Text Messaging May Be Way to Reach Young Readers
By Efrain Viscarolasaga
Published: September 12, 2005 08:40 AM EST
Last week, the Middle East, a rock club in Cambridge, became one of the first major music venues in the area to use a mobile network platform to promote its shows and provide free tickets through text messaging. For several technology companies, it's an example of the emergence of a niche so new it still lacks a name.
NEW YORK Newspapers have been crying in their beer over the loss of young adult readers. So in an effort to grab that ever-elusive demographic, one newspaper decided to stop sobbing and go where the young and hip go. Last week, The Boston Phoenix rolled out a program with two lures sure to snag the under-30 set: chat, and the chance for romance.
Call it networked music.
A mobile technology offshoot of the Phoenix Media/Communications Group in Boston, known as g8wave, provides the messaging platform for the Middle East”s promotion. G8wave (pronounced "gate wave") is indicative of a growing business cluster in New England. Be it a wireless mobile network, a hard-
wired area network or the Internet, New England technology companies are using music as a base application as they move toward an integrated multimedia network.
Because the niche is so new, the parameters lack definition, and it is unclear exactly in which direction the market will turn.
"The industry is not fully explored," said Ahmet Ozalp, a principal at venture capital firm Atlas Venture, "But all media, including music, video and even some gaming, are starting to play a more significant role in early stage funding."
Atlas Venture has funded at least two such companies in Groove Mobile Inc. (formerly Chaoticom Inc.) and Gotuit Media Corp., both in Andover.
Groove Mobile has created a successful mobile music download service, allowing cell phone users to download full tracks of music directly to their cell phones. The company spun out of the mathematics department at University of New Hampshire in 2001 by now chief technology officer Kevin Short. Short, a mathematics professor at UNH and former faculty member at MIT helped develop a unique audio-compression technology the company applied to cell phone-based music downloads.
Gotuit Media makes a tagging system for music and music videos available over cable and on-demand systems. Between them, Groove Mobile and Gotuit Media have closed almost $30 million in venture funding over the past four years from local and national venture capital firms.
VC interest certainly adds credibility to the growing sector, but like everything else business, customer demand will determine the fate of networked music.
Jeff Ostiguy, g8wave's Director of Business Development, said demand for new music-based services is growing in North America, and it is only a matter of time before the U.S. consumer catches up to the rest of the world.
Kevin Hoskins, manager and booking agent at the Middle East, is seeing it firsthand. "Our crowd is incredibly cell phone focused. Why not use their cell phones to give them a better concert experience than they can get anywhere else?" he said.
Customer demand means more services and new technologies will be introduced in the coming months and years.
"U.S. markets are a bit behind in handsets and networks compared to other regions, but the gap is closing," said Adam Sexton, vice president, marketing and product management for Groove Mobile. "As that gap closes, you are going to see a lot of area companies start to heat up. There are a lot of companies in the area (New England) that have come from video, SMS and other types of messaging, and music is heating up."
While some networked music startups, like Groove Mobile, are spawned on college campuses, others are sprouting from more traditional entrepreneurial backgrounds. Arlington's Nellymoser Inc., which recently scored a $5.3 million round led by Softbank Capital, was founded by John Puterbaugh, a multimedia IP networking veteran who has been part of other multimedia companies such as Voxonic in New York.
David Galper and Vince Han, who represent the "young entrepreneur" contingent in this niche, founded Ruckus Network Inc., a college campus-based peer-to-peer music sharing company, in Boston in 2004. Fresh out of college, the company lost in MIT's annual $50k business plan competition, but quickly landed venture funding from Battery Ventures, before moving its headquarters to Virginia. The company still has a development facility here and is installed on campuses around New England.
Boston”s SonicBids.com, an Internet portal that connects musicians and booking agents at small clubs and national venues, was founded by Panos Panay, a former music talent agent and Berklee College of Music graduate.
Bridging the music and gaming gap, Harmonix Music Systems Inc. in Cambridge makes music-based games, including rhythm-action games, Frequency and Amplitude, touted as some of the most cutting-edge on the market.
What remains to materialize is the economic viability of these technologies. Several industries are keeping a close eye on the progress of these startups, including the record industry and carrier networks.
"Music is a great passion of mine and these technologies are pretty cool," Ozalp said. "But it remains to be seen how the business side of some of these technologies will evolve."