SeeqPod has filed for bankruptcy, Imeem is trying to stave off expensive licensing fees, and Project Playlist still faces long-running copyright suits. But despite the doom and gloom among music startups, another one — iLike — has been cash-flow positive since December, I’ve heard. Chief executive Ali Partov confirms, and adds that last quarter was the company’s best ever. There’s also more evidence that its applications on social networks like Facebook, its desktop plugin for iTunes and Windows Media Player, and its own ilike.com web site help musicians find more fans and sell more music.
Revenue is coming through a combination of music-related ads, digital downloads through iPhones and Amazon and concert ticket sales. Its music application on Facebook, called Music, has 6.7 million monthly active users. It includes a section for seeing where nearby concerts are, including a list of friends who are going and a way to buy tickets. iLike offers a range of services for musicians (and their labels), including features that let them update concert tour schedules, stream songs, and buy ads that appear in places like the music-focused news feed on its Facebook app. Major acts that have paid for extra promotion, including John Legend and Beyonce, have seen their albums hit number one on iTunes.
There’s a caveat to what I’m hearing, though. Being cash-flow positive doesn’t necessarily mean iLike is profitable, as the company might be accounting for certain expenses in ways that mean more cash now but not so much profit after all the bills have been paid in full. Still, it is likely at least around break-even. But it’s a startup — so the goal is presumably to continue growing rather than trying to cut costs and make as much profit as possible.
And that’s the thing: iLike’s costs aren’t as high as they are for other music startups because the company offers snippets of copyrighted tracks. It doesn’t have to pay for licenses to the full songs. If users want full tracks, they can pay iLike parter Rhapsody and stream music through its service into iLike’s applications. Of course, relatively low costs would also mean that the company doesn’t need to make too much money in order to at least break even (it’s not revealing specific numbers). Still, breaking even in the music business is hard these days, and suggests iLike will be around for awhile.
How can iLike claim that its service uniquely helps musicians? There are many ways that musicians are finding new fans on the web — ranging from rivals like the other music startups or entertainment-heavy social networks like MySpace and its new MySpace Music service to illegal file-sharing on peer-to-peer networks. Through an increasing amount of anecdotal analysis, is the answer — including testimonials from musicians.
iLike measures pageviews and clicks that lead to purchases, and is “driving major traffic” for artists, Partovi tells me. He says that every album the company has promoted has made a top ten list on iTunes, and most have been in the top 3. I asked him how he knew it was iLike itself that was driving this traffic and not the quality of the musicians that were using iLike. After all, social media web sites purposefully seek out celebrities to give users a reason to try out their services, as others have noted.
For example, country star Keith Urban’s Defying Gravity and soft rocker Gavid Degraw’s Free came in at number one and number two on the iTunes top album last week, after debuting on iLike alone two weeks before the albums went on sale elsewhere.
Partovi’s counter-example is that new artists are getting discovered and going on to be mainstream successess. Lady Antebellum, for example, debuted its first album on iLike a year ago, made it to #3 on iTunes and went on to win a Grammy. Electronic act Thievery Corporation — a long-time underground favorite — also made the Top 10 list with iLike’s help. In Lady Antebellum’s case, digital sales accounted for more than 21 percent of total sales in its first week, much higher than the 4.5 percent that the average country music album gets online. Although the band used its own web site and other online promotion as well, co-lead singer Charles Kelley said this at the time: “iLike made it easy and fun for us to communicate with our fans online anytime,” it “is a critical part of our digital presence and it clearly moved the needle on sales.”
So while we don’t know how much iLike is making, it has at least found a niche doing the three things it needs to do in order to survive: help musicians, make money in the process, and avoid trouble with the labels.
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