Since the Internet stepped in the music distribution game, the music industry is suffering. In a way, music labels have always over-priced music albums, so when it became easy to freely share music through P2P softwares, fans just left the stores to download their favorite songs online. Music juggernauts like iTunes have managed to build a stable music economy online, but for the Founders of Popcuts, that is not enough to tackle the economic crisis music artists are going through. For the newly-launched startup, it is not music distribution that needs to be redefined: Fans need to be rewarded for their efforts too, and that implies re-designing the way we do commerce online.
Last week, I met Kevin Mateo Lim, one of the co-Founders of Popcuts. We took the opportunity of a bright sunny day to sit down in the Berkeley university campus and talk about Popcuts. Popcuts was launched in early August 2008 and is seed-funded by Paul Graham’s Y Combinator. On Popcuts, music fans browse a wide variety of songs, and just like on iTunes, they pay 99 cents for every track they wish to download and play on their personal music devices.
The unusual and brilliant aspect of Popcuts is that songs buyers are rewarded every time someone else buys the same song after them. This way, the ambitious music platform (and the artists) reward fans by sharing their revenues with the consumers. When the service launched, Jason Kincaid of Techcrunch titled his article “Popcuts Pays You To Find Good New Music“. I don’t think this accurately defines Popcuts’ intentions. Popcuts’ Founders are coming from a background in economy (Kevin Mateo Lim calls himself an economy geek). The idea behind Popcuts is that the internet is shaped for a new economic model, a win-win model. Any buyer can and should be rewarded if his act leads to more sales. Because the members of the startup team are music enthusiasts, they decided to apply their new economic model to the music industry first.
However, their intention is to create a software that rewards buyers according to their contribution. This means their model could (if proven to be successful in the music industry) be applied in several other industries, like video for example… Or advertising, like Kevin briefly mentioned.
I specifically asked Kevin if people could invest time/money and expect to generate a revenue from Popcuts, and he clearly explained that unless you are a top trendsetter, you shouldn’t expect Popcuts to be a source of income. I have been testing the platform for 2 weeks now, I have spent about $15 on music tracks and generated about 35 cents back, which confirms Kevin’s words.
There are so many online music stores out there that I won’t bother venturing in comparisons. Quite frankly, considering their company’s vision, I do not believe that they have any direct competitors on the market yet. Popcuts’ success will rely on the Founders’ ability to integrate their new concept in the wheels of the Internet’s 1.0 economic model.