ways—live music is now counting for more artist revenue than recorded. And we play a major role in promoting new artists and discovering new talent. We did a survey and the number one reason people use Mixcloud is to discover new music. Tey can discover it through experts and enthusiasts and if we can help encourage people to go to concerts, hopefully it will be beneficial overall.”
Perez is not averse to paying artists, but he’s realistic about how much revenue that is likely to generate. “We pay the royalties per listen, and I guess the question is can you survive on that? It’s a tough one.”
And he’s also sympathetic to how the labels have had to deal with a changing landscape. “I think in the last two or three years, labels have really come to realise how significant and important digital music services are going to be for them, and I think Spotify has helped enormously with that,” he says. “I’ve heard people describe what’s happened as like the bereavement process— when Napster came out they were shocked, and then they were angry and started suing everybody, and then they were sad and didn’t know what to do. Now they’re coming round to the acceptance stage where they’re accepting that they need to embrace this new technology.
“I think there have been people at the labels all along who have been pushing for that and who are pushing for modernisation, but I can also understand how it’s very hard to have the carpet taken out from underneath you. Te CD was a
cash cow, it made so much money—I’ve seen the graphs from the amount of revenue LPs, cassettes and CDs used to bring in and online just doesn’t compare yet.”
One of the things that Perez does see happening is a shiſt in how people understand music online. “It’s this idea of looking at media as a service rather than a product in itself: of moving from an ownership culture, where you own individual songs, or CDs or books, towards a service model where you pay x pounds a month and in return, like the television model, you subscribe to it, you can access what you want, dip in and dip out. I personally think the idea of owning individual songs, books or movies will be redundant in a few years.”
Tis is, arguably, already happening: “If you look at the way things are going with Spotify, Netflix and LoveFilm, we’re doing a similar thing with radio shows and DJ mixes. Books still seem to be sold on a product basis, but I wouldn’t be surprised if Amazon or someone soon offers a subscription model, like a library. I think that’s easier to swallow from a consumer’s perspective. If you know you just pay £10 a month and get all the music you want, it’s quite a good deal.”
Looking to the future
Most start-ups struggle with funding, at least initially. Any idea, no matter how good, is likely to need a jump start before it becomes truly successful. Tere are really only a couple of ways to do this. Either do what Mixcloud did (start small, work hard, make no money for a couple of years and prove your product), or get interest
26 World Intellectual Property Review July/August 2012
from venture capitalists. Of course, if you can do both, that might be best of all.
“In the beginning, we tried to raise investment from venture capitalists, but because of the issue of copyright, a lot of investors weren’t interested or were scared, for example because they had had a bad experience of doing this kind of investment before and didn’t want to do it again,” Perez says.
Tis sounds like a hard luck story, but it has wider ramifications for innovation in the industry. Te result of uncertainty over copyright is that there are fewer investors interested in this area, which means less innovation and fewer start-ups. “It’s really only because we were so passionate and worked two years without a normal salary, living in a warehouse, that we managed to survive.”
Of course, doing it the hard way has big advantages for the future. Perez explains: “Te irony is that now we’ve made the economics work and have an audience, they [venture capitalists] are interested. But the question is, do we need them now? We don’t know if it’s worth it, because if we can survive and grow organically, we might not need them. It would accelerate things and it’s always an option, but we’ve made it this far without it and I feel like the longer we go without the easier it becomes.”
While it’s sometimes billed as YouTube for
radio, Mixcloud has a way to go before it can be mentioned in the same breath in terms of numbers. But in the space of four short years, it’s gone from two friends with a good idea to a profitable Internet business based entirely on word of mouth and with millions of customers. Who knows where it could end up?
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Photo: Ksenija Nikolic
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