

$87 M. News Corp. Backed Startup Shuts Down Before Launch - ccarella
http://www.betabeat.com/2011/12/31/to-oblivion-and-beyond-wait-no-just-oblivion-87-m-news-corp-backed-startup-shuts-down-before-launch/

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freejack
I think this is less a story about a failed News Corp. ambition and more a
story about how the music and telephone industries have developed first rate
competencies at stifling innovation.

Hearing stuff like this makes me really sad for the future of the Internet if
everything new & exciting will need a gatekeeper or two to sign off on it.

I don't know how viable the business model was, or why they needed $87m to
prove it wasn't viable, but I can't help but think that we would have had
services like this 10 years ago (okay, 5 maybe) if media and networks weren't
so tightly controlled.

Thank god for the Open Internet 'cuz the closed one doesn't seem to be doing
much...

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rhizome
Just think how far that $90MM would go at other companies in the same space.

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freejack
heh - yeah, that's like 10-20 startups worth of cap! ;)

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sc00ter
Or 1.5 Color's worth.

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rhizome
So in an age where C-level executives have to be paid some higher amount in
order to attract "the best talent", BO and Color and their $150MM wasted
dollars would seem to provide an object lesson to the contrary.

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listening
How much of the $87M went toward legal fees? Lots of negotiation here. The
technology is trivial by comparison.

Thinking out loud...

Has any publisher managed to control their content in the digital age?

Academic publishers still manage to keep their content under control. How?

The cost of a subscription is exorbitant. Only large entities can afford it.

The large entities, e.g. universities or large firms, pass on the cost to
their customers, e.g. students or clients/customers.

There's also the small fact that the content is not marketed heavily and in
high demand among the general population. Unlike music.

Perhaps music should only be marketed to customers who can afford it: large
entities.

It wouldn't stop piracy by individuals but it would ensure the existence of
some customers who were willing and able to pay, and to refrain from piracy.

Imagine a situation where working for a large firm or attending a university
gives you a temporary subscription to a vast catalog of not only academic
journals but also major label music. It would be a huge perk.

Yes there would be piracy, but the large firms would have an incentive to try
to stop it. They know who their employees and students are and could no doubt
do a better job preventing piracy than the RIAA lawyers have done. Whatever
might happen, the labels would still make money from exorbitantly-priced
subscriptions.

Nah, it would never work.

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zipdog
The most telling comment is this one:

"Beyond was always a tremendously grand ambition as the advances required by
the record labels and music publishers were substantial"

.. because there were no tech advances required; the only 'grand ambition' was
getting the record labels to listen to reason - which they apparently didn't

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rckclmbr
It's actually a lot more complicated than that. The record labels listened --
there were multiple news reports of them signing deals with the labels... the
labels were actually excited at the idea. The problem was that not only did
they have to deal with the labels, but they had to deal with the publishers,
each individually. And there's a lot of freaking publishers. To top it off,
they also had to convince a carrier to purchase the product, which would mean
either they lose revenue or pass the extra $60 on to the consumer, risking
lost sales.

They had to change/convince multiple businesses to conform to this new
business model, and that's why it was such a grand task -- each one had its
own, different risks, and it was up to Beyond Oblivion to convince them the
model would work (which it would). The labels themselves were just a small
piece of that very large puzzle.

Michael Robertson (mp3.com guy) recently posted a great article (although I
can't find it) about the challenges of an online streaming service which
summarizes the above a lot better than I said it, plus goes into further
detail.

EDIT: Found it. [http://gigaom.com/2011/12/11/why-spotify-can-never-be-
profit...](http://gigaom.com/2011/12/11/why-spotify-can-never-be-profitable-
the-secret-demands-of-record-labels/)

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lonnyk
How did it take $87 M for this idea to fail?

If the real challenge was getting everyone to agree why did it cost so much?

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rhizome
Less than 2 years.

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earbitscom
This is a perfect example of why Avichal Garg's post was spot on:
[http://avichal.wordpress.com/2011/11/14/build-something-
peop...](http://avichal.wordpress.com/2011/11/14/build-something-people-want-
is-not-enough/)

This company was certainly building something that people might want, but
failed to see if the roadblocks that had stopped similar efforts before them
had been removed. They should have been able to find out how much work, money
in the form of advances, and relationships they needed to even come close to
pulling this off far before they ever raised so much money. The fact that they
took $87M and anyone gave it to them without this analysis is just sad.

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rhizome
$89MM. The $10MM in 5/2010 was series B, they got $2MM before that.

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vyrotek
Sad news. My neighbor was one of their developers. I couldn't believe it when
he told me he was looking for a new job. Sounded like it came as a big
surprise.

On the same note, I know a guy looking for a new gig. Anyone hiring? :)

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ethank
Yes. :)

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vyrotek
What's the best way for him to reach you?

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Zirro
Considering they didn't even manage to seal the deals, where did all the money
go?

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dan1234
From what I understand, a lot of the raised money was for the advances
required by the various labels in order to close the deals so I'd imagine a
lot of money was returned to investors once it was clear the deals wern't
going ahead.

There's a bit more on the story here: [http://musically.com/2011/12/31/beyond-
oblivion-shuts-down-b...](http://musically.com/2011/12/31/beyond-oblivion-
shuts-down-before-ever-launching-commercially/)

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sixQuarks
Good, I hope all these failures lead to Murdoch's downfall and bankruptcy.

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rhizome
Reflect on the saying, "more money than God."

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objclxt
Yes, this isn't the first and won't be the last time a News Corp backed
venture sucks up a load of cash and closes down before launch. About a year
ago a News Corp project running in London that had about $40 million odd
sucked into it was shut down before launch. For a company that size, it's not
a huge investment.

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kmax12
was all of the 87 million used?

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rckclmbr
No

