PeopleSound

PeopleSound was a British audio streaming platform founded on 22 June 1999 by Ernesto Schmitt. Going live in October 1999, it was the first European music streaming platform and the most visited. At peak, it was amongst the top ten most visited entertainment websites in Europe, with millions of registered users, and one of the highest profile new-age internet startups.

PeopleSound
Screenshot of the PeopleSound website running in 2000
PeopleSound running in 2000
Type of site
Public (Limited)
Traded as
FoundedJune 1999 (1999-06)
Dissolved2008 (2008)
Country of originGreat Britain
No. of locations6 locations (peak)
OwnerVitaminic
Founder(s)Ernesto Schmitt
IndustryAudio streaming
Employees85 (2000)
URLpeoplesound.com (archived)
LaunchedOctober 1999 (1999-10)

PeopleSound combined new media reach with old media music publishing to create a platform where users could search for music by artist or category and discover new recommended music. Unlike music distribution before, which had been managed exclusively by record labels, PeopleSound signed unsigned artists, notably offering £100 to artists per song they sent in. These artists earned 50 per cent royalties on physical copies sold, but music on the site was available free.

With offices in London, Paris and Munich, PeopleSound raised at a valuation of $200 million (£70m in 1999) and reached a valuation of $280 million (£100m in 1999). Post dot-com bubble, PeopleSound was sold to Vitaminic, and the combined entity was listed on the Italian Stock Exchange. The New York Times called PeopleSound "the leader for European-based downloadable music sites", as well as the first pioneer of music streaming on mobile, and it set the basis for later companies like Spotify and Apple Music.

History

PeopleSound was founded in June 1999 in London by 28-year-old Ernesto Schmitt as a new format for online music distribution. Schmitt had been a Boston Consulting Group Management Consultant but had no music industry experience.[1][2][3] The platform was built on the premise that technology could help consumers discover music and that an entire new generation of artists needed new channels to be distributed through.[4] It aimed to "topple the monopoly of major music companies [and] revolutionise the way new bands are signed and listened to".[5][6]

The early team included Bruno Heese; Martin Turner, formerly head of CompuServe UK; and Paul Levett. In September 1999, pre-launch, PeopleSound was valued at £12 million and had 35 employees and 400–500 scouts.[7] Early backers included Bernard Arnault's global Europe@web Internet Fund, which had also invested in MP3.com.[8][9][10] By October of the same year, the platform was valued at £20 million.[1]

Early expansion

By Autumn 1999, Schmitt told the BBC that PeopleSound aimed to "start in the UK and then rapidly setting up subsidiaries in Germany, France, Italy, Spain, the Benelux countries and even Turkey".[11] Aided by grassroots marketing, they had 150 people finding bands across the country.[11]

Quickly becoming a favorite of the dot-com boom, on 29 May 2000, PeopleSound announced a round of funding valuing it in excess of £70 million ($200m in 2022).[12][13] Investors included Finnish wireless communications operator Sonera Corporation, who took an 8 per cent stake; Ladybird Ventures; and Zouk Ventures, taking a further 2.4 per cent.[14] Under the deal, PeopleSound exclusively became the free music provider for Zed, Sonera's global wireless portal.[12] This integration was the first example of music downloads straight to mobile. Schmitt was quoted as saying "the deal will allow music downloads straight to mobile handsets, enabling music lovers to have their favourite music wherever they go".[12]

Explosive growth

Having positioned itself successfully, by July 2000, the New York Times noted PeopleSound.com was the most popular music platform in Europe, and led European based Internet sites for downloadable music, still "in its infancy".[15][16][17] It had sites in English, German, Dutch, Spanish and Italian,[15] and ranked in the top ten most popular entertainment sites and as one of the highest-profile tech startups in the UK; Les Echos named Schmitt "one of the elite figures of the London Net-economy", while ZDNet declared him "one of the UK's better known Web entrepreneurs".[18][19][20][21][4] It was widely expected to float that summer, reaching a valuation of £100 million.[22][23] Had an IPO gone to plan, it was expected that "even the most junior staff who joined when the company started last year could each make $5 million. Staff joining today would still have made about $160,000 from their share options", and "100 millionaires could be created".[24] Martin Turner, COO, noted that they'd only make inroads into the US after going public, due to the cost of market entry.[25]

