After more than three years, we have decided to shut down the Popcuts music store. Let us tell you why:

We set out with a grand vision: Repair the broken economics of the music industry.
At the beginning stood the realization that artists and their fans have misaligned incentives. Artists would like to make a living (or at least some money) with their music, while fans started accumulating lots of music for free through filesharing. So we decided to make every fan a co-owner of the songs they love.

We had high hopes for this new model to change the way music is sold in the digital age, but we weren’t able to realize this promise. One reason is that margins on 99¢ downloads are small, and they’re even smaller when you’re allotting part of it to fund rewards for previous buyers. So it’s inherently difficult to turn a music download store into a profitable business.

But it was also hard to convince those who control the music rights to come on board. Steve Jobs had the vision and clout to make a huge dent in the music download market, but few others have successfully followed suit, and that’s not because no one after him has tried.
Finally, we have ourselves to blame because we probably could have been much more aggressive in convincing labels and distributors to sign up for our idea. When you run a startup, nothing you do is ever enough.

We think (and we’ve heard many times) that our model is still promising, and we hope to apply it to other markets than just music downloads in the future. In the meantime, if you’re interested in licensing our technology, talk to us.

The site is now closed for new user signups, but you’ll be able to spend any remaining balance in your account on music until March 31. After that date, we’ll turn off the lights.

We’ve had a great time building and maintaining a community where artists and their fans interact, but now the time has come to move on to new things. We’d like to thank everyone who supported us along the way. The UC Berkeley School of Information, Y Combinator, our friends and family, and all the great artists and music fans who became part of this experiment.

All the best!

The Popcuts Team
Yiming, Kevin and Hannes

P.S.: If you’d like to be informed about any new developments around Popcuts and its founding team, follow us on Twitter or Facebook, subscribe to our blog, or simply respond to this email.

Popcuts | 1522 Henry St, Ste D | Berkeley, CA 94709