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Summary:

Wahwah.fm was trying to bring personal radio into the social age, while doing it all legally. It failed – at least for now – and CEO Philipp Eibach has a very cautionary tale for startups planning to take on the music business.

Philipp Eibach Wahwah.fm

It was an innovative idea. Wahwah.fm was going to bring pirate radio into the social age through its smartphone app, which let users turn their iPhone playlists into live web radio broadcasts. Users could message each other and list broadcasts as Facebook events. The service peaked at 50,000 users. And then…

… Wahwah.fm collapsed.

Earlier this week, the company said it was going offline for the summer for a technical overhaul and licensing rethink. As CEO Philipp Eibach put it to me, Wahwah.fm is “making a step to the side”.

The reality is, the model didn’t work – and the reason for that failure is instructive to anyone trying to make the whole music-tech thing viable in the current climate.

After all, this is a company that tried to create a new music business model, and to do it legally.

Unsurprisingly, it all came down to licensing. At the heart of Wahwah.fm was the streaming service of UK firm 7digital. Armed with 7digital’s catalogue, Wahwah.fm still had to get the rights to play the songs in the U.S. and Germany, where it operated.

The company’s clever idea was to adopt a radio licensing model. Effectively, it said that, since it did not provide interactive or on-demand streaming, it should be able to pay lower royalties.

“We licensed the whole thing as non-interactive streaming – a radio license – but it was not enough to provide the user experience we envisioned,” CEO Philipp Eibach told me. “People could only tune in to listen to something live but they couldn’t listen to the song afterwards, or skip tracks. People really liked it being a radio station and the possibility of broadcasting your own music to friends around you, though.”

It wasn’t just a problem with user experience, though. As Eibach painfully discovered, the radio model meant constant renegotiation with the labels and collection societies – few of whom are well-disposed towards new business models in the first place.

“Once you have a license, it’s valid for a few months and you have to negotiate again and again. We realized it’s a huge overhead, the whole licensing and legal thing,” he said. “There’s so much grey zone. You talk to them and they don’t have a clue about new models, and are suspicious of new things.”

“There should be more competition, so there is a need for them to look into new models. Maybe more collecting societies would increase the pressure.”

So now what? Eibach says he and the six staff that are still “more or less loosely connected” intend to make a comeback later this year. The plan is to “hook up” with an existing on-demand service of the liked of Spotify or Simfy, so Wahwah.fm can “effectively outsource the whole licensing thing”.

Apart from that change of base, the company still wants to continue with its live web radio idea. “We still believe in the basic concept of Wahwah.fm,” Eibach said. “We didn’t find our way in the first step, but we’re still on it.”

One of the really intriguing possibilities with the service has always been its potential for letting people broadcast their own content – both recordings and live, radio-station-style talking – alongside or over the licensed songs. Is that still going to happen?

“It’s under discussion, but then again you stumble into this licensing thing. The big labels are really suspicious about user generated content.”

Any advice for other startups wanting to get into the music biz? “Overall, don’t do music,” Eibach laughed bitterly.

“Really have a closer look if it’s worth going into this legal struggle. Sometimes you have more freedom if you do the legal stuff on your own, but it means more hassles.”

“We tried to do it legally from day one, but maybe this means it takes longer.”

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  1. People have long been able, with various ad-hoc systems, streamed their own selections of unlicensed music to each other, via so-called ‘pirate web radio’ or whatever … so obviously there’s a niche to fill with a legal service. Along comes this company, doing the labels’ work for them and providing a service that made it really easy for people to stream fully licensed music to each other in little temporary, non-download webcasts. So far, so good; clearly it was yet another revenue stream for the labels, and a legal alternative to piracy (for this type of ‘hey listen to this music I picked out’ situation) where there was none before … and lo, it has to shut down because the major labels are run by morons who can’t just be like “great!”, treat it like a prototype or future acquisition target, and all the while be getting a simple percentage of revenue. No, they need certain minimums or it’s not worth their while. What a crock. Why should anyone even bother trying to go legal or provide legal services for others? Seriously, why bother? The industry will provide you with no support whatsoever, so why should we feel like we owe them anything? If you want to play specific selections of music for your friends, just play it for them, any way you can.

  2. 50.000 users? i do not believe it. The idea is simply a total failure. Who wants to listen the playlist of your neighbor? Please lets be serious. Second you plan such a service and you are not aware of copyright issues, and licensing deals with collecting societies BEFORE launching your platform?
    Is this a joke? Sorry guys, another time…

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