By October 2000, the site represented more than 10,000 unsigned bands and artists, holding the master and recording rights to their music, and had over 1.5 million registered users.[26] The company was also named among "The UK's Most Visionary Companies" in 2001 by Management Today.[27]

Joint partnerships

PeopleSound first partnered with MTV, becoming jointly branded with MTV in "several hundred thousand pounds worth" of advertising for the V2000 music festival in August 2000.[28] In November 2000, the platform secured distribution deals with Amazon, AltaVista, LineOne, Liberty Surf and intermusic.[29] The deal with Amazon allowed their users to purchase music direct from PeopleSound artists and allowed the platform to scale up their audience.[29]

By September 2000, recording company EMI, having just merged with $14 billion Time Warner, announced a wide-ranging partnership with PeopleSound.[30] The deal was the first European collaboration of new media and old media and allowed PeopleSound to tap into EMI's global administration for its own artists, sharing ownership of its most popular artists with EMI, and splitting royalties.[30][31]

Music licensing portal

In October 2000, PeopleSound launched a service for marketers to discover and licence music for TV, digital and offline advertising.[32] The platform aimed to licence music at a quarter the cost and take a fraction of the time the process would usually take, and announced plans to launch a tool to find similar sounding music.[32] Before launching the product, the company was in talks with Microsoft, Casio, Virgin and Smirnoff Vodka.[32][33] Business director Simon Miller noted "ninety per cent of ads want music that fits the brief, which is where we're targeting".[33]

Bubble boom
Image of the NASDAQ Composite index spiking in the late 1990s, followed by a steep fall as a result of the dot-com bubble.
The NASDAQ Composite index spiked in the late 1990s and then fell sharply as a result of the dot-com bubble.

By June 2001, with tough economic conditions, PeopleSound, with 85 employees, was in merger talks with Vitaminic.[34] The pan-European digital music company, listed on Milan's Nuovo Mercato stock exchange, was interested in PeopleSound, which had nearly sold to Terra Lycos earlier in the year.[13] On 11 June, it was announced Vitaminic was buying PeopleSound for 34 million euros in cash.[35][36][37][38][39] The deal made the joint entity one of the top three largest music platforms on the web and left PeopleSound shareholders with a 19 per cent stake in Vitaminic, the company being one of few post-bubble exits.[40][41][42][43] The deal had sceptics, with Les Echos noting that it was "an unattractive company (Vitaminic) buying a really great company (PeopleSound)"; PeopleSound founder Schmitt told the BBC the deal would "reshape the traditional music industry".[44][45]

The combined acquisition joined archrivals and gave the company a combined catalogue of more than 329,000 tracks and agreements with over 1,200 record labels, with Schmitt telling The Guardian, "Vitaminic is very strong in southern Europe and the US and on the subscriptions side of things we're very strong in northern Europe".[46][47] The combined entity was listed on Milan's Nuovo Mercato stock exchange.[48] By August 2001, and following the internet bubble boom of mid-2000, Schmitt quit to take up a senior role for EMI in New York.[46][49]

Business model

PeopleSound operated under a freemium model, under which music on the site was free but artists could opt to sell physical copies. The website allowed artists to send their finished product to PeopleSound and then granted them a non-exclusive world-wide licence for £100.[50] At the time, this promotion received significant coverage. In exchange, artists were given a page on the PeopleSound website, and were free to choose a price to sell their music. These artists earned 50 per cent royalties – the market average was 17–20 per cent – on physical copies sold, but music on the site was available free.[51]

