A lot has happened in the music space recently that suggests a steady progression towards the sale of DRM-free music by the big labels. In my opinion this progression/evolution is inevitable, and will be followed by a reduction in pricing towards zero - services will be able to sell based on service levels (ease and speed of download, inclusion of music video content and album art, etc.), but not much else. I’ll expand these thoughts in a post later this week.
Today I came across a new startup called Amie Street that may have found the right way to help people discover and market price music from new or little known bands. The founders, Elliott Breece, Elias Roman and Joshua Boltuch, are three Providence, RI college students (pictured left to right in photo below).
This is a very alpha site and there are a few bugs (I can only get the flash player to work on Firefox on a PC, no luck with IE or Firefox on Mac), and the interface could use some help with flow. But the core business model is killer, something I haven’t seen before.
Artists can upload their music to Amie Street for promotion and sale. Users form social networks with friends, listen to, and purchase music. All songs are DRM-free in MP3. Songs appear to be at 192kpbs quality level, although it may just be whatever the artist uploads.
All songs are free to start. Prices fluctuate over time based on demand for the song - currently the highest priced song, “Against the Wall” by Danny Ross, is $0.36. 273 songs have been uploaded so far. This demand based pricing model seems like a good way to sell music.
Users can search, browse and listen to music for free (via streaming). My download test worked well and the price of the song was properly deducted from the $3 in account credit I put on my credit card.
Users who have purchased a song can recommend it to their friends using a limited number of “rec’s” that they receive (users get one per dollar they add to their account). Once recommended, users will get account credit if the price of the song increases, giving them an incentive to find and recommend good music.
If you REC a song at 1 cent or above Amie Street will pay you half of the difference in the prices. So, if you REC a song at 10 cents, and it ends up at 90 cents, we will pay you 40 cents (half of the 80 cents difference).
If you REC a song while it is still free (0 cents), and it ends up at 98 cents, we will deposit 98 cents into your Amie Account. Amie Street pays you more for RECing a song while it is still free because you take more of a risk and because we want everyone on Amie Street to be RECing those great undiscovered songs.
Artists keep 70% of proceeds after $5 in sales. They are not required to sell their music exclusively through Amie Street, and can remove it at any time.
The model is extremely well thought out. Since the vast majority of bands are not concerned with people stealing their music - they just want people to listen to it - Amie Street could be a great way for them to promote their stuff. Myspace has proven that social networks are a perfect mechanism for promoting music, and the tweaks Amie Street have put on the model could be a winner. This is one to keep an eye on as it prepares for a full public launch.
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This is beautiful. I would NOT be SURPRISED if it completely takes over Pandora and the MySpace band section
I still miss mp3.com.
I found great non mainstream music …bought a few albums too
thanx
Wow, seems like a very cool business model. Interesting to see how well it will work. I could definitely see this growing and taking away market share from others. I think they should get a few mainstream artists on there to help boost its marketability.
Change that thought, it actually might function better for undiscovered artists considering the RECing system they have in place. At least that way the undiscovered stuff has a better chance at being discovered.
Looks pretty interesting. I’ve been thinking that the music industry is moving strongly towards artist independence. Record labels have been screwing over artists for years, and iTunes is a joke when it comes to profit for the artist.
Let the free market prevail.
Hey all, I’m Elias, one of the Amie Street founders. Thanks so much for checking out the site, we really appreciate that. We are working on a sample song solution (say that 5 times fast) and will have that up ASAP. Please feel free to email me with comments or suggestions (elias@amie.st)
Music 2.0 pioneer terra naomi should be able to do well financially on this site
That is one of the best sites you have profiled in a long time. Looks like a great find.
I have no doubt they’ll be getting some VC money soon.
kevin - thanks, I agree with you.
Eric, I agree with you too, although music is always tricky.
Just one question (other than what does ‘very alpha’ mean?)… you wrote: “Since the vast majority of bands are not concerned with people stealing their music - they just want people to listen to it ”
You are aware that bands get paid by labels, who effectively run the RIAA, right? When you say “the vast majority” where do you get this information from? I think a source here would add some legitimacy to your argument.
And, for the record (intentional pun), the vast majority of bands make the vast majority of their money from touring. Sources and further reading: http://www.magnatune.com/info/musicians
http://www.firstmonday.org/issues/issue6_8/pfahl/
http://www.musicbizacademy.com.....oughts.htm
http://www.firstmonday.org/iss.....retschmer/
How about “since a lot of INDEPENDENT bands”… next time?
Otherwise, neat site, but I’m sticking with Pandora.
