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Deal Radar 2008: Amie Street and the Twenty First Century Renaissance

Posted on Friday, Jan 25th 2008 is an online music destination that allows (a) musicians to release, (b) music fans to discover, and (c) listeners decide the price they would like to pay for new and independent music over the Internet. The site has excellent music.

In August 2007, Amie Street raised an undisclosed amount of Series A round of funding led by Amazon.

Amie Street makes money by selling non-DRM music. It shares the revenues with the artist who gets to keep 70% of revenues after the first $5 in sales. It follows a demand based-pricing model for the songs.

Amie Street has a traffic rank of 62,291 and 25,802 monthly unique visitors (Compete). According to Amie street, average first time purchase is around $10 and members on and an average spend 8 minutes on the site on each visit.

I like the revenue sharing model and the ranking of artists by popularity of downloads. It is no doubt a good platform for promoting talent and could well change the way music is bought and sold.

At some level, actualizing “talent” is a very difficult challenge for those who possess it. Especially for writers, artists, musicians, and other right-brained people, “business” does not come naturally. If ventures like Aime Street can tap into the vast creative force that exists in our world, and help put together a sustainable infrastructure for actualizing and monetizing such talent, I for one, would be their eternal admirer.

Amie Street will be a good acquisition target for Comcast, Viacom, Time Warner, etc.

Amazon has already invested in the site and has also entered the music downloads business. I see a lot of synergy that Amazon could exploit by acquiring Amie Street. Amazon actually is dabbling in the “talent marketing” game in the writing arena as well, with their Kindle, New Author Contest, etc. so it seems like their heart is in the right place.

A true twenty first century renaissance will come about when we marry the great advances of technology and business with those in art, culture, and spirit.

This segment is a part in the series : Deal Radar 2008

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. Xanga Losing Steam?
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. Bill Me Later - Blessed by Amazon
. Takkle Tackling Socially
. Amie Street and the Twenty First Century Renaissance
. eHarmony Replacing Yenta
. Zappos Wants to be Amazon When it Grows Up
. Figleaves and Specialty e-Tail
. Twitter Gaining Momentum
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. Digg - Packaging news
. Facebook Woes Coming?
. PlayFirst Plays Casual Games Well
. Kosmix+Adify - Potential Google Challenger
. Travel Ad Network Executing Flawlessly
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. Groople, Interesting Use of Context
. Lucidera
. InsideView's Clever Maneuvering
. Seeking Alpha
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. Glam Media's Fashion Forays
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Oh, here we go again. What a world it would be: all the fundamental laws of economics are thrown overboard and everyone sits around a bonfire and sings Kumbaya.

Either there is a flaw in the laws of economics, demand and supply, players maximizing utility, etc or there is a flaw in the Amie Street Artist’s business model.

Consumers and producers are in a constant battle with each wanting to maximize his own surplus or utility. To assume otherwise is, well, just stupid. Now, also assuming a consumer likes more money than less, and more goods than less, we can clearly see that the equilibrium would be an @sshole consumer who takes the goods and pays nothing or close to nothing for it. But thats okay: thats how markets work.

There will be an occasional Commie in the bunch, or a few people with a “guilty” conscience (although clearly they are not guilty of anything) who will decide to pay a fair amount. Show me a business that relies on these consumers, and I’ll show you a business on the verge of failure.

Amie Street’s artists may succeed in the short term; there is too high a sentiment amongst the Diggers, Redditers, etc to “stick” it to the RIAA. Without the animosity, Amie Street does not have a business model.

Krishna Chodavarapu Friday, January 25, 2008 at 10:54 PM PT

To be fair: You can only criticize Amie Street’s business model if you begin with correct information. Users do not choose the price a la the “Radiohead system,” but determine the price of individual tracks by their purchase.

When songs are uploaded they begin free, and as they are bought they rise in price incrementally, according to predetermined algorithms. So it is the community’s purchasing actions which determine the price of songs at any given point — not individual consumers choosing how much to pay.

Christian Saturday, January 26, 2008 at 11:12 AM PT

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