Justin Timberlake Hearts BurnLounge
New York City-based BurnLounge is a company to keep an eye on. The company has raised $13 million from entertainment industry investors including Justin Timberlake. It turns music fans into promoters and sellers by charging for access to its catalog of music and web storefront tools.
The idea is to “take the street team into the twenty-first century,” says Stephen Murray, BurnLounge co-founder, president of entertainment, and chief creative officer. The three-and-a-half-year-old company launched in June after being in beta for eight months.
It generated $1 million in sales in its first month. Fans now operate 40,000 50,000 online retail shops, and the company claims it’s the fifth-largest music download site.
Murray admits that music generates very low margins — sellers earn 5 cents per song sold or 50 cents per album. The company gives doles out more money for selling BurnLounge stores (and soon merchandise), with an affiliate system set up that requires prospective store operators to sign up through a current store operator. Skeptics compare it to a pyramid scheme.
BurnLounge’s setup fees aren’t negligible; $29.95 per year for the basic store, and up to $429.95 per year plus $8 per month if you want VIP concert passes and such. Other complaints: the site makes frustrating use of Flash and only works properly in Windows. Downloads are WMA files, meaning they won’t play on iPods.
Playing to people’s cool kid aspirations on a slightly janky site? That sounds familiar. Party promotions also helped drive MySpace to the top…maybe BurnLounge will catch the eye of one of the hungry media moguls. BurnLounge may not be a social network, but that doesn’t seem to be terribly profitable anyways. MySpace itself just entered the customizable online music franchise business over the weekend.
The company is facing competition from startups and other large players Other companies that help fans to set up music shops include MySpace partner Snocap, Navio, and Musicane. BurnLounge claims that it is not taking customers from iTunes, or even P2P networks.
The company says the vast majority of its retailers and customers have never previously downloaded a single song from the internet. And these new buyers seem to be more partial toward full albums than those of the a la carte generation, with 80 percent of transactions involving at least one album. That’ll make the musicians happy.
And unlike the new MySpace music shops, this is not an indie play. Though BurnLounge adds 350 albums per week of unsigned music, according to Murray, its biggest sellers are far and away pop albums from the major labels.
(Surprisingly, “SexyBack” was nowhere to be found…did Justin give the exclusive to iTunes?) Occasionally heavy promotion brings a smaller artist to the top, for instance Coffey, a poppy Texan singer who likes to pose with the confederate flag.
Update: BurnLounge says its number of registered retailers is 40,000, not 50,000 as it had previously indicated.
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Celebrity investment? What can go wrong?
From what I’ve been reading, it raises my skeptical side. I’ll just stick with buying my CDs.
I actually was suckered into a presentation for the “next iTunes Killer” and it turned out to be Burn Lounge. The presentation delivered in a GenX like sweaty Tony Robbins fashion was a classic pyramid scheme. The focus of the presentation was on how much money you could make, complete with checks being held up like it was Publisher’s Clearninghouse. Little to no mention of any l innovation in the actual delivery of music, or user experience because of course, it is in flash and really weak.
Yeah, I think it’s smart to invest in companies whose websites still force me to use Internet Explorer.
I tried it just to prove a person wrong. I ended up right. I spent $150 to get set up and then was being charged $14.95 for the monthly store fee and a crappy magazine. At $0.05 per song I only needed to sell 299 songs to break even every month. I thought I was going to retire on this :)
I would stay away if you want my advice. There was a consumer credit card reward program called Consumer 1st than many people detracted from into Burn Lounge. Complete pyramid scheme that is just milking money from consumers. Wait – not consumers because no one uses the site to actually download songs. IE – c’mon you are a new company and don’t use Firefox – duh!
There’s this thing called Amazon Associates…
I was about to join today im glad u all posted this i went to a seminar injuly ive wondered about this
This thread shows BurnLounge’s ultimate downfall:
If hundreds of thousands of people sign up, what “burn lounge” music store will make it big? The one that has money for advertising, time to market and promote. Not all 50,000 “record stores” will be able to make it especially with yearly and sometime monthly dues to pay which can be in excess of $400.
And who cares what the artist makes? That isn’t my opinion, but will be the opinion of many. They just want their music.
Another problem and more importantly, is that in order to compete with I-Tunes there has to be a competitor with the I-Pod, which there is none in sight. People will continue to use I-tunes because they have an I-pod and it is easier to use and I-pod with I-tunes than any other medium.
It’s so strange to see the comments posted here and on other blogs regarding BurnLounge. I’ve come to realize that most people who post either have misinformation or just dont “get it.”
It’s also very interesting that people who are already succesful and have a head for business understand this concept immediately and average hard-working people (including myself) are quick to scream “pyramid scheme” or “that won’t work.”
