Admittedly, I was unaware of the existence of Masterbeat until you mentioned them here. Specializing in dance and DJ remix music seemed to be a potential ‘winner’ when you consider the fact that U.S. laws treat that category in a more strict manner compared to how it is treated in Europe.

The Republican party here issued a report on copyright reform mentioning this difference, but that report was retracted virtually the next day due to how the MPAA (via Chris Dodd) threatened to withhold campaign contributions to Washington due to their failure to pass SOPA.

One thing which stands out on the Masterbeat history page is that they never really had the money to advertise their existence. “Word of mouth” can often be a great thing, but 2008 was not a good time for anyone to be trying to construct something like that based upon their own, small customer base. I’m convinced they were a victim of the recession as well as the people they mentioned who don’t know the difference between an MP3 and pantyhose. I believe their story now — it makes complete sense in the context of their inadequate financial resources as they tell it.

Their product was likely very effected by what they call “underground blogs” as well as DJ podcasts. Personally, those blogs were a prime source of a lot of material which I took advantage of at the time due to what I perceived as being generally unavailable through legal channels. Had I known about Masterbeat, perhaps I would have been a customer. Mainstream material at that time however, was easily acquired through legal channels — just not in a lossless format. So, yes — I think “warez” sites in their specific circumstances were probably very damaging to their business model.

Full catalogs should have been enough for them to thrive as long as they remained competitive with iTunes and their ilk. Sony had their own music site (can’t recall the name) in the early 2000′s. One of my old VAIO desktops from 2002 had a music player/ripper/burner which used their site and their own DRM’d format. It was some ‘shovelware’ which I never used. They closed that service down and then reopened some years later under another name and system. This could have had something to do with when Sony BMG pulled out of Masterbeat. Sony is not known for being supportive of anything they didn’t think of themselves.

Baboom is going to have a tough hill to climb due to exactly what you stated — they won’t have a large mainstream catalog and it’s going to take some “defections” by some big names to get it going. I doubt KDC will ever sign any kind of deal with one of the labels. If Baboom lives up to what they’ve been claiming they can do for artists monetarily it should go well. Otherwise, it will fail. They are trying to start a “revolt” against the labels via artists themselves.

A revolution/innovation of this nature will be extremely difficult. If KDC reneges on any part of what he has been claiming, it will all go down in ashes. The end-user experience will play the largest part in all of this.

Ad-supported does work in many areas, but if it becomes overly intrusive or cumbersome to the casual user then all bets are off. A so-called “free” service will never go over with anyone who hates things like nagware. In other words, there can be an “annoyance factor” — it just has to be as minimal as possible.

They have to make money of course, but they will never make money if the potential user-base feel they’re being abused.

“Even though the company had done everything humanly possible to cut
expenses and overhead, it was still impossible for the site to sustain
itself”

So they could (of course) be lying, but that’s their story and they are sticking to it. Ignore all the dance music/dj bits, by 2009 they had cut deals with Sony, EMI, & Universal to provide full catalogs from current artists. They are back focused on the dance/dj scene, so they aren’t talking about this failure. It’s not my opinion that they couldn’t sustain themselves based off of lossless digital sales, that’s what they told everyone.

If warez sites have an impact on digital sales (which, hey, they probably do, it’s just hard to figure out what exactly that impact is), that impact isn’t going to be different just because of the format. That’s all I’m trying to say, although I would imagine FLAC enthusiasts would be more likely to turn to “piracy” because outside of physical media (ie digital exclusives, singles, etc) they have a harder time finding legal alternatives. More importantly Baboom won’t be able to fix this since they won’t have the large mainstream catalog and newest hit singles unless they sign deals with labels, which goes against everything they’ve been saying.

That is exactly what I’m saying. It applies to any site which streams a lossless format. All media these days over the Internet is bandwidth intensive if it is of high quality. Just look at the Netflix vs Verizon/Comcast feud (needing to pay them for a preferential traffic lane). Streaming an HD movie over Netflix can be a good experience or a bad experience, depending on your location. Hard drive space these days is so cheap I find it hard to believe there is actually someone, somewhere (Masterbeat) using it as an excuse.

This very article we’re commenting under says: “Streaming FLAC files will require a decent Internet connection, as a full music album can easily take up more than half a gigabyte. In addition to lossless streams, users will also be able to download tracks in FLAC format to listen to offline.”

As for warez sites having an impact, I was merely giving the MAFIAA side of the story to be “fair and balanced.”