Am I killing the thing I love?

December 12, 2013

There’s no website I love more than Hype Machine — and I’m scared I’m killing it slowly.

What is Hype Machine and why is it so awesome?

If you’ve never heard of Hype Machine before, I highly recommend you check it out.

The Hype Machine keeps track of what music bloggers write about. We handpick a set of kickass music blogs and then present what they discuss [and stream] for easy analysis, consumption and discovery. This way, your odds of stumbling into awesome music or awesome blogs are high.

In other words, Hype Machine finds all the best new music in the world, curates it, and delivers it to your ears.

On any given day, I spend more than 10 hours a day listening to music they aggregate. Over the last 2 years, http://hypem.com is #1 in terms of browsing time on my computer. When friends ask me what I’ve been listening to, I just direct them to my favorites list.

There’s no listening experience I enjoy more, the user interface is wonderful, unique and intuitive, and the community is fun and filled with friends.

Hype Machine and money

Hype Machine is different from other music sites — all the music they stream is free and publicly available.

Musicians approve songs to be streamed on blogs for free, then Hype Machine (and its community) curates those blogs and streams the songs on their site. In return for the content, Hype Machine gives the artists and bloggers a ton of traffic and exposure.

I’m not well-versed in the details, but from what I do understand, this is a model that all parties are happy with (besides the occasional leaked song off an album that quickly gets pulled off the site).

At first glance, this seems like a huge plus for the company — free music means low margins and an easy path to profitablity. Unfortunately, a limiting factor on their profit-making ability quickly becomes apparent: in their quid pro quo agreement with artists and bloggers, Hype Machine can’t charge for music they are being given (rightly so).

Hype Machine is 100% free for users.

This leaves the site struggling to turn a profit through advertising on the site and affiliate revenue through song purchases.

Ads, ads, ads

Ads are a hard game. Services like Pandora and Spotify have been reasonably successful with inter-song audio advertising, but the bulk of their revenue comes through paid subscriptions.

For Hype Machine, I can imagine it’s even harder. Because of the whole “free music” thing, it seems like inter-song audio advertising is off the table. This leaves them with banner ads — an increasingly weak revenue opportunity (unless you have huge traffic that you can effectively target).

While the site has super high user engagement and time on page, little of that engagement is optimal for advertising. When I’m on hypem.com, it’s almost always in a background tab just streaming music — I almost never see aads.

Affiliate links

In the iTunes affiliate program, you can make up to 2% of a purchase. Even if each of the 400K unique visitors bought one song per month (I’ve never bought one), that’d still only be $8,000 in recurring revenue.

When you consider that most of the songs Hype Machine is streaming are freely available to download if you click through to the blog or do a Google search, the economics of the affiliate revenue aren’t great.

All this said, with hundreds of thousands of uniques per month, the site seems to be generating enough revenue through ads and affiliate programs to sustain itself — they’ve been around for 8 years and have never raised a round of funding.

Mobile  and native

In the last month, I’ve increased my listening time, but spent 0 hours on the Hype Machine website.

I’ve moved 100% of my Hype Machine experience to an Android app (free, created by 3rd party) and a Mac app (free, created by a 3rd party). I don’t think I’m the only one who’s making this switch.

Screenshot 2013-12-05 09.07.53

That’s not the kind of graph you want to see as a startup — especially when all of your revenue comes from display advertising and affiliate fees. Granted, there are some serious concerns about how accurate Quantcast data is, but anecdotal evidence (from myself and my friends who use Hype Machine) backs up this data. I also had an email conversation with Anthony, the amazing founder of Hype Machine, who confirmed the trend:

Your assessment that the web usage of Hype Machine has decreased is true, even if the overall Hype Machine usage across different platforms is not…our iPhone app usage has been growing well, even though it’s not free, which is what I am excited about.  

With low-cost listening apps (free on Android, $4 on iPhone), no inter-song advertising, and no affiliate links in apps (neither of mine have them and if they did, they would probably pay out to the app creator), there’s basically no revenue opportunity on users who do the bulk of their listening through non-web interfaces.

I’m terrified that by switching to better listening experiences, Hype Machine’s users are going to slowly kill the site.

What can we do?

We could stop using the platforms that have limited revenue opportunities, but choosing a short-term bad experience is not a recipe for long-term success.

We can tell everyone how awesome the platform is and how much it deserves to be successful (see what I’m doing here?). We can make a more conscious effort to purchase music through their affiliate links. We can buy the native apps they offer.

I’ll also say it right now — if there was a way for me to make a monthly “donation” to Hype Machine, I would do it. Would you?

Unfortunately, I’m unsure that doing those things is enough — I want to find a way to a new way to help, but don’t have a good answer to how. Any ideas?

Do you love Hype Machine and have thoughts on this issue? Let me know on Twitter or in the comments below!

 

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