Is the music streaming model working? Video platform Tape.tv rethinks strategy and bags multi-million euro deal

Tape.tv
Tape.tv

Tape.tv

UPDATE German music video startup Tape.tv is rethinking its strategy, with native mobile apps on the way and a media-for-equity deal with Dirk Ströer’s Media Ventures worth a “mid-double-digit million” euro sum over three years. The company recently laid off 11 employees as part of its shake-up, leaving it with a team of about 60 in Berlin.

Tape.tv, founded in Berlin in July 2008 and available in Germany, Austria and Switzerland, is a web-first platform for streaming music videos. It plays as an online TV station, with channels for different genres and moods, its own shows and festivals, and a “top” chart. By signing in and clicking “like” or skipping songs, viewers end up with customised content, similar to Pandora.

Tape.tv

In May 2012, Tape.tv closed a €5m Series B funding round including prolific Berlin angel investor Christophe Maire and Atlantic Capital Partners (not to be confused with Maire’s Atlantic Ventures), expected to help fund a push into France and the UK that year. At that time, the company had about 3.5 million users and 45,000 hosted videos.

New mobile apps – and considering premium subscriptions

The new deal with Media Ventures, announced last week, shows the company is still focused on Germany for now. “We need two things”, Tape.tv CEO Conrad Fritzsch explained – native mobile apps and an extended business model.

The company aims to release native apps for both iOS and Android this year. Media Ventures’ network includes Ströer Out-of-Home Media AG, one of Germany’s largest providers of outdoor media, which should come in handy to push the new apps.

Tape.tv is currently a free service, relying on advertising and branded content. Neither option is as scalable as they’d like, Fritzsch said. While the company’s branded content works “very well”, it requires one-on-one time and effort to put together. “You have to take brands with you on a journey,” he said.

To help it grow more quickly, the company is now also considering premium subscriptions and selling insight to artists. “It must be a proper model,” Fritzsch emphasised – something that also works for artists and rights collection agency GEMA.

Tape.tv is still sitting on about 3.5 million users after “switching off some unprofitable customer acquisition channels” and is closing several contracts that should push it to 50,000 videos by the end of the year. It’s not disclosing current revenue (in May last year, TechCrunch estimated annual revenue of €20m).

As part of the strategy shake-up, the company recently laid off 11 people but – Fritzsch said – also made seven new hires. “This change in business always leads to a change in employee structure because there is a shift in the need of certain skills,” he said. “From now on, we will put even more emphasis on our development power and will change from a brand-driven company to a product-driven company with focus on our mobile strategy.”

This seems like a growth setback but it’s also a natural evolution. The recent furore between Spotify and Thom Yorke is a reminder that musicians and startups are still figuring out how to make streaming work. Tape.tv’s progress so far in Germany where YouTube and Grooveshark have failed is a good sign – now, the fight is to make it pay off.

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