PeopleSound was said to only reject 20 per cent of the music offered to them, aiming to create a democratised music platform, and offered customers two free songs from every band.[52][53] It aimed to differentiate itself by filtering out poor quality artist submissions, and both it and MP3.com were seen as good examples of 're-intermediating' companies, combining elements of both traditional retail and record companies functions.[54][50]

Later history

In 2004, it was understood that PeopleSound.com was set to be relaunched, and the site had begun operating on a limited basis. Sources said the launch would reposition PeopleSound as an advertising-funded community web site for labels and other content providers.[55] Although the domain name for the relaunched PeopleSound kept being renewed until the end of 2008, the site itself stopped received updates in 2006, with the most recent release listed on their site being Billy Bragg's Volume 1 (2006) box set.[56]

References
  1. "Ernesto Schmitt". The Guardian. 5 October 1999. Archived from the original on 16 December 2022. Retrieved 14 September 2022.
  2. "The Company File: London's swinging Netropolis". BBC News. Archived from the original on 16 December 2022. Retrieved 14 September 2022. The idea for a new format for online music distribution site was dreamt up by Ernesto Schmitt at about the time lastminute was launching last November. Peoplesound will open for business in the autumn. The 28-year-old...
  3. "Entertaining a big idea". The Times. 14 May 2005. ISSN 0140-0460. Archived from the original on 16 December 2022. Retrieved 14 September 2022.
  4. White, Paul (July 2000). "PEOPLESOUND.COM: Behind The Scenes". Sound on Sound. Retrieved 14 September 2022. Peoplesound.com is built on three principles: the principle that through clever technology, you can help consumers discover music, that an entire new generation of artists need to be distributed, but can't be distributed through the traditional channels.
  5. Knight, Will (19 July 1999). "Peoplesound.com - A music revolution?". ZDNET. Archived from the original on 16 December 2022. Retrieved 14 September 2022. believe they can topple the monopoly of major record companies and enable more bands to make a name for themselves
  6. Cassy, John (15 February 2000). "Sounding out the band". The Guardian. Archived from the original on 14 September 2022. Retrieved 14 September 2022. Ernesto Schmitt, Peoplesound's president and founder, claims that sites such as his could revolutionise the way new bands are signed and listened to.
  7. Sprenger, Polly (17 October 1999). "You want to be famous? Click here". The Independent. Retrieved 14 September 2022. Though Peoplesound has yet to launch, Schmitt's already has 35 employees, from customer service representatives to secretaries to a staff of four professional A&R people who review all of the incoming submissions. Schmitt says that when Peoplesound goes live the site will feature 1,000 bands. Schmitt said he is walking a fine line between a display of wealth for the industry and keeping a modest profile for the artists. "If the artists get the impression we're getting rich off them, it would be disastrous," he said.
  8. Vickers, Amy (31 August 2000). "First Tuesday: a networking success story". The Guardian. Archived from the original on 15 September 2022. Retrieved 14 September 2022. Ernesto Schmitt, president and chairman of music website Peoplesound.com, is another strong believer in attending First Tuesday events in the early stages of the business: First Tuesday was instrumental in so many ways. I could bounce ideas off other First Tuesday members, which helped me hone Peoplesound.com. I was also introduced to a number of investors whose interest helped me to drive up the value of my proposition. Perhaps most importantly, I found my chief operating officer [Martin Turner, former managing director of Compuserve] there.