Are my comments being filtered now???
i haven’t deleted any comments from this post yet. let me check the spam filter.
yep, it was in the spam filter because of the links.
Most bands don’t have labels. they want and need exposure. I’m not sure where to go for support for this statement - it seems obvious to me.
I think your point on touring is a good one. In my opinion bands will need to tour to make most of their money (plus merchandise). Music will become free or near free over time.
there have been soooooo many music business models it’s hard to say which has a chance in
however, it’s important to keep trying because one will finally work, and the revolution will start.
i may come up with a business model for music in my many business ideas. i have so many ideas i started a blog about it cuz my firend coworkers were getting sick of hearing them.
sometimes funny, sometimes serious, always thinking out side the box: http://businessideahaystack.blogspot.com/
Michael you said:
“If you REC a song at 1 cent or above Amie Street will pay you half of the difference in the prices. So, if you REC a song at 10 cents, and it ends up at 90 cents, we will pay you 40 cents (half of the 80 cents difference).”
What happens if 5 people recommended the same song? Does that mean for arguments sake, they all recommended the song at 50 cents, when originally it was 0. Does this mean all 5 people that recommended the song get 50 cents deposited into their account?
theBag - yes, I believe it does. They aren’t giving out anywhere near all of revenue, of course. A song might sell a thousand times while moving from 5 to 50 cents, so even if they give 5 people 45 cents in credit, it won’t affect them much.
Incentive led pricing is always going to be a winner if it gets the righ reach. Maybe they can rank people on how much they earnt, get a competition element going.
Good to see other Young Entrepreneurs, intelligently constructing their businesses. Well done guys.
Sharpshoot- good call on the competitive element aspect of the REC system. If you go to members.amie.st, log in to your account and view someone’s profile, you will see a green box entitled “Street Credit.” This is literally a tally of credit earned by the user on Amie Street via the REC system.
Thanks Elias. I definately like the way you’ve constructed the brand. Amie Street - where music lives and also the amount of “street cred” one has. Very Cool! MySpace eat your heart out
我都要哭了!
我终于,终于,终于知道怎么用Trackback了!
I really like the idea of changing prices in response to demand. It makes you go looking for the free songs and not donwload just the top artists.
I have to agree with Kevin… this is one of the best sites you ahve profiled in a while.
Interesting model and cool site.
I agree with Michael and Skeptic that touring will be important for artists to make money. As Krusty the Clown said more than 10 years ago, “The T-shirt sales! That’s the sweetest plum!”
Part of the goal for a site I run is to make it simpler for bands to spread the word about their shows (which they can list for free) and for music fans to find new live music in their area:
http://tourb.us
this model is way too confusing to the average consumer. people like iTunes cause of the speed and ease of the transaction. i read this article and I’m still confused on how this site works, and I have a college education. This referral system is bunk. I like the demand based pricing though, but i’m wary of someone perhaps spending $1000 on their own music to jack up demand and create a false price for their song.
Ya, music is such a tricky thing. Not only manipulated by RIAA, it always controlled by the originators. How to persuade both of them to freely doing exchange out from the traditional ways? Although Ami Street looks exciting, but I’m sure I will still live with that cute donkey…
Anyway, I like Amie more than Pandora~
cg- a band spending $1000 to inflate the cost of their tracks would be counterproductive, as they would now have an artificially expensive album. if the market decides that their music is worth $10, then many people will download it and drive the price to $10. if the band manager decides that the music is worth $10 and downloads it himself several times, then he’s just priced his band’s music beyond what anyone is willing to pay. of course, they get 70% of the proceeds, so really they end up spending $1000 to earn $700, which would have been an acceptable business eight years ago.
as for it being confusing… a) it’s not at all confusing. b) people will either not care about getting the $0.25 back anyway, or they will really care about it and figure out the system. either way, they will almost certainly recommend good music to like-minded friends. we’ve been doing that forever; there’s no reason to incentivize it, but it’s awesome that someone did.
Great model. There’s such a forest of social networking sites though, that building a large enough user base to support the “economy” is a challenge, even with great content.
Could it be possible that in a while, after the model itself proves to be viable, a larger socnet site makes a move, buys the business and attaches this as a component of their current service?
MusicFreedom.com has a very similar model w/ a much larger selection of bands…. still cool though.
This looks like a great way for smaller indie groups to sell their music while maintaining some integrity. The whole bidding up of the price by popularity is a great way of using a supply and demand model for sales - I like!
