PeopleSound was a British audio streaming platform founded on 22 June 1999 by Ernesto Schmitt. Going live in October 1999, it was the first European music streaming platform and the most visited. At peak, it was amongst the top ten most visited entertainment websites in Europe, with millions of registered users, and one of the highest profile new-age internet startups.
PeopleSound combined new media reach with old media music publishing to create a platform where users could search for music by artist or category and discover new recommended music. Unlike music distribution before, which had been managed exclusively by record labels, PeopleSound signed unsigned artists, notably offering £100 to artists per song they sent in. These artists earned 50 per cent royalties on physical copies sold, but music on the site was available free.
With offices in London, Paris and Munich, PeopleSound raised at a valuation of $200 million (£70m in 1999) and reached a valuation of $280 million (£100m in 1999). Post dot-com bubble, PeopleSound was sold to Vitaminic, and the combined entity was listed on the Italian Stock Exchange. The New York Times called PeopleSound "the leader for European-based downloadable music sites", as well as the first pioneer of music streaming on mobile, and it set the basis for later companies like Spotify and Apple Music.
History
PeopleSound was founded in June 1999 in London by 28-year-old Ernesto Schmitt as a new format for online music distribution. Schmitt had been a Boston Consulting Group Management Consultant but had no music industry experience. The platform was built on the premise that technology could help consumers discover music and that an entire new generation of artists needed new channels to be distributed through. It aimed to "topple the monopoly of major music companies [and] revolutionise the way new bands are signed and listened to".
The early team included Bruno Heese; Martin Turner, formerly head of CompuServe UK; and Paul Levett. In September 1999, pre-launch, PeopleSound was valued at £12 million and had 35 employees and 400–500 scouts. Early backers included Bernard Arnault's global Europe@web Internet Fund, which had also invested in MP3.com. By October of the same year, the platform was valued at £20 million.
Early expansion
By Autumn 1999, Schmitt told the BBC that PeopleSound aimed to "start in the UK and then rapidly setting up subsidiaries in Germany, France, Italy, Spain, the Benelux countries and even Turkey". Aided by grassroots marketing, they had 150 people finding bands across the country.
Quickly becoming a favorite of the dot-com boom, on 29 May 2000, PeopleSound announced a round of funding valuing it in excess of £70 million ($200m in 2022). Investors included Finnish wireless communications operator Sonera Corporation, who took an 8 per cent stake; Ladybird Ventures; and Zouk Ventures, taking a further 2.4 per cent. Under the deal, PeopleSound exclusively became the free music provider for Zed, Sonera's global wireless portal. This integration was the first example of music downloads straight to mobile. Schmitt was quoted as saying "the deal will allow music downloads straight to mobile handsets, enabling music lovers to have their favourite music wherever they go".
Explosive growth
Having positioned itself successfully, by July 2000, the New York Times noted PeopleSound.com was the most popular music platform in Europe, and led European based Internet sites for downloadable music, still "in its infancy". It had sites in English, German, Dutch, Spanish and Italian, and ranked in the top ten most popular entertainment sites and as one of the highest-profile tech startups in the UK; Les Echos named Schmitt "one of the elite figures of the London Net-economy", while ZDNet declared him "one of the UK's better known Web entrepreneurs". It was widely expected to float that summer, reaching a valuation of £100 million. Had an IPO gone to plan, it was expected that "even the most junior staff who joined when the company started last year could each make $5 million. Staff joining today would still have made about $160,000 from their share options", and "100 millionaires could be created". Martin Turner, COO, noted that they'd only make inroads into the US after going public, due to the cost of market entry.
By October 2000, the site represented more than 10,000 unsigned bands and artists, holding the master and recording rights to their music, and had over 1.5 million registered users. The company was also named among "The UK's Most Visionary Companies" in 2001 by Management Today.
