How Neil Young’s Pono Music Raised $2 Million in Two Days – Forbes
On a breezy weekday morning in the hills just outside Austin, Texas, Neil Young slides onto a couch and smiles.
His relaxed countenance belies the fact that, at this very moment, he’s raising money for Pono–his long-awaited music player and service for high-quality audio files–at a rate of about $700 per minute via Kickstarter. Along with previous support from some outside investors, that will be more than enough to bring Pono to market this fall.
“Thank goodness that we have the investors that we have, because we were able to get as far as we could” before launching the Kickstarter campaign, says Young. “Far enough to be able to show the product. … But we couldn’t get [corporate] investors to get interested in saving an art form.”
Even so, the numbers behind the rollout are eye-popping. Pono (Hawaiian for “righteousness”) topped the $1 million mark within 12 hours debuting on Kickstarter, among the fastest to seven figures of any campaign. In the 48 hours since its launch, the total has surpassed $2.5 million.
For Young, though, Pono is about much more than a Kickstarter campaign. He wants to create an entire iTunes-like ecosystem for high-quality digital files, complete with an answer to the iPod (the PonoPlayer) and the iTunes Store (the PonoMusic.com Store).
Pono’s business model is similar, too: revenues will be divided in a manner similar to the 70/30 split between content creators and Apple Apple. Says Pono chief executive John Hamm: ”That’s the same deal we have. That’s the same deal everyone has.”
Most mp3 files have a bit rate of 192kbps or 256kbps, a small size that’s a product of the compression that allows users to store so many of them on a single device. High resolution files—the sort that Pono will champion—tend to run anywhere from 44.1kHz/16 bit (six times as much information as a typical mp3) to 192 kHz/24 bit (about thirty times as much).
“It raises the consumer-level quality of music to where it was pre-1980,” says Young. “Which is kind of amazing when you think of how great everything is in the 21st century, but audio quality has gone downhill to the point where it’s the largest opportunity for improvement of any media.”
The songs reaching users’ ears through streaming services like Spotify and Pandora tend to be of a similarly low quality. But that hasn’t stopped their popularity from surging. According to a presentation by Nielsen at SXSW, 68% of U.S. consumers streamed music in 2013; services saw a 40% year-over-year increase in listening.
“Digital consumption has reached the masses, with a majority of consumers in the U.S. streaming music last year,” said Nielsen’s David Bakula in a statement. “The change in consumption requires us to continually evolve how we measure and define success.”
For Pono, that means success will depend on carving out a corner of the market that truly cares about sound quality—enough to afford the $399 player and a projected $15-$25 per album price tag when the entire system goes live in October.
A good comparison might be vinyl, which currently makes up about 2% of total U.S. album sales and continues to grow; Hamm believes high-quality digital downloads could exceed that market share by a factor of at least ten. Says Young: “I don’t have any doubt that it’s going to be bigger than vinyl.”
He’ll have some competition. Already, services like HDtracks.com have seen triple-digit growth in downloads of top-notch digital files like the FLAC format touted by Pono as well as AIFF, WAV and ALAC offerings. And a handful of portable players tailored to such files currently exist.
In that regard, Young’s venture is in some ways similar to Dr. Dre’s Beats headphones: it’s a case of a well-regarded musician putting his personal touch on existing technology and creating a movement.
Dre’s most recent move has been to expand into streaming, something that will be tricky for Young. At the moment, the limitations of bandwidth make it very difficult to stream the highest-quality files.