Music streaming startup Earbits is shutting down

Los Angeles-based music streaming startup Earbits will be shutting down its website and mobile apps next Monday. The company announced the shutdown on its blog Thursday, as Earbits CEO Joey Flores wrote:

“Shutting down a company after 4.5 years is going to be painful for anybody but is particularly painful for us here at Earbits.  (…) We proved to ourselves and a substantial number of artists and listeners that our concept does work, that our vision is what the industry and larger streaming providers need to be doing in order to create more value, but that we simply needed a lot more capital to pursue such an aggressive mission properly.”

Earbits offered users a personalized radio service similar to Pandora, with one important difference: The service didn’t have any ads, and also didn’t charge users for subscription fees. Instead, it tried to connect listeners with artists and labels, effectively turning music streaming into a marketing machine. This actually worked remarkably well, according to Flores:

“By showcasing features that allowed our listeners to connect with our artists, we generated for them hundreds of thousands of new mailing list signups and Facebook fans across a relatively small audience. The revenue and other value that our partners generated from these new connections was often ten or twenty times higher than what they receive from ad-supported royalties on major services, and it provides concrete evidence that there is more streaming companies can do to provide the content community with a return for their hard work.”

There have been a lot of discussions about the money artists and labels are getting from streaming services like Beats Music and Spotify. Some of these services have started to embrace marketing and merchandise sales as additional benefits for artists; Beats for example has bought the artist commerce platform Topspin and wants to integrate it into its own service.