SF MusicTech Pumps Up the Volume for Local Startups

Name-dropping music/tech leaders you’ve met is easy in San Francisco. Odds are you’re eating lunch next to one.

The industry’s top companies and influencers work in or right next door to San Francisco. Like SoundCloud, Pandora, Google Music, Thrillcall, BitTorrent, INgrooves Fontana, ioda – take a breath, there’s more – Live Nation Labs, SoundHound, BandPage, Rdio, Stageit… you get the idea. And they’re joining dozens more from across the country and world the next few days for SF MusicTech.

Two of our City’s most famous live band bashes bookend a strong week of all things music, starting with Hardly Strictly Bluegrass on Sunday the 7th and rolling all the way through to the Treasure Island Music Festival on the 13th and 14th. Pre-game for SF MusicTech Summit starts Monday at Singly and Rdio’s MusicTech Hackday, Tuesday is of course the main event at Hotel Kabuki in San Francisco’s Japantown, and Wednesday brings with it Music Startup Academy. Not enough for you? Check out a whole smörgåsbord of other cool music events that week.

“There’s nothing like San Francisco,” Brian Zisk, executive producer of SF MusicTech, said of the City’s music/tech scene. “I couldn’t do this any place else in the world, even though I get offers to have it any place else in the world.”

And the industry seems to agree. Zisk said music/tech companies from outside the Bay Area come here for SF MusicTech and other meetings so often it feels like they have a local office. Many end up doing just that.  “As we expose people to all the great stuff going on here, they come back and do business, they come back and set up businesses here. They relocate here,” he said.

Coming to the Bay and to this established conference – which has grown from 500 attendees in the first year to over 1,000 now – gives entrepreneurs, musicians, and others in the music/tech ecosystem a chance to learn cutting edge strategies and find business opportunities. A good number of deals you see in the music/tech world start or even get signed during SF Music Tech, which has both the fall show and a spring event.

Next week’s summit speakers include General Motors Chief Infotainment Officers (yes, that title exists) Philip Abram, Live Nation Labs VP of Product Ethan Kaplan, Composer/performer/one-woman orchestra Zoë Keating, Sony Network Entertainment Director Anu Kirk, Pandora Founder Tim Westergren, VEVO Senior Vice President of Product Development Michael Cerda, and Schematic Labs CEO Steve Jang. You can also check out who’s attending.

Two of the hot issues at next week’s summit will be, quite frankly, how everyone gets paid and setting standards for licensing content. “It’s crazy that each company has to negotiate deals with each and every label and publisher,” Rachel Masters, Red Magnet Media co-founder and advisor to a few music/tech startups, said. Some, like EMI, have worked out an easier system for developers with use of an API, but it’s far from the usual experience.

Between the varied (and confusing) agreements and the high costs for streaming services, startups aren’t fully incentivized to build; their revenue could get gobbled up entirely by royalty payments. Some are holding their breath to see what happens with streaming music services like Spotify or Pandora. Can they truly become runaway successes, or will the cost of royalties shut them down? (Or will iTunes kill the streaming radio stars?)

Even if Apple doesn’t, these services have a serious problem stemming from antiquated rates: compared with Sirius XM, which paid 8 percent of its gross revenues in 2012 for use of sound recordings, Pandora paid almost 50 percent of its revenues. If you’re a Pandora listener, you may have heard ads supporting the current legislative effort to recalibrate how much online radio/music subscription companies pay in royalties. If it goes through, The Internet Radio Fairness Act would update royalty rates for streaming services using the same standard applied to other forms of radio.

But, as Masters points out, streaming is far from the only thing music/tech can innovate. She pointed to advertising, affiliate ticket and merchandise sales models, and lead gen tech. The fan club model is also open for disruption, she said. And startups could also explore how to help out the artists themselves – making products that more easily connect them to fans, for instance.

At next week’s summit, Zisk said he wants to see how music/tech companies and startups will disrupt and change the music industry and how labels interact with consumers. “So much has been around punishing your customers for listening to music they haven’t paid for,” he said. “How do we move forward in a productive way?”