I worked for one of the big 5/4/3 music companies and they are actually desperate for physical distribution to go away.
Universal Music (the largest music company) sold its CD manufacturing plants a few years ago and all their focus is on digital exploitations. They are looking to the future and that rarely includes people buying CDs in retail stores.
I can't stress how desperate they are to take advantage of the huge number of digital assets that they own. So, start-ups, don't be too afraid of them. If you have a way for them to make money they will be interested in you, just don't assume they are idiots.
You may also want to start thinking about writing software to help them manage the millions of digital assets that they have - its not a simple problem - imagine the digital rights that needing tracking (for every type of exploitation in every territory), the royalties to be paid, the SOX auditing, the contracts, digital workflows, let alone the challenges with taking digital content and pushing it to a huge variety of downstream partners.
If you have a way for them to make money they will be interested in you, just don't assume they are idiots.
That's a really polite way of saying "They will squeeze the last drop of blood out of you and then some".
You may also want to start thinking about writing software to help them manage [...]
We already have the software. It's called spotify, soundcloud, grooveshark, iTunes etc. The technology to pay the artists a slice of the revenue is in place. Except currently it's mostly used to pay the labels instead.
That's a really polite way of saying "They will squeeze the last drop of blood out of you and then some".
Very true! However, they do have a lot of cash and very few ideas of how to exploit all their digital assets.
We already have the software. It's called spotify, soundcloud, grooveshark, iTunes etc. The technology to pay the artists a slice of the revenue is in place. Except currently it's mostly used to pay the labels instead.
I didn't mean software for end users, but software for the music companies to use internally to manage their assets. You'll be surprised (or not) to know quite how disjointed and hacked together their internal systems are. Every music company merger results in years of hacks in getting data from one set of archaic systems into another. Of course, the same software could also be used for managing other media, such as film, tv etc - there are small companies that have done very well supplying custom software to entertainment companies
e.g http://www.ecteon.com/products-overview
You'll be surprised (or not) to know quite how disjointed and hacked together their internal systems are.
Not surprised, I've witnessed it first hand (I've been with a music startup).
My argument is that they don't have a software-problem. Managing an inventory of a couple million items is by no means rocket science, they could fix that in a couple months. What the best software can't fix is their mindset, which is firmly stuck in long expired business-models.
Dealing with one of the so-called "majors" is like dealing with a really stubborn 3yr old. You can forever explain the simplest realities to them in the simplest terms - they will still insist on their objectively absurd position and use all the remaining power that they have to make your life miserable in every possible way.
The best strategy is to stay far away from them until they run of money and their inventory moves into more clueful hands. Unless you want to be the one to take-over their inventory of course. In that case I wish you the best of luck - and nerves of steel.
Maybe the first founder didn't know the right people?
Probably.
Music companies are entertainment companies so are still extremely relationship-oriented businesses - far beyond the way conventional businesses are (such as software companies, manufacturers, retailers, etc). To be a top exec at a music company does not necessarily depend on skill or acumen.
Music execs can fail horribly at one company and then effortlessly transition into another great exec job at a competing music company. It's a small world. The music industry has this idea that its very complex and difficult and needs years of experience - but its really not.
If your founder happened to know the right exec in an e-commerce department and was able to show a demo/trial you could have been in with a chance. Anything related to billing software always has a good chance because its easy to make a case how it is generating revenue from day one. That's a difficult thing to do.
Universal Music (the largest music company) sold its CD manufacturing plants a few years ago and all their focus is on digital exploitations. They are looking to the future and that rarely includes people buying CDs in retail stores.
I can't stress how desperate they are to take advantage of the huge number of digital assets that they own. So, start-ups, don't be too afraid of them. If you have a way for them to make money they will be interested in you, just don't assume they are idiots.
You may also want to start thinking about writing software to help them manage the millions of digital assets that they have - its not a simple problem - imagine the digital rights that needing tracking (for every type of exploitation in every territory), the royalties to be paid, the SOX auditing, the contracts, digital workflows, let alone the challenges with taking digital content and pushing it to a huge variety of downstream partners.