  9. "Europe's Got Net Fever". Newsweek. 5 September 1999. Archived from the original on 14 September 2022. Retrieved 14 September 2022. That's where the growth is. And the stories of wealth and competition are starting to rival the tales from Silicon Valley and Route 128. Twenty-eight-year-old Ernesto Schmitt, the founder of peoplesound.com, remembers the hiring battle for Martin Turner, a former managing director of CompuServe UK, who was headhunted by a major investment bank to help start a financial-services Web site. "The [banker] invited him to lunch," says Schmitt. "When he got there, he asked if Martin noticed all the cars in the parking lot. He pointed to one, and told him that if he signed right then, he could have the keys." It was a Ferrari. Turner declined. "He doesn't like red," says Schmitt, who promptly hired him to be peoplesound.com's COO.
  10. "PEOPLESOUND.COM: Behind The Scenes". Sound on Sound. Retrieved 14 September 2022. Peoplesound.com management. From left: Bruno Heese, VP International Development, Martin Turner, Chief Operating Officer, Paul Levett, VP Technical Operations and Ernesto Schmitt, Chief Executive Officer.
  11. "The Company File | London's swinging Netropolis". BBC News. Retrieved 14 September 2022. London is turning into the main new Silicon Valley for Internet businesses and the UK is the hot-point for new music coming out of Europe," he says. "So we're starting in the UK and then rapidly setting up subsidiaries in Germany, France, Italy, Spain, the Benelux countries and even Turkey." "A lot of it is about having a local grass roots presence, a network and marketing. We've got 150 people working for us across the UK now, finding bands and sending them to us. Without that network you won't be able to get the content and that's really what it's all about.
  12. Cassy, John (31 May 2000). "Peoplesound beat goes on". The Guardian. Retrieved 14 September 2022. Peoplesound.com, the free on-line music download site, yesterday shrugged off concerns surrounding the future backing for start-up internet companies by finalising a new funding round valuing it in excess of £70m. Finnish wireless communications operator Sonera Corporation is taking an 8% stake in the London-based company, with internet venture capital firm Zouk Ventures taking a further 2.4%. Under the terms of the deal Peoplesound becomes exclusive free music provider for Sonera's global wireless portal, Zed.
  13. Snoddy, Julia; Cassy, John (1 June 2001). "Peoplesound in takeover talks". The Guardian. Retrieved 14 September 2022.
  14. Wearden, Graeme (8 June 2001). "Empire-building Vitaminic swallows Peoplesound". ZDNET. Retrieved 14 September 2022.
  15. Shannon, Victoria (19 September 2000). "MP3.com Says It Is Looking to Europe for Expansion". The New York Times, International Herald. ISSN 0362-4331. Retrieved 14 September 2022. 'PeopleSound.com Ltd. now leads Europe-based Internet sites for downloadable music. Based in Britain, it has German, French, Dutch, Spanish and Italian versions, and it emphasizes its local content.' 'In July, MP3.com and PeopleSound.com were the seventh and 10th most popular entertainment sites, respectively, among European Web surfers, according to MMXI Europe BV, a site-ranking firm.'
  16. Learmonth, Michael (21 September 2000). "MP3.com Europe won't include signature services". CNN. Retrieved 14 September 2022.
  17. Vickers, Amy (21 September 2000). "EMI unveils first online publishing deal". The Guardian. Retrieved 14 September 2022. Not content to rest on its laurels while it awaits EU regulatory approval on its £14bn merger with Time Warner, EMI has revealed details of a wide-ranging partnership with Europe's largest free music download website Peoplesound.com - the first deal of its kind in Europe.
  18. Shannon, Victoria (19 September 2000). "MP3.com Says It Is Looking to Europe for Expansion". International Herald Tribune. ISSN 0362-4331. Retrieved 14 September 2022 – via The New York Times. 'PeopleSound.com Ltd. now leads Europe-based Internet sites for downloadable music. Based in Britain, it has German, French, Dutch, Spanish and Italian versions, and it emphasizes its local content.' 'In July, MP3.com and PeopleSound.com were the seventh and 10th most popular entertainment sites, respectively, among European Web surfers, according to MMXI Europe BV, a site-ranking firm.'
