The Next Napster

Kazaa. Napster. Limewire. In the 21st century world of file sharing, the music industry has taken a pitfall from the days of purchasing CDs of our favorite bands.
When Will Leinweber and Adam Steele, two graduates of the University, took a technology entrepreneurship class in fall 2008, their common interest in music led them to start thinking about a business plan that would allow the music industry to make a profit.

Launched on June 16, Merge.fm is a web application which allows fans to listen to and provide feedback on unreleased songs uploaded by artists. To get access to the artist’s works, fans pay $4.99 a month and the profit is split between Merge.fm and the artists themselves. “It’s a whole dimension of different experiences,” said August Knecht, the third co-founder and graduate of the University. “The real thing that we offer is the ability to see the different versions that a song goes through,” Leinweber said. “That’s sort of like our core difference between iTunes, where you just get the individual finished song.”

Allowing fans to listen to multiple versions of their favorite artists’ unreleased songs wasn’t always the original idea behind Merge.fm, though. “Originally it was a different idea,” Leinweber said. “It was going to be sort of Wikipedia for musicians, where musicians could collaborate and work on a song together without having to be in the same location.” Leinweber said the problem with their original idea was that independent musicians don’t have a lot of money, and so building a product to sell to them would be a challenge. “After a while of talking to potential customers, we came to the idea of having the musicians sell their creative process to their fans, and getting their fans engaged in the music before it’s even released,” Leinweber said.

Currently, five employees work at Merge.fm, including the three co-founders and two undergraduate students that work part-time. “One of the fun things about being a small start-up and a web application is that several times a week we upload different changes to the site, hopefully to make it better and improve it all the time,” Leinweber said. 

Among the major changes Merge.fm hopes to implement soon is their pricing model. While fans now pay a monthly subscription, the new payment model will allow fans to buy access to individual songs. “It is really exciting because if you come to the site and see your favorite artist working on a new album, you can then buy those songs before they’re released,” Leinweber said. “Or if you come to the site later and the album’s already been released, you can then go see the history of the songs that you like the most and see where they came from and gain a new appreciation for it.”

Of the dozen artists featured on Merge.fm, most are local bands, such as Elsinore and Withershins. “Our plan is to prove that it works for these smaller cases, and if it does work, we can spend the time to go bigger and attract a lot of bands after that,” Leinweber said.

As for challenging other web applications, such as Indaba, which has been compared to Merge.fm, the staff at Merge.fm think their business model stands out.
“They do more that kind of Wikipedia music kind of thing, which is what Merge.fm originally started out doing.” said Roshan Choxi, one of the two undergraduate students working at Merge.fm said. “We’re kind of opening up this entirely different revenue model of selling the experience and not the final product.”

Choxi said with mainstream artists such as Radiohead and Kanye West releasing their music for free, Merge.fm comes at a time when the music industry is in need of a change. “There are a lot of these bands that are trying new things out there, and we’ll be a great platform for them to experiment with the way they interact and distribute their music to their fans,” Choxi said. 

For now, the biggest goal for the five employees at Merge.fm is to increase their revenue stream. Currently funded by Illinois Ventures and working out of an incubator office at Enterprise Works at the University’s research park, the group is looking for an angel investor.

Despite the small paycheck, the five employees know it’s their common passion for the company that keeps them going. “Every once in a while, we hit a pretty big success, like a milestone, that helps us to keep pushing forward,” Choxi said.
Choxi added, “Have you seen The Social Network? We’re going to do that for us too. We just need a year or two. I think Justin Timberlake will play Will.”