An indie digital music startup tried to fight the streaming behemoths. Guess who won?

Dharma or deep house?
Dharma or deep house?
Image: Reuters/Kacper Pempel
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“One good thing about music,” goes Bob Marley’s famous, gentle croon, “when it hits you, you feel no pain.” But in the business of music right now, pain is likely the only thing being felt.

Big streaming services like Spotify and Apple Music are doing all right—the former because of its position as the staunch industry leader, the latter because of its backing by a near-trillion-dollar company. Many other music companies that’ve started up in the last few years, meanwhile, are struggling to stay afloat.

There’s Rhapsody, hemorrhaging millions of dollars a month. There’s Jay Z’s Tidal, which has waved hello and goodbye to too many executives to count. There’s the horde of non-streaming startups not even lucky enough to have their troubles publicly chronicled, but floundering nonetheless.

And then there’s Drip, an indie music subscription platform for exclusive artist content, which was due to shut down today (March 18) after five years of trying. Yet instead of asking why Drip failed, a better question may be how it and other small music startups managed to stick around so long in the first place.

The little startup that could(n’t)

In 2012, Drip was seeing hundreds of independent music labels eager to jump aboard. Its business model was fresh and sexy: users paid a monthly fee for curated deliveries of songs, remixes, tickets, and other content from indie labels, much like how their predecessors in the pre-digital era signed up for mail-order cassette clubs. It was the new album-of-the-month club.

Drip claimed to be a boon for serious music fans and indie labels alike—chiefly by fostering close, emotional connections the same way old-school record stores once did.  Of course, most of those record stores no longer exist. The reason for their demise? iTunes, Napster, and the rise of digital downloads forcing out physical media.

Now, it is the turn of services like Drip, which are mainly about owning exclusive downloads, to be disrupted. Today’s big names in music are in streaming rather downloads, and they’re cornering the market on listeners and forcing smaller players out of their way. Streaming services flood people with so much content—literally making millions of songs available all for a flat monthly fee—that consumers can easily become wary of signing up for more music-related programs beyond that.

With the field for streaming platforms itself becoming oversaturated too, industry experts note it’s difficult for small (whether streaming or non-streaming) music companies to even make consumers aware of their presence. ”The community told us they loved it,” Drip co-founders Sam Valenti and Miguel Senquiz wrote in a Feb. 18 Medium post announcing the service’s shuttering. But they added:

We experimented, we had a great time, and we’ve made some great friendships along the way…  [but] at the top of the year we took a hard look at Drip, our future… Between timing, funding, and everything needed to realize this future, we made the decision that now was the time for Drip to come to a conclusion.

The main problem with Drip’s vision—of digital fan clubs, enthusiastic audiophiles, indie communities—is not that it didn’t have appeal. It did. Certainly there are, and always will be, indie music lovers interested in fresh underground content that’s separate from anything major labels have to offer.

Yet most indie fans like at least some mainstream songs—and would they pay for both a massive streaming library from Apple Music and indie downloads from Drip? The answer, it seems, was no.

Boom and bust—again and again

TurntableEarbitsBopSongzaBoomioBoom. And now Drip.

A moment of silence for all the music startups that’ve sputtered out in recent years. Even Apple’s iTunes, while still relatively huge, is in somewhat of a downward spiral (paywall) thanks to plummeting download numbers, hence the flashy launch of Apple Music.

Overabundance is the culprit. In the last decade, there have been far too many new startups rushing into the music scene, industry specialist Cortney Harding tells Quartz. They all had one thing in common: an soaring overestimation of the size of the market, and particularly the independent music market. They saw the music business as a space ripe for another reinvention. What they likely didn’t see was how similar their ambitions were, and how moderately-sized their audiences. And how big streaming is becoming.

“There are a lot of zombie startups right now that essentially got some money a few years ago and are just running out the clock,” says Harding, who consults within the music and technology businesses. “A few years ago, you could pretty much raise money for everything—now there are music startups where employees are on furlough. We’re going to soon see of consolidation this year, a lot of startups going under.”

“There’s always a boom and bust,” she adds.

So what’s next for digital music? Some say the industry will dwindle to one or two giant players—most likely Spotify or another streaming service—based off the winner-takes-all history of internet companies. Others say there is ample room for multiple success stories. Whether non-streaming entities can sufficiently distinguish themselves from streaming companies remains to be seen; what’s clear is a more general phenomenon: that customers, right now, are being hit with far too many options.

For evidence of the boom, just look to the dozens of companies on old startups-to-watch lists from 2012 and years previous. For evidence of the bust, count how many of the names you recognize.

As for Drip, surprisingly, it was saved yesterday—by a last-minute takeover by Kickstarter, in the crowdfunding site’s first-ever acquisition. This has prevented Drip’s collapse for now, though who knows how sustainable its future is. Perhaps it will end up being the digital equivalent of vinyl in whatever happens next in music.