Playlist.com goes titsup
Lotsa money owed everywhere
Labels both large and small, as well as songwriters' organisations, are owed millions after Playlist.com filed for bankruptcy.
Founded in 2006 as Project Playlist, the revenue-lite operation made widgets for social network sites as Facebook and MySpace, and in its heyday boasted almost 40 million users.
The largest amount, $16.6m, is owned to Universal Music; but independent network Merlin is also owed $1.68m, with songwriters' association ASCAP out of pocket by $377,323, according to Chapter 11 documents.
Playlist.com's content delivery network partner Limelight is owed over $800,000. Other major label debts include Warners ($4.143m) Sony ($3.15m) and EMI ($2.103m). Playlist has issued promissory notes for many of these creditors.
It's hard to see how the outfit could stumble along for so long, without credible revenue. The wheeze was to scrape music on the web wherever it could find it, and allow users to play it back through an embeddable widget. A sprinkling of fashionable Web2.0rhea was sprinkled on top. And that, er... was that. About a million other people happened to have the idea at the same time.
In 2008 several major labels sued Playlist, after which Universal granted it a licence. It was Universal that ushered Playlist.com into the bankruptcy court, arguing that Playlist defaulted on that licence almost immediately. Sony licensed the operation earlier this year.
The saga highlights the risk of investing precious money in music start-ups. The music business needs to experiment, but as in so many other areas, the internet is a basketcase for making money, with hobbyists and chancers using music as a quick way to draw a crowd. So to hedge the risk, companies insist on equity stakes in start-ups. Playlist raised $23m VC funding along the way. ®