Can The Echo Nest Stay Aloft in the Turbulent Music-Recommendation Industry?

10/30/08Follow @wroush

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problem,” says Lucchese. “We’ve seen some commercial music services that are still trying to figure out how to tie together ‘Elvis Costello’ and ‘Elvis Costello and the Attractions.’ But we ended up building natural language processing capabilities that are pretty unique and turn out to have real value for the market.”

Name reconciliation, of course, isn’t the kind of service you could sell directly to music consumers—which is why “We are not interested in being a consumer-facing music service ourselves,” says Lucchese. “We are a provider of enabling technology to other music services.” That could mean anything from an ad-supported social networking site like Bebo or MySpace to an editorial outlet like Rolling Stone, Vibe, or Spin, to an Internet radio station or listening community like iMeem, to a paid music service like iTunes or Rhapsody, to a provider of mobile music downloads. (Those are just examples—Lucchese won’t confirm or deny that the company is working with any of these companies.)

The Echo Nest now has nine employees. It closed its first venture financing round—an undisclosed sum contributed by Waltham, MA-based Commonwealth Capital Ventures—in September, and will probably double in size over the next 12 months, according to Lucchese. (I imagine that it’s getting a few resumes from former Matchmine employees.) Its customers will interact with the Musical Brain through the extensive application programming interfaces (APIs) that the company is building for specific services such as recommendations or feeds. “The more you use our platform—the more you hit the APIs—the more you pay,” Lucchese explains. That way, customers don’t have to sink a lot of money into the service up front, and The Echo Nest gets a slice of the revenues as demand for online music services increases. “We definitely want to share in the growth of an industry that’s expanding at 35 percent per year.”

But there’s one down side to being a tools provider: you only look as smart as the people who are actually putting your tools to work. Whether The Echo Nest’s recommendation system ultimately outperforms Pandora’s “will come down to how well our customers use our tools to create new experiences for users,” Lucchese acknowledges. “How you actually measure the difference is a tough one. That said, there’s one area that’s really easy to measure, and that’s the shitty recommendations that people are getting from collaborative filtering systems. If you just looking at transaction data, you are prone to give out recommendations that people immediately distrust.”

Lucchese is right—I can’t remember the last time I bought something at Amazon based on the site’s automated recommendations. I can, however, remember the last time I set up a personalized Pandora radio station. It was last month, and it helped me discover a whole series of musicians who have a style similar to jazz pianist Robert Glasper, one of my current favorites. So the company is riding a trend—and the big question for it, as for every other technology startup, is whether it can outrun the economic downturn and transform its service into real revenues before the capital dries up. Matchmine couldn’t. The Echo Nest just might.

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Next page: video of The Echo Nest’s presentation at Demo 08.

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Wade Roush is a contributing editor at Xconomy. Follow @wroush

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