[Corrected 10/14/19, 3:36 pm CT. See below.] The music streaming wars are far from over. While big players like Spotify, Apple, and Amazon fight to make their music apps the go-to option for listening to the latest hit tracks from well-known artists such as Beyoncé, Drake, and Mumford & Sons, young startups still see room in the market for new services to help people discover and share music.
Like with any consumer tech product, the question is whether these upstarts have what it takes to build a loyal following—and a sustainable business—before the money runs out or they get crushed by much bigger competitors.
One young venture giving it a shot is LÜM (pronounced loom, thanks to the umlaut), which stands for “Live Undiscovered Music.” The company aims to help fledgling, often-neglected musicians build an online fan base and, if successful, move into live shows and other areas of the industry, and even “graduate” to other streaming services, says Max Fergus, LÜM’s 23-year-old co-founder and CEO.
Fergus describes LÜM as a music discovery and streaming platform for the “next generation.” The app’s evolving interface, a bit of a mix between music-streaming service Spotify and photo- and video-sharing app Instagram, lets users control what they hear and then promote performers they like. The mobile app is free, and a desktop version will be developed soon, he says.
Part of what makes LÜM interesting is the startup isn’t trying to build the next popular music app from a big coastal city like New York, San Francisco, or L.A., or even a music hub like Nashville. The company is based in Madison, WI, a Midwestern college town that has a small technology cluster that often punches above its weight, but is known more for healthtech startups than consumer mobile apps.
When Fergus and his co-founders—who are all in their 20s—were getting ready to form the company last year, he says they debated if it made sense for them to start a music discovery and streaming technology company in the Midwest. [An earlier version of this paragraph misstated when LÜM was formed. We regret the error.—Eds.]
“We wondered if we’d have to be on the coast,” says Fergus, a recent graduate of the University of Wisconsin-Madison. “And we talked a lot about what resources there are in Madison. But it turns out this has been a phenomenal place for us to begin because our advisors and mentors have been great.”
Although a move to a bigger city might be in the offing down the road, LÜM has been able to get some initial traction in Madison, while forging connections with coastal investors. (More on that in a minute.)
It helps that Madison and the Midwest are filled with artists who are talented, yet often relatively unknown, Fergus says, as well as plenty of young music aficionados who are “eager to sift through a lot of songs to find the gems and then share their opinions, engage, rank, and tag music with their friends and peers.”
Fergus says he and his fellow co-founders started LÜM not because they are musicians—in fact, Fergus says he can barely carry a tune. Rather, he says, it was because they discovered an area in need of an overhaul: in spite of the demand for new music, only a tiny fraction of artists has had success building big followings on current platforms.
Moreover, he argues that the existing music streaming financial model is flawed, which means even behemoths such as Spotify (NYSE: SPOT) have yet to make money. (Spotify went public in April and is currently valued around $21 billion. It reported a net loss in its most recent quarter, although it’s getting closer to profitability.)
Fergus says too many musicians still believe they need to first be picked up by a label before they can be successful.
“They think you need to be signed by an artist management company, have someone do your social media account, all of your branding, etc.,” he says. “Once you have your whole team in place, then you begin to grow your fan base and force your way into the industry. But the truth is that isn’t the way it works anymore because there are so many people who want to be artists. You need to prove that you have a legitimate fan base first.”
That’s where LÜM comes in, he says.
“We give artists the tools to use their communities as a catalyst for their own growth, so that they can take the next step in their careers,” Fergus says. “We use music streaming as a means to an end to help these artists get their voices out and to give them a platform to advocate for themselves.”
Of course, there are other options for independent or lesser-known musicians to share their music and connect with fans, including … Next Page »