Lessons learned by streaming startups


I read two “lessons learned” articles last week about founders of Internet radio platforms. One was a story of success, with tips on starting a digital business from Tim Westergren, the founder of Pandora. The other is the perspective of failed streaming audio startup Imeem‘s founder Dalton Caldwell.

Westergren’s advice struck me as much like the man – he recommends inspiring co-workers, believing in your ideas, seizing the moment by being flexible enough to adapt to big new trends (as Pandora did with smartphones, apps and mobile), but wise enough to manage innovative new ideas so that the pace is reasonable. In terms of investment, raise funds early and often – well before you think you should, he recommends.

Caldwell’s tone is noticeably more negative – not surprising given the end of his startup story with Imeem. Imeem was sold to MySpace last year for what was rumored to be a very small amount of money, and then shut down. Music licensing is the big problem – “he said record industry executives aren’t trying to be jerks. Instead, they’re in a tough situation because their revenue is shrinking rapidly”. Caldwell actually thinks the Pandora model stands the best chance for success against the high royalty rates, but only for a large player – he’s not sure there’s a place for a small startup anymore.

So, wisdom aside, I’m marveling at the fact that the industry has matured so that we actually have entrepreneurs with track records to offer historical perspectives on business models and industry trends. It’s way to early to say there’s no room for little guys – we’re still waiting for the next online streaming service to mount a serious challenge to Pandora. But in the meantime, there’s good stuff to go to school on in these two examples…

–Jennifer Lane, President, Audio4Cast.com, has a long career in Internet radio. Read her blog about the business of Internet radio and digital audio at  www.Audio4cast.com .