Muxtape is down due to supposed problems with the RIAA but it’s been speculated by the rapscalions of the web 2.0 blogosphere that the real reason they are down is because of increasing server cost.
Muxtape is a site created by Justin Ouellette which allows anyone to upload a mixtape which can then be sent to any of your friends. The music was then streamed back to the listener and if they liked what they were hearing they could purchase it through amazon or itunes.The site became a huge repository of music and before long scripts were written which allowed you to steal music from the site without paying.
Obviously muxtape was paying quite a bit for all the data they were streaming. Although they were streaming from S3 which is a very cost effective way to store and dish out data on the net- their wicked fast growth must’ve been catching up with them.
Jakob lodwick of College Humor fame and later exiled creator of Vimeo put in 95k into Justin’s little creation allowing him to quit his job and work on it full time for a time period of 26 weeks. Information obtained by a note that Justin and Jakob made that got leaked online:
Looking at the column delineating the cost on the right side of the note;
The first two lines seem to say Billy $30.5k and JO $32.5k. So it seems like ~60k went to both Billy and Justin for site creation. Leaving the remaining ~30k to go to the company of which only 18k went to servers. These numbers were only for 26 weeks though (as written on the initial note). Muxtape has been around for well over 3 months.
The S3 Pricing for storage: Data Transfer $0.170 per GB - first 10 TB / month data transfer out
Storage
$0.15 per GB-Month of storage used
$0.100 per GB - all data transfer in
$0.130 per GB - next 40 TB / month data transfer out
$0.110 per GB - next 100 TB / month data transfer out
$0.100 per GB - data transfer out / month over 150 TB
According to these numbers they would’ve burned through the 18k a long
while back. I’m curious weather the muxtape guys are looking at their
exit in the same way that the anywhere.fm guys did. As a buyout only escape. Anywhere.FM
allowed you to download an app that uploaded all your music online and
then let you stream it from anywhere that you had an internet
connection. They had extrodinary hosting costs and within 4 months of
launch were bought out by imeem.
The buy out route for such risky business seems like a so last year plan. Even when youtube did it they stood on more firm ground with the content that they were storing online had copyright material in it mixed with original content. So if anyone wanted to make an issue they had to sift through the mess of videos. Yikes.
2 comments so far
This makes a lot of sense, but I think the key problem beyond the necessary burn rate was that they are not attractive to investors.
You mention imeem, which cooincidently got popular by doing exactly what muxtape did, but they managed to grow from a small site to a large one over a matter of a few months and took on VC money to pay for it. Then when the legal attacks came they were in a strong position to negotiate licensing deals.
Muxtape has a lot of advantages over imeem, it has no filtering so there’s no banned tracks, and no need to pay artists right now so the site isn’t covered in ads and can take on a cool minimalist guise that bloggers seem to love. In fact, if you hit technorati and compare the number of blog posts on imeem vs muxtape you’ll find that the number of articles being posted about each site is rouhgly equal, despite a user disparty of almost 1:100.
muxtape grew very quickly in March and April it’s seen a gradual drop in users since then, so there’s no user growth to show to potential investors. And the fact that they have a whole lot of bonus points over imeem and can’t take any of their users away isn’t help. To become legal they’d have to make changes like imeem and this would only make them less popular.
Oh and to turn this site legal would probably cost tens millions, a big risk for a VC who’d be buying a site with less than 1% of the visitors of the top ranked sites.
So no VC money, no growth in the site, no easy way to go legal results in no good news for the site.
But you’re right about the exit strategy, I believe the muxtape name has some cool factor to it, and this may be their biggest asset. One of the music sites which doesn’t have a brand might team up with muxtape to give themselves some exposure. This might take the form of an acquisition or a partnership.
August 20th, 2008 at 7:12 pm
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