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Billy Chasen explains why the current music industry is killing digital startups and stifling innovation

When took off during the summer of 2011, adding 140,000 users in its first month, investors were climbing over one another to give Billy Chasen their money. "It was exciting, and odd, and a little scary," he recalls. Two years and millions of songs later, Chasen announces that he is shutting the company down for good, ending one of the most compelling experiments in music discovery to ever hit the web.

A big part of what doomed Turntable was trying to play by the rules, says Chasen. "We wanted to do it all the right way, nothing shady, always working with the labels." That meant paying every time a song was streamed, not simply piggybacking on copyrighted music hosted by sites like YouTube or SoundCloud that might have been uploaded illegally. The company also cut off access to its international users in areas it hadn’t yet signed deals. "That really curtailed our growth." It transitioned from a DJ service to a live-performance experience back in December of 2013, and today is shutting down that service as well.

"We wanted to do it all the right way, nothing shady."

The idea that the music industry’s current system of licensing and royalty fees is crippling American startups has been gaining traction for a while. David Pakman, a venture capital investor with Venrock and former digital music entrepreneur, published a long essay this week pointing out that the music labels are essentially demanding about twice as much in royalty payments as consumers are currently willing to pay for the privilege of listening. Companies like Rdio and Rhapsody have struggled, Spotify has raised millions but still can’t turn a profit, and Pandora announced today it was going to have to raise prices for all its subscription customers.

Music labels are essentially demanding about twice as much in royalty payments as consumers are currently willing to pay

Chasen says he still thinks that plenty of great stuff could happen in the digital music industry. "We had users that were willing to pay for virtual goods like custom avatars and merchandise. That’s a brand new revenue stream the major labels haven’t really tapped before." But until things change dramatically, he isn’t planning another music venture. "I just don’t think real innovation is possible with the current system."

For his next venture, Chasen is keeping things small to start. About a month ago he launched a new app, Ketchup, which is intended to help users keep their close friends and family updated on their daily lives without overwhelming their wider social network. "My girlfriend wants to know when I’m home, or at the office, or at the coffee shop, but blasting that out to my whole Twitter following would annoy people," says Chasen.

A mobile native personal status

Imagine a status update you can leave for people, the way you once did with your AIM or Gchat away message, but done in a way that is mobile native and lets you easily control who sees what status. Chasen built the app with two other developers from Turntable and for now they’re keeping the project small and self-funded. "This solves a pain point I have in my life," says Chasen. "So hopefully it will appeal to lots of other people as well."