Grooveshark CEO Sam Tarantino called early-2011 through early-2012 the “
year of getting punched in the face 10,000 times” — a reference to getting kicked out of Google and Apple’s app stores, facing huge new competition, and getting hit with another big copyright lawsuit.
A year and a half later, the Florida-based music streaming site is doing a lot better.
This summer, Grooveshark signed an out-of-court agreement with EMI Music Publishing and announced an amicable pact with Sony/ATV, according to Digital Music News, though legal battles with Universal Music Group, Sony Music, and Warner Music Group are ongoing.
Tarantino claims to be adding 200,000 users a month, including big growth in mobile. The company has grown to 85 employees, after cutting from 145 to 60 a couple of years ago.
“We bootstrapped this thing since the beginning and it is only until now that our slow but steady steps are starting to bear fruit,” Tarantino wrote in an email.
The site is controversial because of alleged copyright violations. Tarantino’s vision, however, is supposedly to provide licensed content to help support artists. In any case, Grooveshark provides an impressive experience, letting users stream almost any album for free and without ads.
We asked Tarantino about recent developments over email:
Why did Sony/ATV and EMI back down while other producers continue to fight Grooveshark in court?
I wouldn’t call it “backing down”. We’ve always operated with the intent to licence content on the platform, and we have been for the past 7 years. People tend to forget that I started this company because I’m a musician first, and my goal has always been to leverage technology to build and grow artists. Over the years we’ve been positioned as the black sheep because we grew the company in Florida, not in Silicon Valley. No one really understood who we were. When you reach a scale where you’re big enough to challenge the establishment, that can be a scary thing, IF you don’t understand what drives us. I think most people thought we were just a bunch of coders wanting to ruin an industry but the reality is we were doing the best we could with limited resources. We bootstrapped this thing since the beginning and it is only until now that our slow but steady steps are starting to bear fruit. In the last 2 years, we opened an office in NY and I myself as CEO moved up to spearhead the long process of educating everyone in the industry on who we are and why we are doing what we do.
2011/2012 felt like “getting punched in the face.” How is 2013 going?
Actually 2013 has turned out an about face from last year. There are new faces both here at Grooveshark, and across the industry. We’ve scaled back up to 85 employees, 20 who are in NY. We’ve been taking steps in preparation for some major growth. This has been the most exciting year for me personally since we exploded to 35 million users back in 2009-11. However this time around, the excitement feels far more substantial because we’ve been on the downside of a meteoric rise. We’re in the championship rounds, and its in those later rounds, AFTER you’ve been pummelled, you really understand what it takes to stand back up and finish, and that’s a lesson we needed to learn.
What does your user growth look like?
Our overall growth has been solid, our mobile growth has been phenomenal. We made the decision last year to go to an HTML5 web app. The benefits of which are that we are device/OS agnostic and can be accessed via the browser on any smartphone or tablet by going to Grooveshark.com. Since late last Fall we’ve been growing at a pace of about 200K users each month.
While the rate of growth has been a pleasant surprise, we understand that a big part of music consumption has always been on the go. We have some pretty big launch plans this fall to amplify the mobile experience, and mobile is a major part of our overall strategy moving forward.
What is your revenue breakdown and how is it growing?
Grooveshark’s revenue model is primarily ad driven. We work with scores of the world’s biggest brands and advertisers. Our audience is a young, affluent, and engaged music enthusiast; and we deliver millions of these consumers. We do have a subscription offer for users interested in accessing our Android app and receiving sneak peaks at new product releases. I’ve had countless users admit that the true reason why they subscribe is to support this site that they love. These people are fans, and any company will tell you that there is a massive difference between a fan and a spectator. It’s very humbling to know we have so many fans and makes me love what I do even more every single day.
We’ve had good growth here in 2013 but if in the headwinds of multiple lawsuits we’ve been able to grow at a modest pace, now imagine what we’d be able to do with tailwinds.
What does the future of the music business look like?
The core of it is around live. Look at how much people spend on concerts or festivals. It’s incredible because in many cases people will pay $US50, $US75, even $US100+ dollars to see a band live. As a band you’d have to sell 10 CDs to make up for one $US100 ticket. Unless you’ve been making music for 20 years, most bands don’t even have that much content in the first place. We’ve reached a point where the consumer is now spending more of their entertainment wallet share on live music than on the actual content itself. The question is how do we help everyone in the space reach that consumer who is spending on the live experience?
Here’s an example; I went to see Alt-J at Central Park Summer Stage which was $US42.99. Seven of the next eight dates are sold out. The size of these venues averages about 2,500 people which means that on average they are bringing in just over $US100k a night. If they do 100 nights per year like many touring acts then they are doing $US10M gross. If they are touring 200 nights that’s $US20M gross. And that is for a NEW act. U2 holds the record for the highest grossing tour in history. Their last 360 Tour generated over $US700 million in ticket sales from 110 dates. Compare that to selling 1-2 million albums at $US15 a piece. The winners of the music biz are those who focus on creating a 360 degree consumer experience coupled with multiple revenue streams. It’s about delivering great content from great artists that people want to see, hear, and feel. Whoever is not aligned with that is in trouble.
I love Kevin Spacey’s speech because he nailed it. “The audience has spoken, they want stories. They’re dying for them. They’re rooting for us to give them the right thing and they will talk about it, binge on it, carry it with them on the bus, and to the hairdresser, force it on their friends, tweet, blog, Facebook, make fan pages, silly gifs and god knows what else about it.”