Deezer Story Part 3: Shaky Foundations
February 2007
Over time, our relationship grew, and we began to trust each other more. Mindful not to push Daniel too hard, I allowed time to work its magic. I noticed improved communication and a more collaborative way of working. My initial doubts gradually subsided, and I felt increasingly comfortable moving forward with him.
One day, as we rode the subway together, Daniel unexpectedly offered me a position as co-founder. Given our growing closeness, I sensed this conversation was coming and looked forward to discussing the foundations of our partnership. Unfortunately, it wasn't really a discussion around a fair partnership but more of a non-negotiable offer—a "take it or leave it" proposition. In hindsight, this approach wasn't surprising for someone who avoided conflicts. However, I was both taken aback by the impromptu offer and disappointed by the lack of dialogue.
My excitement about the project somewhat tempered my bitterness, but deep down, I knew it was a bad deal for me. I honestly believed that our contributions would be equally vital to the success of this endeavor. There was no Y Combinator-style standard for equity splits at the time, nor were many discussions or stories about equity splits between founders starting companies together.
Nevertheless, knowing Daniel's stubbornness and tumultuous past with Lovelee, I decided to sleep on the offer rather than push too hard immediately.
We discussed the offer briefly throughout the coming weeks, but I quickly saw it was a dead end. Part of me credited Daniel for starting Blogmusik, but the other part saw no future in this project without our moat's music licensing deals. I was torn internally. But as the famous adage says: “It's not how you start, it's how you finish."
I eventually accepted that offer by the end of February 2007. A few years later, it turned out to be my mistake.
March 2007
Once we shook hands on our partnership, our first priority was to meet with our attorney to get his expert feedback and advice on making Blogmusik 100% legal and address the looming cease-and-desist order from SACEM. We secured a meeting in early March 2007, and our anticipation built as we prepared to present our case.
From the moment he walked in, Michael captivated us. He looked like he'd stepped straight out of a rock concert: young, undeniably handsome, with long, flowing black hair that screamed rebellion. His leather boots clicked against the floor as he strode in, exuding confidence. A somewhat French version of Prince. His demeanor was refreshingly direct. We exchanged knowing glances, thinking he could easily be the charismatic lead singer of a rock band. In our minds, he was perfect - the embodiment of the edgy, innovative spirit we wanted for Blogmusik. "Welcome to the world of music, baby!" I thought to myself, feeling a surge of excitement.
As we settled into the meeting, we eagerly recounted the story behind Blogmusik, tracing its evolution from a simple idea to our grand vision for the future. Michael listened with an intensity that was both encouraging and slightly unnerving. I couldn't help but wonder if he thought we were just a pair of starry-eyed dreamers, too naive to understand the complexities of the music industry. Yet, as we spoke, something unexpected happened.
His palpable enthusiasm for our entire endeavor struck us immediately and continued to amaze us throughout the meeting. It wasn't just polite interest; he seemed genuinely excited by our proposal. He grasped our vision more impressively, leaving us both relieved and energized. His eyes lit up when we introduced our "Radio 2.0" concept. Clearly, this framing resonated deeply with him, offering the perfect context to position the innovation we were bringing to the market.
As we delved deeper into the discussion, he painted a stark picture of the music industry's current state. He spoke of a worldwide "death spiral," with a particularly dire situation in France. Record sales plummeted, piracy was rampant, and traditional models crumbled. Yet, in the face of this gloomy backdrop, he saw a glimmer of hope in Blogmusik.
The State of the Music Market in 2007
For context, back in 2007, the music market was experiencing a steep decline year over year since 1999:
The situation in France was even more dire:
The main culprit was the explosion of piracy, fueled by inexpensive broadband access and MP3 players:
Based on one of the largest ISP in France in 2007, Free, one could get unlimited bandwidth up to 28Mbps for €29.99/month (~$44 based on the EUR/USD average exchange rate). Still today, France is the cheapest market for broadband personal internet access.
For context, Europe experienced an explosion of ISPs in the mid-90s due to the deregulation of the telecommunication sector, making it mandatory for publicly owned telecommunication operators to lease their network to new entrants. To this day, ISPs in France and other countries in the EU have benefited from the billions of euros invested by public operators to bootstrap their business and launch inexpensive broadband offerings. For instance, the French operator Free offers today 5Gbps download and 700mbps upload for €29.99/month (as a point of comparison, my Frontier internet access costs me $129/99/month for 5Gbps).
As the meeting drew close, we found ourselves in both exhilaration and trepidation. We had not just secured a legal advisor; we had found a kindred spirit who truly believed in our vision and could help us navigate the treacherous waters ahead. His enthusiasm and understanding of our "Radio 2.0" concept gave us hope that we might be on the cusp of ushering in a new era for the music industry.
Michael's enthusiasm was tempered by his sobering insights into the music industry's complexities: music copyright is intricate, involving multiple stakeholders and numerous licensing deals. But the industry desperately needed reinvention, which gave Blogmusik a chance to exist. To succeed, we had to demonstrate a willingness to collaborate with the industry rather than oppose it.
This meant taking a difficult but necessary step: shutting down Blogmusik immediately.
Our next move would be to meet with influential figures in the French music industry, convincing them of our sincerity and vision. It felt like a step backward, but we understood it was crucial. With Michael's guidance and our unwavering belief in our project, we were ready to face the challenges ahead, hoping to usher in a new era for the music industry.