SAN FRANCISCO (02/03/2000) - Matt Wishnow is not waiting for his IPO. He has no plans to retire before he's 30. In fact, though his business is a music e-commerce site, he doesn't even want to corner the mainstream music market.
"Our positioning statement is 'neglecting the average music fan,'" he says half-jokingly.
Twenty-five-year-old Wishnow and partners Christian Anthony and Ari Sass founded Insound.com, an online community and shop featuring indie music, videos, zines and books. Insound wants to be like a neighborhood record store: a place where music fans can hang out, hear new bands, watch videos that will never appear on MTV and commune with like-minded souls. It's a site where visitors can search by categories like kraut-rock, shoegazing and psychobilly and "never have to see a mention of Third Eye Blind," as Wishnow says.
Wishnow claims he wants to grow Insound slowly, so he won't break ties to the underground music community. That plan may seem quixotic, given an offline landscape where megastores are edging out precisely the kind of music shops on which Insound is modeled. Insound is trying to protect itself against that fate by discreetly selling mainstream music as well as hard-to-find titles.
Insound works with the same big distributors - Alliance and Valley - that service all the mainstream e-music sites, so any CD available at Amazon.com is also for sale at Insound (though you won't see it promoted there). Profit margins on the mainstream titles run 8 percent to 15 percent, Wishnow claims.
However, Insound also sells music from tiny labels, which aren't distributed anywhere else. The company takes a direct slice of these sales, posting profit margins of 40 to 50 percent. While these bands' followings may be geographically scattered, they're intensely devoted, as the impassioned discussions on Insound attest, and Wishnow hopes that loyalty will transfer to the site itself.
Though there are hundreds of ever-mutating Web sites rapacious for street cred, even competitors acknowledge Insound as the real thing, an online extension of a thriving underground community. "I think Insound's great. They're doing a service to everyone in the indie community," says Adam Rabinowitz, director of label relations at Cductive.com, the make-your-own-CD, underground music site.
Wishnow came to indie music as a fan. "I grew up as a precocious underground rock fan," getting into 60s garage rock and 70s punk in high school, he says.
After graduating from Brown with a degree in Media Theory, Wishnow went to work in the marketing department of Elektra records, where he became director of creative services. That's where he met future partner Sass. Both felt a kind of "dissonance" at a major label, Wishnow says, because "the bands that we wished we could get behind were not the bands that the label was ultimately going to get behind."
Joining with Anthony, Wishnow's best friend from college, the trio solicited a round of angel money from private investors ("significantly less than a million dollars," Wishnow admits) and created Insound. The site launched about a year ago, and in January, pulled in just under a half million unique visitors, Wishnow claims.
Wishnow and company's music background was what impressed Ed Halter, director of the New York Underground Film Festival. "I really liked that they were coming from an underground music standpoint instead of an Internet background," he says. "They had a real curatorial outlook and a sense of taste." Halter decided to partner the festival with Insound and also joined the staff, working on the launch of Insound's new underground movie component.
These days, says Wishnow, he's struggling to maintain his original ideals in a world where there's no stigma attached to selling out. He claims he's approached several times a week with offers of mergers or buyouts, and there's pressure from potential investors to go public. Nevertheless, he says, "I'd be perfectly happy to be a small company in the greater scheme of things, but a big company in the underground. I'd be perfectly happy to do that for the rest of my life."