Dalton Caldwell

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App.net Promises User & Developer Driven Social Network

In an era of sponsored tweets and sponsored Facebook pages, App.net promises to be a social network designed for users and not for advertisers. ”We believe that advertising-supported social services are so consistently and inextricably at odds with the interests of users and developers that something must be done,” reads the site’s beta page.

Rather than a free model like Facebook or Twitter, App.net requires users to pay a minimum of $50 a year to join a “real-time social feed without the ads.” The crowd-sourced funding initiative, which has already raised almost $700,000, more than meeting its $500,000 goal which ends tomorrow.

In a video (which we’ve embedded above), App.net founder Dalton Caldwell explains the why he thinks users should pay. “The reason I am so optimistic about a paid opportunity is that it aligns our incentives economically with users and developers. Let me explain that, if we are selling a service our customers are our users and our job is to make our users happy. If we have a free ad-supported service, our customers are advertisers and our job is to make advertisers happy.”

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Amazon Brings Kindle Fire’s Killer Instant Video Feature to iPad
On Wednesday, Amazon released an iPad version of its Instant Video app. The app accesses Amazon’s video library of over 120,000 movie and TV show titles, and makes the iPad the only mobile device other than the Kindle Fire to receive Amazon’s special brand of video love. VentureBeat The app goes a step further than Netflix by providing streaming access to movie and TV shows you’ve purchased or rented through Amazon’s online store. You also have the option to download those video purchases directly to your iPad for viewing offline. ars technica While the app gives you one additional viewing option for Amazon’s library of content for rent or purchase, it is definitely geared more toward users who want to stream content available via an Amazon Prime membership. The $80 annual fee not only gives you free shipping options and access to Kindle “library” items, it also allows you to access a fairly large library of streaming video. TIME/Techland Apple’s rules stipulate that it gets a cut of content sold from inside third-party apps, and linking to an outside site from within an app in order to sidestep such a payout is a no-no. That’s why you have to go to Amazon’s site directly first, pay for what you want to watch (or add it to your Watchlist if it’s a Prime title), then pull up your purchases and Watchlist content inside the app afterwards. Reuters Amazon.com is trying to get its digital music and video on as many gadgets as possible as the world’s largest Internet retailer replicates a strategy that paid off for its Kindle e-book business. The theory is that if customers can play and watch Amazon music and video on all their existing devices, they are more likely to purchase the content from Amazon rather than competitors like Apple’s iTunes and Netflix. Read more

Imeem Founder: Music Startups are Doomed

If you want to have a successful music startup, then you’d better be either very lucky, or have one crazy ace up your sleeve. Otherwise, you’re doomed to failure, according to Imeem founder Dalton Caldwell.

Onerous fees, antiquated licensing systems, money hungry labels, and market domination by Apple’s iTunes Store are some of the hurdles that a music startup needs to overcome, Caldwell told tech’s best and brightest at the YCombinator Startup School in Stanford on Sunday.

“Every time a founder does a music startup, a likely more successful startup dies,” said Caldwell, who’s own streaming music startup Imeem died on the vine in 2009.

Caldwell listed various online music business models and systematically picked them apart: Music download stores have iTunes’ 90% market share to deal with. Subscription music services have to pay expensive minimum fees to the labels and wade through licensing restrictions on a country-by-country basis. Not to mention existing competition from the likes of Napster and Rhapsody.

Music startups are often forced to sign non-transferable licensing deals, according to Caldwell, which means that if the music startup is sold, the buyer can’t use the license. A serious problem for startups hoping to attract a big money buyer.

Caldwell’s Imeem was once valued at $24 million, and managed to sign deals with all 4 major U.S. labels. However, the financial hurdles proved too much. MySpace bought the company for less than $1 million and promptly canned it.

We’ve seen other music startups fold as well. Music marketplace Amie Street was bought out and shut down by Amazon.com in September.

Music businesses based on the streaming radio model have the best chance of making it, according to Caldwell. Popular online radio startup Pandora, which is now profitable, was in a battle for its life against high online broadcasting fees just a couple of years ago. After hard negotiation and legal wrangling the company was able to get a royalty rate that allowed it to stay in business, however it was still higher than traditional broadcast fees. And following the Pandora model may already be out of reach for small startups, he added.

The struggles for online music startups will continue until governments work out some sort of international licensing framework, musicians abandon music labels, and the industry creates some sort of distribution and measurement system that tracks song popularity, said Caldwell. And that’s not going to happen any time soon.