Key executives from Internet startup Highnote pitched investors in Toronto on a service the company says could do for music what Google did for the Internet search.
The Nashville-based company, which is currently running beta tests at www.gethighnote.com, is being led by James Payne, a product manager for Google’s monetization service, and Nashville music manager Scott Welch.
Highnote’s business model is based around providing free music streaming to customers, and linking new acts in playlists to prominent stars in various genres. The concept is to make the service a site that will lead people to new and emerging artists.
In a similar way that companies pay for Google AdWords, Highnote executives are counting on labels and artists to pay to be linked to popular acts. What these new acts would pay is dependent on the number of times Highnote users listen to the tracks.
“The [return on investment] for us is in driving traffic to new artists,” Hari Sundram, Highnote’s director of business development told an audience of more than 30 in Toronto.
The service was initially conceived for streaming audio, but is focusing a lot of its current attention on video as well.
The event was hosted by noted music lawyer Chris Taylor, who has worked with the likes of Avril Lavigne and Nelly Furtado and runs indie label Last Gang Records. Taylor said he was part of the service’s advisory board and was considering an investment in the service.
The service projects revenue in its fifth year of operation at a staggering $920 million with margins of 68%.
Despite the potential upside, Payne admitted it has been a struggle raising the $2.5 million needed to license enough music to officially launch the service.
“We feel this is a billion dollar business by year five using fairly conservative numbers,” Payne said.
Michael McCarty, president of EMI Music Canada, was at the presentation, along with reps from most of Canada’s major labels. McCarty called the possibilities of the service “very clever.”
“The key is the quality and quantity of leads, which depends on establishing a slightly new way for the public to get music in a very crowded field,” he said in an e-mail after the presentation. “[It is a] big job.”
