
MOG CEO David Hyman Responds To imeem’s Dalton Caldwell - px
http://techcrunch.com/2010/10/21/music-startups-can-work-mog-ceo-david-hyman-responds-to-imeem%E2%80%99s-dalton-caldwell/
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pg
Actually Dalton was careful to qualify what he said. He never said music
startups were impossible. His message was that, given the uniquely horrible
obstacles in this domain, you'd be stupid to start a music startup when you
could instead start one in some other domain where the obstacles were merely
the obstacles all startups face.

Everything we've seen confirms what Dalton said. If we published anti-rfses,
this would be the first. Avoid starting startups that handle label music.

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far33d
On one hand you have a huge market, ripe for disruption, with high barriers to
entry. Seems perfect for a startup.

On the other hand, you have these enormous obstacles: upfront payments,
minimum revenue guarantees, arcane and complicated reporting and security
requirements, and strange nuances and differences in costs based on how you
are using the music. It's a major pain in the ass.

All of this takes time away from building something people want. If you are
lucky enough to find your product-market fit, the barrier to entry will keep
competitors away and you'll have a huge head-start.

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replicatorblog
I think the big issue is that it _isn't_ that big a market. When you factor in
the COGS of label music, the market size relative to available profit is
actually fairly small no matter what barriers you build.

To Dalton's point there are other interesting markets with barriers. For
instance Scrapbooking is a $3B market, 1/3 the size of the music industry by
revenue, with 2 tech players. One tech product in Scrapbooking generates
$300MM in revenue and faces almost no competition. Arts & Crafts is a $32B
industry. Toys is ~$30B, Jewelry is $60B, the list goes on, but there are SO
many big markets that are ready for technical disruption that are ignored
because they aren't very sexy.

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dalton
YES, THANK YOU.

One of my personal goals for doing the talk is to get people thinking that
way. I wish someone would had gotten me thinking that way years ago.

I wanted to put a quote from Aaron Patzer in my talk, but didnt have enough
time.

Here is the quote: "For other entrepreneurs aspiring to such an exit Patzer
advises solving a real problem. “When I founded Mint there were a ton of
startups in the social networking space, and in streaming music,” he says. “I
found something that was a real problem for me and I knew for millions of
others, and I solved it.”

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replicatorblog
Totally agree, I made a presentation called "Web 3.D" which basically talked
about how lucrative opportunities existed in areas where web service
overlapped with physical goods. If you start at slide 35 in this presentation,
I made a visual comparison of industry size vs. number of market entrants.
Music, a shrinking $9B industry has hundreds of startups. Jewelry, a $60B
industry has 2. There are some good reasons for this, but the industries are
imbalanced.

[http://www.slideshare.net/josephflaherty/web-3d-presentation...](http://www.slideshare.net/josephflaherty/web-3d-presentation?from=ss_embed)

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chrischen
I've also been told countless times _not_ to deal with music startups. While I
do agree that building a business that tries to prop up the record label's
business model is bad, I think there is lots of potential in the space given
the supposed decline of the record labels and the huge and rising popularity
of music.

