Live Undiscovered Music, a Madison, WI-based startup whose software helps users discover new music and share it with friends, captured first place in one of the state’s more closely watched pitch competitions Thursday.
The startup, which goes by LUM for short, won a contest known as “Pressure Chamber,” which is put on by the Great Madison Chamber of Commerce. The event is one of more than 50 being held as part of Forward Festival, a yearly entrepreneurship-focused conference in Wisconsin’s capital city.
By virtue of its win, LUM gets a spot on an all expenses paid trip to San Francisco in October to meet with Silicon Valley investment firms.
On Friday, LUM’s app for iOS devices became publicly available in the App Store, co-founder and CEO Max Fergus said.
The streaming service will feature only musical artists that LUM views as up and comers, and for now the company doesn’t plan to pay performers or songwriters who agree to let LUM to stream their songs. For artists, the upside of joining LUM is broader exposure, Fergus said.
In company materials, LUM says it encourages users to engage with both artists and other users through the company’s software, which Fergus described as a “streaming platform built on a social network.” The app is free to download but users can make in-app purchases like a virtual currency of “tokens,” he said. They can also earn tokens for getting friends to join the LUM community.
“We gamify the social music experience,” Fergus said.
The song-picking algorithms popular streaming platforms like Spotify (NYSE: SPOT), Apple (NASDAQ: AAPL) Music, and Pandora (NYSE: P) use tend to favor big-name artists from major record labels, Fergus said. As a result, about 90 percent of the artists on those services struggle to get exposure, he said.
Fergus made it clear in his pitch that his company is not seeking to become the next Spotify. Instead, LUM wants to become a launch pad for unheralded musicians, and help them reach more ears.
“We want to use LUM as a graduation platform,” Fergus said. “We want artists that are in that other 90 percent to grow the necessary fan base to eventually make money through music streaming and live entertainment and some of these other channels.”
On one hand, high-speed Internet gives today’s independent artists platforms that did not exist in the 20th century, such as YouTube and Soundcloud.
But many musical artists who aren’t household names have voiced similar claims to the one on LUM’s website that “the barrier for making money as an artist through streaming is astronomically high.”
The performers with the largest followings can command the highest royalties from widely used streaming platforms. But as Taylor Swift’s dispute with Spotify over per-stream payments showed, even the biggest stars want to be sure they’re not getting shortchanged as listeners continue to shift from buying individual songs and albums to paying for access to a vast catalog of songs. Most popular services offer a free version and a paid, ad-free version. Fergus said LUM will place “targeted social media advertisements” within the company’s app.
LUM’s streaming platform does not violate the Digital Millennium Copyright Act, a law that protects against music piracy, Fergus said. If artists decide to leave LUM and take their songs down from the service, LUM won’t have any ownership or rights. “We let all of our artists retain all of their rights,” he said.
Fergus said LUM recently finalized the terms of a $500,000 seed funding round. The company plans to raise a larger round of financing in the next year, he said.
LUM on Thursday beat out AmebaGone, Breathe For Change, DataChat, and GymDandy. The results were determined by an audience vote, in combination with scores from a panel of judges that included venture capitalists from outside Wisconsin.
Last year’s Pressure Chamber winner was DotCom Therapy, which develops telehealth tools aimed at connecting certified speech language pathologists with students who require their services. In 2016, Polco, which develops software allowing cities and counties to solicit input from residents and use their feedback when creating public policy, took home top honors in the contest.