  19. Robert, Virginie (11 June 2001). "L'italien Vitaminic s'empare de Peoplesound". Les Echos (in French). Retrieved 14 September 2022. 'one of the elite figures of the London Net-economy'
  20. Wearden, Graeme (8 June 2001). "Empire-building Vitaminic swallows Peoplesound". ZDNET. Retrieved 14 September 2022. 'one of the UK's better known Web entrepreneurs'
  21. Snoddy, Julia; Cassy, John (1 June 2001). "Peoplesound in takeover talks". The Guardian. Retrieved 14 September 2022. Peoplesound.com, one of the UK's highest profile remaining internet start-ups
  22. Robert, Virginie (11 June 2001). "L'italien Vitaminic s'empare de Peoplesound". Les Echos (in French). Retrieved 14 September 2022. 100 million pound valuation
  23. Cassy, John (15 February 2000). "Sounding out the band". The Guardian. Retrieved 14 September 2022. it would be no surprise if Peoplesound floated in the summer
  24. Miller, Charles (5 June 2000). "A slow start to the revolution". The Guardian. Retrieved 14 September 2022.
  25. White, Paul (July 2000). "PEOPLESOUND.COM: Behind The Scenes". Sound on Sound. Retrieved 28 November 2022. We won't try to make inroads into the States until after we go public, because you need such a huge cash investment to enter the market in the US.
  26. "CAMPAIGN-I: Peoplesound unveils music licensing portal". Campaign. Haymarket Media Group. Retrieved 14 September 2022. The website represents more than 10,000 unsigned bands and artists, and has both the master and recording rights to their music.
  27. "Sweet harmony: Supply-chain management". Sheer Inspiration: The UK's Most Visionary Companies. pp. 12–15. ProQuest 214761446 – via ProQuest.
  28. "MTV and music site partner for festival". Campaign. Haymarket Media Group. Retrieved 14 September 2022.
  29. Vickers, Amy (21 November 2000). "Peoplesound seals MP3 music deals". The Guardian. Retrieved 14 September 2022. Peoplesound's 10,000 artists and 30,000 free MP3 tracks will now be publicised and available for download from AltaVista, LineOne, Liberty Surf and intermusic. The deal with Amazon will enable users to purchase CDs from Peoplesound artists from the music and books retail giant.
  30. Vickers, Amy (21 September 2000). "EMI unveils first online publishing deal". The Guardian. Retrieved 14 September 2022. Not content to rest on its laurels while it awaits EU regulatory approval on its £14bn merger with Time Warner, EMI has revealed details of a wide-ranging partnership with Europe's largest free music download website Peoplesound.com - the first deal of its kind in Europe.
  31. Simmons, Lisa (24 September 2000). "Can AOL's freeway handle the traffic?". The Independent. Retrieved 14 September 2022. In the same week that MP3.com defiantly continued its plans for a European expansion following its ceasefire with the major record labels, EMI, one of the largest music publishers in the world, shook hands with peoplesound.com. Why? Because peoplesound.com uses EMI's technology to find out whether a new artist showcasing on the site is likely to be a hit or a miss. In other words, it's another A&R tool for EMI, and it gives a dot.com launched only last year the support of a major player.
  32. Marketing, Week (26 October 2000). "New initiative from peoplesound.com". Marketing Week. Retrieved 14 September 2022.
  33. "CAMPAIGN-I: Peoplesound unveils music licensing portal". Campaign. Haymarket Media Group. Retrieved 14 September 2022.
  34. Wearden, Graeme (4 January 2001). "Dot-coms face a tough 2001". ZDNET. Retrieved 14 September 2022.
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  38. Frantz, Grenier (8 June 2001). "Vitaminic se dope au Peoplesound.com". 01net.com (in French). Retrieved 14 September 2022.
  39. "Vitaminic comprará Peoplesound". El País (in Spanish). 8 June 2001. ISSN 1134-6582. Retrieved 14 September 2022.
  40. Castleman, Amanda. "Italian Firm's Dolce Music Deal". Wired. ISSN 1059-1028. Retrieved 14 September 2022.
  41. "Vitaminic to acquire Peoplesound.com". San Francisco Business Times. 3 August 2001. Retrieved 14 September 2022.
