8tracks Shutting Down After Buyout Falls Through

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8tracks is shutting down. The streaming service with a focus on expertly crafted playlists has announced it will wind down operations on New Year’s Eve after more than a decade in operation.

In a lengthy and candid blog post, 8tracks founder David Porter said the service was shutting down due to lack of revenue needed to cover royalty commitments. “Given the magnitude of music royalties, the only way to field a enduring streaming music service (if music from the major labels is to be offered) is through money and scale,” he wrote. “We’re nearly out of cash and can’t afford to pay current and past royalties.”

According to Fields, the company recently learned a potential buyer had backed out following a lengthy M&A process.

Steady losses in listenership over the years also meant the service was unable to sell advertising at CPMs needed to cover compulsory royalty rates. Fields also said a steady decline in its free service meant there was a smaller pool of active listeners to potentially convert to its premium tier.

Why the loss in listenership? Fields said it was due in large part “because Spotify was able to satisfactorily address listener needs for music discovery and activity- and mood-based listening over time, as it improved its offering, reducing the relative appeal of 8tracks’ early lead in delivering on its unique value propositions through a crowd-curated model.”

The company bet early that audio consumers would gravitate more to “lean-back” programming (like Pandora) given its ease, with on-demand being an occasional utility when a specific song was desired.

“Nonetheless, easy, on-demand access to any song has proven to be a must-have requirement; it’s what people are accustomed to in the ‘ownership’ model, and periodic on-demand listening makes algorithmic lean-back selections ever better,” said Fields. “The upshot is that the average music consumer wants all of his listening needs addressed ‘under one roof.'”

Added Fields, “Given 8tracks’ audience size and declining trajectory vis-a-vis Spotify, Apple, Amazon and Google/YouTube, we were unable to raise sufficient funding (or find a good home for the company) to properly invest in product development, both for features that would have capitalized on 8tracks’ unique value proposition in the streaming music ecosystem as well as for features viewed today by most consumers as ‘must-haves.'”

8tracks launched in August 2008 and since has amassed 3.5 million playlists and 750,000 DJs. It ended November with 927,000 monthly active users, who streamed roughly 539,000 hours of music during the month. Subscription revenue for the month of October was $47,000, with ad revenue totaling $6,000.

Playlists created on 8tracks can be exported to Spotify. Read Porter’s blog post here.


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