Your Kind of Music

CNBC Business Magazine, Jan. 1, 2012

Its big idea was to stream videos based on individual users’ tastes. Now Berlin’s is making its own shows and expanding across Europe

By Siobhán Dowling

Florence + the Machine are wowing the crowd on a windswept autumn day in Berlin. Surrounded by hip young fans and media types, the British band are putting on an acoustic performance of songs from their new album on a roof overlooking the River Spree. The director pleads with the crowds not to clap until he has signalled, as the whole thing is being filmed. It is the 100th rooftop concert for, one of Berlin’s most successful media start-ups.

The company, founded in 2008 by Conrad Fritzsch and Stephanie Renner, is an online music channel that has rapidly grown in just a few years. While it started out streaming music videos 24/7, it has increasingly broadened its remit, producing its own content. In the German-speaking world it has 3.5 million users a month and its expected turnover for 2011 was €20m. In 2012 it is expanding into new markets, launching in the UK in January, with channels to follow in France and Scandinavia.

The headquarters of are in unhip Pankow, a sleepy suburb in the former East of the city. In the retro communist-era building, however, things are suitably cool, with young trendy types flitting about in low-slung jeans and hoodies. The company only moved here in October to accommodate its growing workforce. Two years ago it had 15 employees. Now there are almost 80 and by the end of the first quarter of 2012 that will likely have increased to more than 100.

Fritzsch, the 41-year-old CEO, fits the bill of a Berlin entrepreneur with his square-frame glasses, black jacket and trainers. He worked for 14 years as a director of TV ads but had become jaded and wanted to do something new. “I can only do things that I love 100%, because I work so hard,” he explains. “And I knew I wanted to do something with music.” He and Renner, another advertising burnout, decided that music TV in its current form was no longer giving people what they wanted: actual music.

At the same time, the internet offered new possibilities. “We have seen these mega-trends, globalisation, personalisation and digitalisation,” Fritzsch explains. “So we created a product that operates globally, that is digital and that at the same time can be personalised.”

The idea behind is to take away the burden of having to search, he explains. When a user opens a video plays automatically. A team of editors curates these videos, with new streams going up three times a day. By clicking on icons to show like or dislike, a personalised stream is created. Users can also choose from various genres and moods.

Fritzsch says the site differs from YouTube and Spotify in that it takes away this pressure of choice. “If you have to search for something it is like a wall, and we break down this wall with our editorial recommendations.” In this way a personal channel is created. “The idea behind is that content finds you.”

The team of editors scopes out new or local artists to add to the stream. Top 100 chart hits account for only 25% of the curated content on any day and the new company slogan – “We fight for music” – encapsulates that vision of going beyond the mainstream.

After establishing the company, Fritzsch and Renner realised that there was a potential audience for more programming that featured the artists in different settings. They started doing the rooftop concerts and also developedOn Tape, where a band gives an intimate performance to fans in Berlin. The show is streamed online, allowing for interaction with users such as’s 80,000 Facebook fans, and is shown the next day on public broadcaster ZDFkultur. Other programmes are planned for 2012.

Keeping users online for long periods of time to watch entire shows is, of course, very attractive to advertisers. Making money online is notoriously difficult and while users don’t want to pay for content, they also don’t like being annoyed by ads. has attempted to get around this conundrum in various ways. For starters, it has developed its own formats to go beyond pre-roll ad spots, which are seeing a decline in unit value. One, called 360°, reduces the video to a smaller size on the screen, allowing the surrounding space to be filled with advertising. The ads are integrated into the player, so they load faster than traditional ads.

A second format is the so-called flip ad, whereby the video seems to be flipping away at an angle but is still visible, leaving space for an ad. This can be particularly useful on smartphones. The ads are also targeted, so a Beyoncé video, for example, will be surrounded by an ad for her new perfume, while a trash metal clip might feature ads for video games.

“The main thing online is not to annoy the user,” Fritzsch explains. “If the advertising annoys them, then they have to be able to switch it off. So we try to make the advertising as clever as possible.”

In December a subscription service was launched, providing users with ad-free content for either a daily micropayment or monthly fee. They can also purchase services, once they have registered, such as mixtapes based on their personalised channels. In the year since registration was introduced, 250,000 had signed up. The company hopes that two-thirds of all users will be registered eventually.

Not content to just broaden into TV production, the company also wants to tap new markets across Europe. “We are not just looking at some of the more profitable countries but also ones that have high consumption of music videos,” says Paul Dinsmore, the company’s new strategic advisor for its European launches.

An American who was previously head of global digital for Sony Pictures Entertainment, Dinsmore has been at since August 2011. He says the draw was the company’s novel approach to curated content and advertising models, or what he refers to as “the non-interrupted high-quality user experience”.

Dinsmore says the focus with the new launches will be on local music scenes. “We will be working with specialists in UK music to focus on the tastes and needs of the audience there, and the same for the other new markets.”

Technical, production and editorial teams will initially be based in Berlin, working with partners and external sales teams in the new countries.

Attracting foreign staff and building partnerships has been made much easier by the company’s location in the hip German capital, according to Fritzsch.

He admits: “When we are having meetings in Stockholm, London or Paris, they do think it’s cool that we are based in such an exciting city.”

Originally published in CNBC Business Magazine, Jan/Feb 2012 Edition


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