SOCAN licensee 8tracks.com is an internet radio and social networking website which revolves around the concept of streaming, user-curated playlists consisting of at least eight tracks. Users create free accounts and can either browse the site to listen to other user-created playlists, or create their own. 8tracks was recognized on Time magazine’s 50 Best Websites list in 2011, and has also received positive press in Wired magazine, CNET (“The top 7 reasons why you should listen to 8tracks.com”), and Business Insider (“A Free, Legal Music Service We Love”).
8tracks users can’t see the contents of somebody’s playlist, and therefore don’t know what they’re getting until they play it. They can’t preview the playlist at any point while it’s playing. They also can’t rewind and play tracks they’ve already listened to. It’s like an unlabeled tape in a player that can only play, stop and fast-forward. The spirit of these rules is to ensure that the playback is promotional of a music sale, but not a substitute for a music sale.
The company was founded in 2006 by David Porter, a veteran of online radio service Live365, and launched on 8/8/08 (August 8, 2008) by a small team working nights and weekends in New York, California, and France. It reached the ability to pay its employees and hire them full-time in 2011 and profitability in 2012. Since then, it’s grown from a million listeners to 8 million, and 20 percent of its audience comes from Canada.
Porter was initially inspired by the “Hot List” button on the original Napster 1.0 back in the late ‘90s that allowed a user to see all of the MP3s on another user’s hard drive. “It was the first online social music discovery tool,” says Porter. “I was, like, ‘This is awesome.’” And, as a fan of electronic DJ culture, Porter recognized that the curator of the music mix or playlist was often as much of a draw, if not more, than the music-makers themselves. “I thought maybe we could apply this DJ paradigm to experiencing music online,” he says. “The users act as broadcasters and can create programming. It may be the only way to create a model where anyone can upload anything and still be covered under the copyright law.”
How does that work? In the U.S., 8tracks takes advantage of a provision in the Digital Millennium Copyright Act, which gives it a compulsory license as long as it’s a “non-interactive Webcaster” with a “small Webcaster” license. 8tracks can stream any music, as long as it pays a royalty, and as long as it behaves like an online radio station. To operate In Canada, 8tracks is licensed by SOCAN under Tariff 22F for audio websites, and pays a small percentage of its gross revenue, which is then divided amongst the songwriters and music publishers of all the songs streamed on the playlists. 8tracks logs every single performance across every platform, and submits these logs to all of the applicable performance rights organizations.
8tracks has four primary sources of revenue: Visual advertising, audio advertising (still to come), subscription to a premium version of the service, and commerce via a “buy” button that links to the song on iTunes, with 8tracks getting a percentage of the sale. The company’s ultimate objective is to be a serious competitor to Pandora, though 8tracks operates on $1.5 million raised to date, and Pandora is currently funded at about $300 million. It sounds overly ambitious, but if you search Twitter using the words “8tracks” and “Pandora” together, the tweets are overwhelmingly in favour of 8tracks by comparison. The company is now exploring marketing initiatives to make more people aware of it, and improving the accessibility of their programming.
“And we’re stepping up our game in Canada,” says Porter, “hoping to get involved with North by Northeast in 2014. We’re thinking of hiring a general manager there, and getting a bit of a footprint in the country.”