For instance, the person above who’s worried about selling 299 songs to break even every month doesn’t see the big picture. This is not about opening an online store and having to hussle up thousands of customers. You only need a few customers. Your best friend, your workout partner, your mom. And while that’s not many sales in your store each month – you have to remember you’re making money out of hundereds to thousands of stores. That would be like McDonalds opening just one store in your neighborhood. Their customer base would not extend past a 2 mile radius. But they blanket the globe with golden arches and instead of selling the least hamburgers – they sell the most. Likewise, BurnLounge will sell the most music, then movies, ringtones, audible books, and any other form of digital media.
Let’s face it guys… the world is aggressively transitioning to digital. The market is only 8% of where it’s going. The 92% who are not downloading will be very soon. This is not a theory – its a fact. The convergence from a tangible hard unit to digital would happen whether BurnLounge exists or not. Fortunately it does! Literally hundreds of billions of dollars are up for grabs that are moving from traditional retail to online stores. So with this knowledge, you can choose to be just a consumer – or you can build loyal distribution across the globe by opening your mouth and saying “check out my burnlounge buddy!”
There are 300 different download services online. 299 only let you be a customer. Only 1 has a business model that let’s you profit. That’s appealing to the masses. Burnlounge is going to blow up and those that position themselves NOW in front of this huge cultural shift will create unimaginable wealth.
You see, iTunes can spend 3 million on a superbowl commercial and even knock on my best friend’s door and personally solicit his business. But if my friend can buy his music from me rather than from iTunes he will do that because he’s loyal to me and I’m loyal to BurnLounge. Again, extrapolate that concept univerally among millions of stores and you have secure revenue that comes in whether you work that day or not. It’s truly passive residual income.
America is country number one out of 100 countries guys. The company that is funding this 100 nation roll out is Montgomery & Co. They are the firm that brokered the sale of myspace.com to Fox Network for $580 million recently. Do you realize the amount of due dilligence that this broker firm did before taking on BurnLounge?? Do you think Livenation, who is responsible for over 80% of all concert venues in America, would partner with BurnLounge, granting their retailers VIP access to all events? Why would they do this. Because the UNDERSTAND the concept. They understand the amount of music BurnLounge is already moving with just 40,000 stores (over half a million monthly) will continue to increase exponentially as we expand across the globe. Why would Cadillac, who NEVER sponsors anybody, ask to be BurnLounge’s official sponsor for life and open up their own BurnLounge (see http://www.burnrubberlounge.com)? Why would the Elvis Presley Enterprises, or Willie Nelson, or a hundered other famous artists and celebrities involve themselves with a “fly-by-night” company?
Guys… take off your “buyer’s beware hat” for a minute and put on your “financial cap.” Stop for a minute to look at the credibility of the company. The partnerships they have put in place and what they have accomplished so far is mind-blowing. BurnLounge has done more in 9 months than most fortune 50 and 100 companies accomplish in their entire business history.
And the really cool part is that we haven’t seen anything yet! It’s happening faster than any of us realize and BurnLounge is poised to be the biggest player in the world.
Take the time to understand what BurnLounge offers you. Don’t sneeze at it without taking a serious look. Check out their compensation. Ask the person who shared it with you to tell you about how you’re paid to tell others about BurnLounge and how you get paid even when those folks share BurnLounge with their friends, and so on and so on and so on into 100 countries.
Think about how virally the myspace community grew. The only question you have to ask yourself is, “do you want to be the one getting paid when music, movies, video games, etc. are being downloaded across the globe?” If the answer is yes then you need to positionn yourself NOW. Get your online media center up and running and share this with those you care about. You want to be residually-tied to as many stores as possible. Start building now before the momentum REALLY takes off, so that you’re fishing with a net instead of a pole.
If anybody has questions or would like ACCURATE information, or would like to be sent press relases via email, etc. Feel free to contact m at your convenience. My name is David York and my email is david@theburncrew.com.
Take care everybody and God bless,
Peace,
David
Anyone who doubts it a pyramid scheme business model only has to read the above loooong post and substitute “Amway” for BurnLounge and “soap” for digital media. Oh boy, its fun to live in America ;)
These people who get involved in these schemes drink the coolaid that you dont have to sell the product, you sell the business to your friends. But someone has to want to buy the end product (songs/albums) to make it all float. That tends to work with soap and other staple products. Will it work for WMA files … I doubt it. So at the end of the day the people holding the BurnLounge shops are just shuffling money between those who have fewer friends and those who spend all their time evangelizing new store owners. Guess who loses?
i must say, people need to start thinking outside the box! i have been involved in burnlounge for a short while and its been exciting and fun. Where else can you get into the music business for such a small initial investment, have the rights to sell millions of songs (soon to be movies!!) and get paid EVERY WEEK!! there is a reason why all the celebrities and wealthy businessmen are jumping in burnlounge, they see it!! Its a no-brainer! i have had NO PROBLEM getting my friends, family and co-workers involved. We are all thankful that there is finally a way to get paid for recommending a new albumn to a friend!