Sam Tarantino is the Founder and CEO of Grooveshark, an online music streaming service with over 30 million users worldwide. Sam oversees overall business strategy, licensing and key partnerships, and corporate development for Grooveshark, and was listed in Forbes 30 under 30: Music in 2011 and 2012. Grooveshark currently employs over 100 people and is based in Gainesville, Florida.
By Chris Borchert
Let’s start outside the box. You recently said, “Old media thinks of things as restrictive: ‘How do we have a release date and not give anything away until that release date.’ Whereas in the tech world, it’s always about scale: ‘How do we get this to as many people as possible?” Are there any elements of restriction, or exclusivity, that remain beneficial in the new media context?
That’s an interesting question. When it comes to purely digital media, like movies, music etc., I think within the next 10 years you’ll start to see windowing go away. The concept of windowing was always you hold the release, you build up a lot of buzz and pr around that release, and then at some point you essentially target all of the demand onto a certain date.
The interesting thing about where we are now with new media is that’s kind of flipping on its head. I talked to somebody who has seen the way Google search results work and it was interesting because when you announce a release date, the interest on Google search skyrockets. And by the time the window comes, the search results are already there. That’s the Internet’s problem with windowing, and eventually people will catch on. I mean people are already catching on. If you look at the windowing timeline, and I don’t know the exact percentages, it used to be 2 month, 3 month, 4 month windows, now it’s weeks, if not days.
Great. The mood was much better this year than last, perhaps because of the weather. Last year the whole mood was dreary with horrible cold rainy weather. This year there was optimism and people were just overall more receptive to new ideas. We usually go there to network and build our relationships so there were no real specific takeaways for us.
So we started in 2006 when I was still in college. I met my business partner, Josh, who does all of our tech and I do all of the business, and we said ‘OK let’s go do it.’ The first thing we really focused on was building a product, because we were going out there trying to meet with investors and going out there without any product is always challenging. The first test was build a product, and the Internet was where it started, and over the course of 2007 and 2008 we spent our resources on building a product. In 2009, we launched our first product that really took off virally, our search and play product, and that grew from 0 to 30 million users at the end of 2011.
Well there are a few categories. You’ve got your radio services like Pandora and Slacker, which are competing in the realm of pure recommendation, automated recommendation. And then you’ve got kind of more direct search and play competitors like Spotify, but Spotify is trying to get subscription-based business. So they’re trying to be more like Netflix. And we’re trying to be more like a YouTube: broad, mass-scale, leveraging users but content-based. So they are two fundamentally different businesses. We look at how successful YouTube has become by leveraging user-created content, and we’re looking to do that on the music side, because I think the opportunities with independent content and independent creators are equally present in the audio category.
It’s definitely morphed from product-related challenges, because in any business the first hard thing to do is to get people to use your product — whether that is a movie or a startup or a makeup company — you need people to use your product. And especially in the context of the Internet, that’s not trivial. Most startups fail to get digital traction, and that was the challenge we faced our first four years.
So as we started growing and growing and we solved that problem, the second half of our life span and our last four years have really been about how do we solve the business challenges and getting the content industry to treat us as partners as opposed to treating us as adversaries.
Can you talk a little bit about what it’s like dealing with the major record labels? Take us into the big conference room – what’s going through your head before you walk into a meeting with those guys?
You know, it’s tough. I mean I’m not exactly the oldest person in the room. I think a lot of times you look at startups the same way you look at artists, like which one is the next one that is going to work. I’m lucky to have a good team around me, I’m not the only one going into these meetings. There are always people around me to complement me.
Ultimately, we’re here to solve industry alignment. A lot of our problem stems from the fact that we’ve always been a startup in Florida. You know, we’re not in Silicon Valley, we’re not in LA, so a lot of what we try to do is go out and meet all these people and show them what it is we are trying to do.
A lot of people over the years have left to go to Silicon Valley, and for us Florida people, it really is like the mecca out there. So in 2008 we had raised enough money to keep us going for a year and we reached the point where we said look, if we go out to Silicon Valley, our expenses are going to triple and we’ll be up for 2 or 3 months as opposed to a year. And we weren’t having a hard time hiring here in Florida because of supply and demand: the demand for tech in Silicon Valley is huge but the supply is huge so it balances out; in Florida the supply of entrepreneurs and developers is really low but we’re the only game in town.
So for us it was clearly obvious, here we are making half or a whole third of what salaries in Silicon Valley are and yet the cost of living is that much better that we are able to do so much more with the money we did raise. And I attribute the fact that we’re still here to the fact that we stayed here. A lot of businesses in 08 and 09 went out of business because they ran out of cash due to the cost structure in Silicon Valley.
Grooveshark Artists is our first version of our platform artists can use to take control of their content, view stats, and build connections with new and existing fans. While we still have a lot of functionality to build out, this iteration gives control directly into the hands of artists and we are looking forward to growing this product over the next year by turning it into a pillar of fan communication. Our goal is for artists to view their Grooveshark Page as vital to their marketing mix as their YouTube page and this version is the first step in a long road to this goal.
So just to be clear, just because we’re in lawsuits does not mean we are an illegal service. That’s a distinction that most people don’t quite make. You know, Samsung was in a lawsuit with Apple but that didn’t make Apple illegal. So because we are in a lawsuit, some people think we are a bad company and that we’re stealing people’s stuff but the reality is the decision that Facebook and Google and Apple have made to take our apps down is really a decision related to risk. And that ultimately, those companies have to work with labels and with themselves, and in this case we have with the labels, they’ve basically gone to those companies and asked them to take the apps down.
So we built the HTML5 app. If you go to grooveshark.com on your mobile browser, you’ve got the app right there. So that’s been our current solution. Obviously we’re always in talks with the labels to deal with them to the point where we have all our apps back in the app store, that’s our ultimate goal, but it’s probably going to be a little while until that happens.
My co-founder Josh founded it as a way to bridge the gap between what the University of Florida was teaching and what skills we need in developers. In general there is a big gap between major universities’ curricula and real world hiring needs, and that is especially so in tech in Florida and the broader southeast region. I know dozens of entrepreneurs hiring developers and building companies but there are so few qualified and trained developers that this gap needed to be bridged. GS University is our answer to that need.
(laughs) Well, I’m a musician. I’ve been playing since I was ten, so that’s probably the biggest reason. But it’s just such a unique time. We’re living in an amazing time if you really think about it. Not since the Industrial Revolution has one unique product served as the engine across all industries. The Internet has really allowed somebody like me to take an idea and get to the point where we’re sitting here about to meet with industry the way that the founders of YouTube or the founders of Facebook did. It’s a pretty awesome thing. I mean, it’s stressful. Sometimes I want to jump off a balcony. But that’s the business.
Never give up, that’s usually my advice anyway. But especially in the music business, never give up. It’s like that old adage, “first they ignore you, then they hate you, then they join you.” Never is that more true than in the music business. But yeah, just in general, never give up. Find something that you love and that you enjoy doing, and take the good times with the bad times and never give up.
Not really, I mean 2013 is going to be a very exciting and interesting year. We’ve got a lot of things planned. There’s some new releases on the product side that we’re excited about, they’ll be here in the next few months or so. We’ll keep you posted for sure.