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Listn, a social sharing startup based in Los Angeles, has just announced that it has been acquired by Beatport. The music sharing app started about 18 months ago and had grown quickly to 400,000 registered users, yet hadn’t created a revenue stream and was facing down a highly competitive music industry. The company declined to disclose the exact terms of the deal, but said the sale was in the seven-figure range. The acquisition came about as Listn was searching for additional funding.
“Our goal was always to change and improve the way the world shares and communicates around the music they love. When we met SFX (Beatport's parent company) we knew that rather than compete with the same goal in mind, we should join their incredible effort to revolutionize the music industry,” said CEO Mike Schmidt.
Listn pulled music listening history from several different music platforms including iTunes, SoundCloud, YouTube, Spotify, and Rdio, then shared that history with friends. Additionally, users could play their own music using the app and they could share tracks with friends, creating a sort of combined music library.
The app was de-listed from the App Store last week and will shutdown at the end of October. Listn’s five-person team will join Beatport in New York City to focus exclusively on new projects. Schmidt declined at this time to disclose exactly what those projects will be.
Founded in Boulder, Colorado in 2004, Beatport provides high-quality streaming music, is focused on electronic dance music (EDM) and bills itself as a “provider of music, tools and resources customized for the unique needs and demands of DJs.” In February 2013, SFX Entertainment bought the company for about $50 million. At the time, it had 40 million users. Because the club scene often is an early test for new artists and music, Beatport is considered an early indicator of mainstream hits in the EDM genre.
“Beatport is an ‘iTunes for DJ's’. What excites me is their attention to detail and amazing relationships with the music community. These guys are pros and I feel like our learnings will help take the company to the next level,” said Schmidt.
The future of digital music sharing
With several large competitors like Songza, Spotifiy and SoundCloud dominating the complex and competitive industry — albeit at tiny and even negative margins — carving out a space in the market was a tough task. Schmidt said he foresees success in music sharing to be a carefully constructed balance.
“Like many social players it's all about the experience and content. There are so many people trying to compete in this space that you need to deliver a simple and valuable product,” said Schmidt. “Music is also tricky because you need to appease so many stakeholders. Dealing with labels and rights holders is something that both Beatport and the entire Listn team value. So, I think the perfect cocktail is one that focuses on the content, stakeholders and a mobile experience.”
Schmidt also thinks that part of the key to success will be the ability to offer exclusive content.
“I think one player to watch is Apple. They are on the verge of something incredibly interesting. When they released U2's “Songs of Innocence" exclusively on iTunes I remember thinking that it was the smartest thing I've seen in music for a while,” said Schmidt. “Exclusivity gets people talking and gives services in the music industry a leg up. When a streaming service has exclusive content, people start to jump between streaming mediums. There is no brand loyalty when it comes to music services. People just care about the music.”
Built In LA made the same observation about Apple’s purchase of Beats Music this summer. In addition to the Beats Music streaming service, Apple was getting two music executives with deep industry ties and a taste for the next big thing: Dr. Dre and Jimmy Iovine. Those connections could help Apple facilitate exclusive music deals.
Beatport’s strong hold on electronic dance music could give it similar benefits. Beatport’s exclusive first-look into the EDM club scene gives the streaming service the ability to charge a premium to advertisers and users.
“More exclusive content and curation equals more subscriptions and sponsors,” said Schmidt.
Founded originally in Montreal, Canada, Listn’s investors included several firms from that city: Real Ventures, BDC Venture Capital and FounderFuel. It later moved to Los Angeles to participate in LaunchPad LA’s 5th accelerator class. In total, the company raised $500,000 in seed funding.
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