The web is full of hipsters scouring the indie music scene for the next big thing. And while there is no shortage of communities where these trendsetters can share their picks, they’ve never stood to gain anything from being ahead of the crowd (aside from a slight sense of superiority). Popcuts, a Y Combinator-funded music store that launches today in public beta, is looking to reward these early adopters by paying store credit to the first people who buy a song that later goes on to become popular.
When an artist signs on to the store, they allocate a certain portion of the revenue generated by their songs to go back to their fans. This money is then distributed according to how early each user purchased a song (the earlier you buy, the more you make). For example, the band My First Earthquake has decided to pay out 30% of its revenues to its fans. The earliest adopters (say, the first dozen people to buy the song) will break even after the song has been purchased by around 25 other people. Fans buying the song later on will still earn credit, but it will be earned at a much slower rate (the site will tell you how quickly you’ll be earning credit before you buy a song).
For the time being Popcuts is only selling music from unsigned indie artists, but CEO Kevin Lim says that the company will pursue deals with record labels once it has perfected the new payment model.
Popcuts has a compelling idea, but its success may well lie in the generosity of the artists it signs. The store’s default split gives 60% of revenues to bands, which is competitive with other online stores. But the default 30% allocated to fans may not be enough of an incentive to drive many more purchases, and bands may find they have to give up more of their proceeds to drive sales. In any case, it’s an experiment that the music industry will probably be following closely.
There are a number of other music stores experimenting with new pricing models for music. Most notable is Amie Street, which initially sells a song at 1 cent and increases the price as it rises in popularity (like Popcuts, this rewards early adopters, but it does so in a different manner).
interesting idea. but are ppl still paying for music?
but on serious note, this is a great idea.
I agree, nice idea… wouldn’t people just keep buying and spread the word to buy, so they can get their money… I mean it could turn into a huge cycle? maybe. maybe not.
http://tinyurl.com/applenow
Isn’t this also known as a pyramid scheme?
They may not be paying for the music. But they buy the t-shirt!
thanks for the leadoff comment intersting. this is Kevin, CEO of Popcuts.
we’re focused on finding a way forward where artists get paid, but fans are also recognized and rewarded for their key role in music. hopefully we can help spark discussion, and get some good new artists discovered along the way. music is more than the mp3. we want to give a sense of ownership to the fan.
Hey Kevin,
Nice idea - my site is a community of bands and music fans. Perhaps our ideas could be integrated for the good of the music community. Shoot me a message if you get some time.
Allen, founder
http://www.madtownlounge.com
Kevin,
Your idea is *awesome* and it’s original thinking like this that will help musicians find an audience and an income in the future. I don’t know whether PopCuts is the ultimate answer, but it’s *certainly* an innovative step in the right direction. Kudos to you and your team.
yeah this is actually one of the first good ideas in terms of music in awhile. Interesting model, and i really like to see if this catches on.
Great idea.. id love to see the fans actually get involved. There is so much opportunity for the indie artists now, where you can have major distribution thru itunes, and models like this one. Even get major productions that the top start used to only get, and have the tracks and beats A&R’d by top a&R music execs that worked with the most current mega hits. used tp cost $100, 000 a beat and now indie artist can pick and chose , Pop Beats, R&B Beats, Hip Hop beats, Rap Beats.. etc….and get full arranged and produced beats at:
http://www.beatslocker.com
All that remains now for the indie artist is promo and marketing ( the ONLY reason you might still need a major label besides Promo funds) and this hopefully will be a step in that directions and get fans more involved……
interesting model, but will users learn to go places other than their itunes application to download music? I hope so.
Like Bittorrent for example?
This is a great idea. I couldn’t wait to get started. The UI was an initial turn-off, but the real turn-off was the payment. I am pretty sure you could make a ton more just using amazon referrals.
Love the idea. Will it work? If they can locate enough web savvy hipsters, it’s got a chance. We’ll have to wait and see..
How much does Y Combinator pay you guys to write an article about every startup that they have funded? It’s getting ridiculous.
It’s like 5-10k per article.
Honestly, this is really dumb. Talk about a tough audience to attract and a weak business model.
Hey Y Combinator, I have an idea for you. Give me 25 grand and I’ll go to Vegas and put it on black. That’s got better chances than this startup.
weak business model? this is the one of the better biz model of the startups covered in techcrunch i;ve seen these days.
Still a funny comment.
Good or no, tough market to change the dynamics of, just look at amiestreet. They may be profitable, but not to justify large VC investment.
i totally agree, betting on black sounds better - any biz model based around selling music in any traditional sense is pretty much doomed - nobody buys music anymore and those that still do will stop pretty soon.
You mongoloid - you’re payout on black would only be 2x if you won. Payouts on successful startups can be anywhere from 4x-100,000x.
ORLY most startups fail?! That’s why the payout is so high.
Wow you predicted a startup will fail - that’s like predicting a batter won’t hit a home run in baseball. Congrats you’re the new Oracle of the Obvious.
If I read this right, it’s essentially a pyramid/multilevel-marketing scheme?
Lord knows I have a problem with hipsters, but the site looks pretty cool. No one has fixed the broken, broken music industry yet. Will it be PopCuts?
i’m a big fan of http://www.thesixtyone.com .. hooked on their site, not planning on leaving anytime soon
For those wondering why YC stories always end up here, I think it’s to get traffic. Any YC story on techcrunch quickly rises to the top of news.ycombinator, which leads to traffic and buzz.
