Earbits
The business, the turning points, and the decisions behind them.
01 / WHAT IT BUILT
What the company did
Earbits was a Los Angeles-based free streaming music service from Y Combinator's Winter 2011 batch, founded by Joey Flores and Yotam Rosenbaum. It was an indie-music discovery platform: listening was free for users, while artists and labels could pay to promote their work to fans. The company had raised $1.7 million, and by June 2014 it had grown to over 300,000 registered listeners and 13,000 artists across 600 record labels.
02 / Earbits FAILURE REASONS
Failure factors
CEO Joey Flores announced Earbits was shutting down on 16 June 2014, stating the concept worked but the company needed far more capital to pursue its two-sided music marketplace and had bitten off more than it could chew in a tough industry; Music Ally framed 2014 as the year funding ran out for music startups whose models needed more time.
Flores said Earbits simply needed a lot more capital to pursue its aggressive mission properly.
He wrote that building a digital media two-sided marketplace in an already tough industry meant they bit off more than they could chew.
By October 2013 Earbits had ~230k registered users and ~60k monthly uniques; Flores had claimed profitability at 1m users, which did not materialize before shutdown.
03 / EVENT HISTORY
Events in the structured record
- Operations ended
Earbits briefly stopped operating in June 2014 because of a funding shortfall; a partner then provided a rescue.
04 / CONTEMPORARY REBUILD ASSESSMENT
Difficulty of rebuilding this project today
Material for this section is being gathered and checked. It will appear here once ready.
Overall assessment: Not completed
05 / CAUSAL CHAIN
How the factors connect
- 01
In June 2014, Earbits announced it would shut down its free streaming service on June 16, after four and a half years, having run out of money and failed to find outside investment partners.
- 02
CEO Joey Flores said the concept was proven but the company 'bit off more than it could chew' building a two-sided digital-media marketplace in a tough industry, and needed far more capital than it had.
- 03
Less than 48 hours after the site went dark, a strategic partner stepped forward with a letter of intent to acquire the company and provide capital, bringing Earbits back online.
- 04
The acquisition was completed by Atlanta-based media company You42, announced about 20 months later in 2015.