The best thing about Amie Street is the fresh thinking these guys have brought to a business where the entrenched players only see two choices (which can usually be summarized as “how we do it now” and “total anarchy”). Really innovative and creative approach; I hope they are wildly successful. Great profile.
Audiri has all of these same features and more
http://www.audiri.com
i am interesting in the pricing algorithm:
1. it seems price bases on recs. if so, how to deal with the pricing spam which mentioned by nm.
2. is it possible that price declines?
I like the concept…any business model that enables the user to make some money while doing sometehing they enjoy doing has great potential to succeed.
Agree with Skeptic on all points.
Also, is 334 songs a good selection to start a site with? Especially when you pocket people’s money into “Amie Street bank account”.
Vast majority of existing independent bands already sell their tracks digitally and on CDs thru CD Baby, TuneCore, etc. Why would they want to undermine the efforts that those companies put into promoting their music, why would they be giving most favored nation status to Amie St?
i’m from the band waterlog and i absolutely LOVE this site. we have utilized tons of places as an outlet for our music and this one appears to be the most promising. With so much free music available, it’s good to know there is a place were fans can pay a reasonable amount for your music while taking some ownership themselves in the artist/band. Our music started off free and as folks take interest we have started to benefit from the growth along with the fans - makes sense to me. it seems like the battle between money and music has been solved. good job and you have our support!
- break on thru! !! !
Hey Ben- the pricing algorithm is not directly based on RECs. The only way to artificially inflate the price is to keep buying it under different accounts, which means that whoever inflated it paid for it, and if the next few users to buy it don’t believe it is worth that much, the price will go down, leaving the “inflator” to have paid for essentially nothing. That inflation, as nm mentioned earlier, would not be a good plan.
PayPlay- we actually didn’t plan to launch the alpha for another week, during which time we would have added more content than the 334 songs that you saw, but things change and we got BLESSED by techcrunch.
This does sound like a good business model in music, for the BUSINESS and the content owners. Long term, it may not be so good for people, especially if there is no cap on pricing. On first pass, the generate scarcity in the information space - a story which has made many billionaires many times over.
The model raises some serious concerns over information access, and having to pay to know information exists. Imagine this model in other areas more central to people’s lives, not just music. Then imagine that the price to access the information is based on popularity: eventually we have essential and important information sources that only the richest people in the world can access - simply by artificially generating scarcity by raising prices as adoption increases.
While we have that model now for physical things (not everyone gets to buy a $10M jet… they are scarce), the models for information do not have to be that way. In fact, the wider adoption of information, the price can go DOWN because with wider adoption, a lower margin is possible to recoup costs. The incremental cost for adoption is essentially zero.
Significant kudos for 70% pass through and no DRM. If the price goes too high, people will simply use your service to find good stuff and get it elsewhere cheaper, free, or by illicit means.
Hey Jonathan–Thanks for the kudos. We do cap the songs at 98 cents to keep the prices fair, because we also believe that the best information (music) should be available to everyone. Thanks again for your support.
Excellent point Jonathan. Fortunately, our algorithm prevents excessive use of market power which comes along with scarcity. No matter how popular a song becomes, the algorithm has a ceiling of 98 cents. We use some datapoints as well that smooth out price spikes. So the probability of a song going from 0 to 98 cents in a single day is very low. Yes the algorithm also prevents the scenario of maxing out the market, which happens when everyone in the community has purchased the song, and the wild price fluctuations that come along with that bottoming out. The song is still popular so it should still have value, but we throw in some adjustments because of the obvious change in market potential. Keep the feedback coming. It’s really helping out a lot. Thanks guys.
A partnership between this site and popular site Purevolume.com would be EXTREMELY powerful.
Love the site, love the model. This will do well as long as they market it to the bands right.
very cool stuff. it’s always nice to read about someone doing something new/interesting - ‘flippin the script’. i figure we get that about once a month round here, if that.
Do Amie St promise not to be evil with their “Patent Pending” as mentioned at the bottom of their splash page?
Hey all- Amie Street does solemnly promise not to be evil in general, much less with the patent pending! Also, if clicking the link at the top of the page to Amie Street doesn’t work, just type in members.amie.st
I love Aimie Streets bus model but there are some sites who fall between the line and I’m not so sure thier not ripping off the artists like SellaBand, check it out:
http://www.theplugg.com/2006/1.....hype-real/
I like music, and I like make friends.
Anyone know what happened to the Amiestreet.com website? It doesn’t seem to be working.
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I like the concept…any business model that enables the user to make some money while doing sometehing they enjoy doing has great potential to succeed. - http://www.chinabboss.com
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