  42. Robert, Virginie (11 June 2001). "L'italien Vitaminic s'empare de Peoplesound". Les Echos (in French). Retrieved 14 September 2022. 'one of the elite figures of the London Net-economy'
  43. Wearden, Graeme (8 June 2001). "Empire-building Vitaminic swallows Peoplesound". ZDNET. Retrieved 14 September 2022.
  44. Robert, Virginie (11 June 2001). "L'italien Vitaminic s'empare de Peoplesound". Les Echos (in French). Retrieved 14 September 2022. However, the operation disappoints market observers. "It's an unattractive company buying a really great company. I've always been very skeptical of Vitaminic and would have liked to see how far Peoplesound could have gone. We'll have to see what happens to the two companies combined."said Heidi Fitzpatrick, analyst at Lehman Brothers.
  45. "Peoplesound bought for £20m". BBC News. 8 June 2001. Retrieved 14 September 2022. We will take leadership in the technology revolution reshaping the traditional music industry.
  46. Gibson, Owen (23 August 2001). "Schmitt quits Peoplesound". The Guardian. Retrieved 14 September 2022. His departure came as Vitaminic completed its £20.9m acquisition of Peoplesound, giving the company a combined catalogue of more than 329,000 tracks and agreements with over 1,200 record labels
  47. Vickers, Amy (8 June 2001). "Vitaminic buys Peoplesound". The Guardian. Retrieved 14 September 2022. "Vitaminic is very strong in southern Europe and the US and on the subscriptions side of things we're very strong in northern Europe. It's a very complementary tie-up," he said.
  48. Mathiason, Nick (24 June 2001). "The day the music died for online rebel Napster". The Observer. Retrieved 14 September 2022.
  49. Simmons, Lisa (26 August 2001). "New Media: Online office footie fans get shown the red card". The Independent. Retrieved 14 September 2022. First out the door and on to the first plane to New York was the chief executive of Peoplesound, Ernesto Schmitt, star of many a dot.com documentary. Schmitt has landed himself a plum role at EMI Group stateside, where he will fill a newly created position of senior vice-president of strategy and business development across the group's recorded music and music publishing divisions.
  50. Brindley, Paul (2000). New Musical Entrepreneurs. Institute for Public Policy Research. p. 49. ISBN 978-1-86030-103-2. Retrieved 18 January 2023.
  51. Knight, Will (19 July 1999). "Peoplesound.com - A music revolution?". ZDNET. Retrieved 14 September 2022. If they pass the Peoplesound A&R selection and gain a contract, Peoplesound will share 50% of the net profit from record sales. The figure is far more than you'd expect from most major record companies, 17-20% of sales is normal, and even independent labels only offer around 30% after overheads.
  52. "PEOPLESOUND.COM: Behind The Scenes". Sound on Sound. Retrieved 14 September 2022. We only reject around 20 percent of what is offered to us, and with those we do reject, it's not a question of whether these guys are going to sell five million copies or not.
  53. Knight, Will (19 July 1999). "Peoplesound.com - A music revolution?". ZDNET. Retrieved 14 September 2022. Peoplesound will offer customers two free songs from every band as a taster and then invite customers to create their own compilations in CD Realaudio or MP3 format.
  54. Cassy, John (15 February 2000). "Sounding out the band". The Guardian. Retrieved 14 September 2022. Peoplesound differentiates itself by filtering out poor quality artist submissions before they are posted on-line. "We get rid of the crap early on. Some sites will post recordings of kids singing in the bath but we have a dedicated team of ex-A&R men deciding which artists will make it onto Peoplesound.
  55. Koranteng, Juliana (2 November 2004). "Sources: U.K.'s Peoplesound To Relaunch". Billboard. Retrieved 14 September 2022.
  56. "Free MP3 Music – PeopleSound". PeopleSound. 2006. Archived from the original on 14 October 2008. Compare with next available archived snapshot.
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