Nathaniel Whittemore

Yesterday, Techcrunch broke the news that Soundcloud had raised a new Series B round of $50m dollars, led by Kleiner Perkins, at something like a $200m valuation. This is an awesome bet for KPCB, because Soundcloud is the most interesting startup in the world, and further suggests that 2012 is the year of the music startup. 

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As I was writing my top ten trends to shape VC in 2012 post, one of the predictions that just missed the list was that in 2012, music startups will achieve platform levels that allows for a totally different level of dynamism and robustness in the startup ecosystem. This platform-ization will come across every part of the music experience:

Access to major label tracks: Spotify’s big announcement from a few weeks back was the opening of their platform API to allow 3rd party developers to build apps on top of their repository of tracks. This will create big new opportunities for music discovery, sharing, integration, etc. 

Access to concert information: There are a number of players pushing hard in this space, but Songkick seems to be opening a lead in the on-demand concert information segment. If they (or one of their competitors) consolidate their lead and become a platform, there are tons of apps - from ticketing to video sales to merch and beyond - that could be built on top. 

Band social media engagement: Facebook has replaced Myspace as the go-to place for musicians, aided by tools like BandPage that are making it easier than ever for musicians to engage and interact with their fans in real time. 

Music education: I’m not sure you’ll see a pure platform winner in the music learning space in 2012 (or ever), but there are an increasing number of awesome apps pushing music ed into the next century. I’m biased, but I think our portfolio company Chromatik will become the standard way that bands, choirs and other groups of musicians learn music together. 

In this landscape then, what makes Soundcloud so different and so special? 

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The promise of the generation of the social internet that started in mid-2000s was a fundamental shift from consumption to creation. It’s easy to forget that not that many years ago, the only way we interacted with things online was to read them, see them, watch them, or listen to them, with no ability to share them, remix them, or create our own versions of things like them. 

Soundcloud often says that it intends to do for sound what Youtube did for video. In a world where startups are constantly making “we’re the x for y” analogies, it’s important to recognize just how profound that could be. Youtube is not just the platform that launched a thousand memes. It is the platform that enabled Warhol’s 15 minutes of fame prophecy to be truer for a larger number of people than ever before; the platform that saved the music video, and changed how talent is discovered; the platform that enabled for totally new forms of activism like the “It Gets Better” series; and on and on and on. It is the platform that lived up to the meritocratic promise of the internet and blurred the line between professional and amateur more than any before it. 

Soundcloud’s promise to do the same for sound that Youtube did for video comes at a moment in which we are undergoing a fundamental shift in how we engage with music. The two factors that define this shift are 1) the lowered cost of consumption of music and 2) the lowered cost of creation of music. 

The lowered cost of consumption of music began with Napster (followed by Kazaa and the dozens of other music downloading tools that grew up in its wake), was aided incrementally by iTunes (which, if still on a pay-per-song model, made a breadth of music available that no individual record store could ever match), and is coming to completion in the era of Spotify (which I desperately hope buys Rdio instead of just driving them out of business and steals their UI). The result is that it’s dramatically easier to experiment with new artists to find things you like, diversifying the palette’s of listeners in a way that simply wasn’t viable before. 

The lowered cost of creation of music has been driven by the relentless improvement of both the software and hardware used to perform and create music. Even a decade ago, the only option for most bands to record music was saving their pennies for expensive studio time. Now anyone with a Mac and a mic can record and mix high quality tracks. 

In no genre has this shift been more apparent than in electronic music, which is growing, diversifying, and remixing itself so fast as to make the pace of innovation in every genre look tortoise-like. A few weeks ago, Skrillex (the 23 year old conquering hero of dubstep) was working on a remix of a track by Avicii (the 21 year old super hero of big European house). He finished it on his laptop in his hotel room, causing him to be a couple minutes late to his gig downstairs in Sheffield, England. He played the track for the crowd just a few minutes later, and within hours, a video of it was up on Youtube, and quickly thereafter making the rounds on the music blogs. By the next day, amateur DJs had created bootleg versions of it by imitating the sounds they heard with their own copies of Massive - a tool for making synthesizer sounds. And just a couple weeks after that, it was formally released on Avicii’s remix single of the track. 

2011 was the year electronic music ate the world. Hip hop and pop music came to be dominated by European house producers (think Pitbull’s “Tonight (Give Me Everything)” - produced by Afrojack, Rihanna’s “We Found Love” produced by Calvin Harris, and, um, everything by Guetta). Heavy music became both influenced by (see Korn’s most recent album, all produced with extreme electronic producers like Excision, Downlink, and Noisa) and supplanted in the favor of 15 year olds by the drop of dubstep, led by Skrillex (who recently garnered 5 Grammy nominations, including “Best New Artist” - a first for an electronic musician). 

Part of this popularity can be explained in how well electronic music - in its creation, consumption, fast evolution, youthful energy, and fundamentally collaborative creation - reflects the Zeitgeist of this remix era. It is no surprise that Soundcloud’s early traction was with electronic musicians and producers, who flocked to it both as a utility to upload everything from new tracks to full sets and playlists, as well as a social vehicle to build fan repertoires and share their music with the world.

As a set of code, Soundcloud is the best utility for sharing audio with the world of people and I’m sure that as it grows it won’t just be music that is shared there. As a cultural artifact, however, it captures something much more profound: the transition of music from a world of highly-controlled, highly-produced, professional acts, to a world of explosive creativity, genre blending, experimentation, and just-a-minute-ago-amateur superherodom. 

The point is that Soundcloud is not simply housing and sharing sounds, but liberating sound from millions of creative minds around the world. I can’t wait to see what they do with this new injection of resources, and even more, I can’t wait to see what the next generation of kids late-night recording for-the-love-of-it do with the platform next.