Snocap Hits Hot Air and nosedives

Snowcap is reportedly laying off 60% of its work force, and putting the company up for sale. The sad part is just as the defection of big name bands from Madonna to Radio Head will have a major influence on the music industry, it is looking like too little and too late for Snowcap. Valleywag looks like the winner in the scoop, quickly followed by CNet and Venture Beat, and Venture Beat reports:

The San Francisco company has struggled to define a business model amid quick change in the industry, and recently had moved into new areas, setting up online stories for musicians at various sites. It said its technology can track the usage of music online, and ensure that it is being licensed properly, according to copyright. The stores were a way for musicians to sell the music. A good idea, but a fragile one considering it needed to find a way to make money from it. Source: Venture Beat

That is one of the biggest clues any new company needs to look at, have the business model up front, make sure no one is ticked off at you and you might stand a chance. While we are not saying it is a bubble, it is interesting to see who is pulling out of the on line distribution model and who is sticking around. Consolidation is good, but the survivors are the middle sized companies, and the larger ones that got in early and did good things with it.

Some companies have grown, some have failed, and it is good to see a consolidation in the on line music distribution business because there are too many companies chasing too few people until DRM is totally dead.

While the music industry trundles on, the next three to four years it is going to be very bumpy, lots of turbulence and lots of churn as companies come and go. The ones that are the most stable are going to be the ones that win. Companies that focus on all music, new, old and suddenly hot are going to be the real winners in the game. The companies that can build and profit from social networks, and resource description frames (RDF) will also be winners in the business.

In all this will be interesting to watch as it plays out.