We, the Internet users, are accustomed to FREE stuff. The majority of us download MP3s, movies for free, and cannot imagine paying for email, MySpace, YouTube, Google, or various softwares etc. There are two ways to generate revenue and/or profit in this harsh reality: Advertising support and/or Flip. Personally, I am not a big fan of advertising support websites – it lacks sustainability, and it does not benefit a start up (with low traffic) like us. I have done some backhand calculation and it will be very hard for us to break even – mainly to the cost of bandwidth. Take YouTube or LastFM, for example, I doubt advertising as its sole revenue source will ever cover the cost of its operation.

So, where do we find the cash? (We need to eat, find shelter, and clothe ourselves after all)

A good friend of mine and I had this discussion yesterday evening, and he was trying to convince me to use the irrational VC to fund MuSMo’s ongoing development and operation. And, he does have a point – just look at the irrational amount of money given out (granted it is not easy to get VC money). With ample amount of cash in hand, like many, MuSMo can start up, scale and continue to develop at an incredible pace. However, without a sustainable business model, we can only look for an exit strategy of TO SELL OUT (or FLIP), i.e. wait for Google, Yahoo, Microsoft etc to buy us out. (Let’s put aside the question of why these rich companies would like to buy a company who cannot yet monetize a sustainable revenue stream or make a decent profit for another day)

Is this a reason why not many exist after the 3 year mark? So what should MuSMo do? Any suggestions, or is the stunt by Democracy Player the way forward? Will subscription model be enough to cover the operation expenses? Should we concentrate on building large scale, before worrying about making a decent profit? YouTube might not take a lot of money to develop (the last figure I heard was $35,000) but it takes much much more to operate it!