On Closing Mixwit…
Mixwit was a lot of fun for Mike & me to develop and in the end we are both really happy with the results. Way back in the summer we realized that we may have to go “scorched earth” at some point, so we’re actually feeling more relief than regret at this point.
We came up with the project a little over a year ago, and started working on it fulltime back in January of 2008. We didn’t do any promotion so the project was a huge viral success. The initial seed was a small mention on Techcrunch covering YC Demo Day. Several websites quickly came on board to discuss the possibility of such a project.
The really big push for us was Muxtape, which launched a couple of weeks after us with massive technorati fanfare. I assume it was common for people to mention Mixwit along with Muxtape because Muxtape had the word “tape” in their name and we actually had a “tape” in our product.
Our goal was never to be a playlist service, and especially not a project caught up in questionable legitimacy. As it stands now, we could probably continue running Mixwit as a small project for another year or two, but that’s about it.
It was made clear to us early on that no investor was willing to provide funding for anything relating to a music playlist service. At one point we did have one very enthusiastic prospect, but they quickly bowed-out when they heard the seven-figure licensing fees required by the labels (along with per-play fees, past infringement fees, and partial-ownership) just for Mixwit to continue. Without this arrangement, if we ever tried to grow or scale we’d be easy pickings for the music industry’s legal dept. And without significant investment, we wouldn’t have the resources to respond to litigation, regardless of merit.
To be clear, we’ve never been sued and received only one complaint from a label during our run. We did have informal meetings with two labels in September. Both meetings were cordial and positive, but provided a bleak outlook. One couldn’t take us seriously due to potential future litigation and the other thought we should try “white label” services, which AFAIK don’t actually exist.
The only way for us to move forward was to turn off the music playlists. We had other products completed and waiting for launch, but we didn’t want to put them at risk until we could clear up the mixtape issue. We set a deadline for the end of the year – if we couldn’t make the transition happen by that time then we needed to cut ties and move on. By December we knew it wasn’t going to work out and took steps to close-up as tidily as possible.
The contributing factors:
1) The economy – Start-ups are now operating in survival mode, not R&D mode. Previously we knew it was going to be difficult to get funding for music licensing. Now it’s simply *impossible* for at least a year or two.
2) Resources – With the exception of YC funding, we were entirely self-funded. We had outstanding costs and fees for services relating to music licensing that we would never use. The cost difference between starting a new company and continuing Mixwit was very significant.
3) Time – each step of the transition was taking longer and longer, and we found ourselves putting more time and resources into removing a product we weren’t using, and less time was being alloted for the real products. Further, we both had to start consulting on the side which took up potential work hours.
4) Mixwit was “tainted” – Even if we made the transition, there would always be a perception that if we were to ever scale / grow the music industry would tap us for past perceived infringement. This possibility seemed highly unlikely (bordering on paranoid) but not out of the question. In the end, it could have a significant impact our chances for any future funding.
Moving Forward
Right now I’m consulting on the side, which will keep me busy through January. I’m rebuilding my “war chest” so I can afford to work full-time on the new project.
Mike’s also consulting full-time and talking with the mysterious OpenTape group about transferring our users’ data to some kind of archive.
We’ll pop back up early in the new year.I hate losing the name, but I’ve already figured out the new one for our new company/product and I’m very stoked on it. We’ve got a basic widget ready for release and a large app to rebuild and release by Spring.
We got a bit to clean up before we turn off the lights. Keep an ear out for a brief farewell tribute to Kubrick and Dr. Strangelove. We’ll meet again…
