Entreprenuership + Music = Insanity. Pt 2.

In Part 1 of this series I focused on the entrepreneurial resolve needed to start a tech services company in the music industry. Also known as insanity. It is, what I believe will be, an examination of calculated risk and responsible resolve - but resolve nonetheless. We're doing this - so come along for the ride!

I skate to where the puck is going to be, not where it has been. -Wayne Gretzksy

But, why music? It's a sleepy but enormous industry whose top-line economics are still limited by inefficient marketplace characteristics. It's several passions of mine all in one. It's sexy and fun. It's primed for disruption and it will make it relatively easy to recruit some amazing talent. At the core of all these factors it's basic supply and demand. We believe demand is going to increase and we want to be as close to the supply as possible.

The spectrum of music availability is growing exponentially and it's out-pacing quality content. According to Nielsen, Music is still the most popular form of entertainment driven largely by commuters (no pun intended). And radio is still the primary source of music but that is going to change. Why? Streaming services, of course. The more control you give people over their content the more control they want. FM radio will fall the way of AM radio and cars will come standard with streaming providers like Pandora.com.

When you think of it in terms of real estate it becomes a very exciting business opportunity. For example, FM radio can only support about 101 channels in a listening area which is very limited real estate. And because it's so limited it's also very expensive real estate making it difficult for new content to make an entry. It's a domino effect from here: since it's so costly you need deep pockets, record labels have deep pockets but to keep it that way they have to be extremely selective on which artists they invest in. It becomes less about the art of music and more about the money. It's a vicious cycle but it's natural for commoditization, escalation and capitalism to go hand-in-hand. It other words, high gas prices will affect the price of your coffee and expensive radio airtime will affect the variety of music available.

Enter the Internet. Jammber is an extraordinary opportunity because it allows us to help music artists get more of their music to more people and make more money doing so. Continuing with the real estate analogy we can show artists how targeting less expensive real estate can actually increase their net worth and help them do bigger-better things. By positioning ourselves as a platform we don't have to be all things to all people. Instead we only have to do a few things really well. If we get the secret sauce right (and I think we will) it will result in some interesting stats.

I imagine a day, in the very near future where 25% of all the music on iTunes is from Jammber artists along with 20% of all Grammy winners, 35% of all streaming music, 40% of all local concerts and 30% of all music videos. That will translate into 15% of all music revenues being captured by Jammber artists (about $900m/year) and Jammber will be the destination brand for all aspiring musicians around the world. We'll do our best to provide enough value so we capture 20% of that revenue placing us at $180m in annual revenue. If we can control our growth and retain decent margins it will place Jammber at a nice valuation upwards of $800m. Better still - when you imagine the music that will come out of a community no longer dictated to...we may just see a musical renaissance and that is something we'll be very proud to be a part of.

As they say, "the map is not the territory" and I'd be insane to think business imperatives such as "retain decent margins", "control our growth" and "capture 20% of revenue" will come easy. But I'm entrepreneur. And that's what we do. It's difficult but it's far from impossible. Most importantly it's worth it. Before, my co-founder Adam and I set out on this journey I asked myself one question while we were in the idea phase: "Am I willing to be wrong?" Meaning, if I go down in flames will it be a beautiful sight? Will it be worth the pain and arrows we'll endure. The ridicule? The public failures? An exhausting learning curve? Disappointments?

Yes. ABSOLUTELY! Because it's more than music. It's the future of our culture. It's lives being touched. And it's a once in a lifetime opportunity. Albeit insane. But like I said in the previous post, "Insanity is often disguised as genius in it's early stages."