Most of the comments are really lame. People need to lighten up.
Great model good execution. Music is a very hard business to break into. best of luck
(linkback) Popcuts - Thrive or Fail? [VOTE] - http://www.thriveorfail.com/d0f0b
When you pay people to do something, you mess with their intrinsic motivation to do that thing. That is, if they liked to do it before, paying them doesn’t cause them to like to do it even more.
I don’t think this is a winning model.
very unique idea! fan’s taste and artist could be judged by ranking and purchase of music. Hope it to become a society of fan and artist!
intrinsic what? works for me! i just bought three songs from artists i never heard of and i haven’t paid music in years. i can be recognized as supporting a new musician and for having taste? i’m in.
http://www.popcuts.com/users/michael/
New sites like Popcuts and YouLicense are what the music business needs. These are tools/sites which will empower artists. Regardless some will make it and some will fail.
Some argue that the artist is not getting a fair deal with YouLicense, what are the alternatives?
Thrive for Popcuts! Kudos to Kevin and the Popcuts team.
haha, i can’t believe you can play TETRIS while you’re uploading a song!!!!!!! These guys are HILARIOUS.
Although this is yet another place for me tell sell my songs online, I like the twist. Giving early adopters a financial inventive is extremely engaging, as it goes directly to fans’ pockets. The problem here, though, is that this is the only value add which they offer to fans. It features little else than a monetary reward. Good idea, needs to be expanded…
It seems the Dot Com Bubble has come full circle. The last Dot Com Bubble ended in April 2000 2 weeks before the AllAdvantage.com IPO. If you recall, AllAdvantage was another multilevel marketing scheme, that combined paying people to surf and look at ads, with multilevel payments to spam-invite your friends. Now, we have more startups trying MLM again in the Web 2.0 era.
There’s something about cashback and MLM models that seems kind of a cheesy, I can’t quite put my finger on it.
I think this is a great idea, they seem to have found a unique angle on really connecting fans with musicians.
This music space is getting more and more crowded. The thought process is clear and innovative but if I am taking out my credit card to pay an unsigned band I want to pay them to keep making great music, not some hipster who “found them first.” Rather than make pennies off of struggling artists I would rather donate it back to them, give me a button where I can do that and I’ll start using the site.
> Amie Street, which initially sells a song at 1 cent and increases the price.
Are you as accurate when you write about startups other than Amie Street?
Because in fact they start at 0 for most of the tracks and a bit higher sor some label promotions.
Yet another TechCrunch blowjob article for a future epic failure. Keep it up guys.
PS - If you ever feel that little tingle in the back of your mind that asks “Is this company a steaming pile of shit?”, just ignore it. That’s called “critical thinking” and has no place here.
Wow you predicted a startup will fail - that’s like predicting a batter won’t hit a home run in baseball. Congrats you’re the new Oracle of the Obvious.
Congrats, you are a broken record.
Check out my Popcuts page @ http://www.popcuts.com/users/mobius/
It’s an interesting idea, but I’m wondering if their target demographic is too cool to have their coolness institutionalized and commoditized on a website.
Just wrote a post about it at my own blog, <a href=”http://www.themusicsnob.com/2008/08/07/popcuts-shares-revenue-trendsetting-listeners/”The Music Snob
Whoops:
The Music Snob
Whether this idea works or not, at least it’s another way of getting people interested in new music. If someone buys a song by a band they’ve never heard before and decide they like it, everyone’s happy.
Joe - http://www.anewbandaday.com
Sounds like a sellaband.com ripoff…
I’ve already made $1.11 off of buying 3 songs. Popcuts rocks : )
Will Popcuts succeed where Weedshare failed? Maybe: Weedshare was doomed by relying on DRM. Now that DRM-free music is no longer anathema to musicians, perhaps the share-music-to-make-money model can work.
This system will get gamed almost immediately. If the average song gets more than 25 downloads eventually, some investor can automate buying the first copy of every song that goes up, and sit back as the algorithm generates profit over time. Perhaps they could be the nth buyer just before the payout rate changes so they aren’t the only one holding truly bad songs.
Essentially, doing this would make the song buyer an investor in the company, paying upfront cash for Long Tail revenue rights. The cash pays for the hosting and overhead and comes back eventually if the company doesn’t go under. The only question is whether 25 downloads is more or less than the average - more and the scheme is profitable, less and it isn’t. If it is profitable then only the 25 schemers (or one with 25 aliases) who get to each song first will ever make money, while everyone else will just be a sucker buying songs later with no hope of getting much of a kickback. If it’s not profitable then it’s still just about street cred or maybe shaving pennies off your music collecting costs, which you can reduce to zero through BitTorrent already.
It’s blurring the line between a Ponzi scheme and a legitimate operation. Early buyers will eventually find out that the company has all the data and can adjust the payout scheme any way they like so they keep drawing new buyers. All they have to do to stay profitable is keep selling songs for greater than hosting cost, everything else is gravy, but they can game it to maximise their own profit. Early buyers are gaming late buyers but the company is gaming them all.
haha, the TOP “trendsetter” on popcuts has made back less than the price of a single album. you could make money faster by panhandling.
Wow, so much hating for a young startup. These guys have barely launched, and we all know that ycombinator’s seed funds are really small, so why bash them as if they were Microsoft?
Seriously, keep your pants on, it’s just a music Website.