For many, the coffee shop experience is about more than the origin of beans or the intricate patterns in one's latte. Comfy seating and mood lighting play their part, but often the in-store music selection can make or break the cafe experience.
But entertainment doesn't come cheap. Subscription-based music services charge between $30 and $150 a month without offering much in the way of customization. Cafe owners who play music from their own collections are liable to end up with music licensing giants BMI or ASCAP threatening legal action.
Between a summer job at a local coffee shop and an internship at New York City's ATO Records, Falmouth native Stephen Hebson saw this dynamic play out first hand. "I knew how much people paid for licensed music and it made me think, 'This is silly. I can build something better,'" Hebson says.
Hebson's hunch was validated in May when he and fellow Brown University graduate Parker Wells won the student track of the 2012 Rhode Island Business Plan Competition, netting the duo nearly $40,000 in cash and professional services for their Overhead.fm music streaming service and inspiring the duo to expand into the Portland market.
"It's been huge and has given us a lot of traction; we now have some cash on hand to spend on marketing," says Hebson.
Now just weeks after graduating from the Ivy League school, Hebson and Wells have been busy applying to business accelerator programs around the country in hopes of soliciting more capital and guidance as they attempt to bring their first-of-its-kind music streaming service to the market.
By licensing music directly from artists and labels, Overhead.fm is able to sidestep expensive licensing services and tailor their selection to a more locally minded crowd, a selling point that Hebson thinks will appeal to independent businesses in markets like Portland and Providence.
"The end game is to have every artist across all genres, but we've started building up a content library by going after indie pop and rock acts with local and regional traction, and we've had a lot of success there," Hebson says.
Some Portland groups to sign onto the fledgling service include local indie acts The Mallett Brothers, Jeff Beam and Eric Bettencourt. The service will launch in Portland next week, according to Hebson.
The service is currently offering a 30-day free trial for businesses, with a $25 a month subscription fee thereafter. An interface similar to Internet-based music service Pandora allows users to rate individual tracks, using an algorithm to track one's musical preferences and offer up similar content.
"People have a lot of pride in Portland, and the algorithm gives a lot of weight to local music, so if you're a subscriber in Portland, you're going to hear a lot of local music," he says.
Hebson writes 95% of the program's code and Wells tackles business development and sales. A friend has helped develop the algorithm to track users' tastes.
Overhead.fm currently has six Providence businesses participating in a pilot program, allowing the team to gather data that will help them refine the service ahead of a national launch.
"We are treating [Providence and Portland] as test markets. We know these cities have pretty big independent music and retailer cultures and are small enough that we can get a lot of saturation pretty quickly and use that data" to build out the model, says Hebson. "We've already had a lot of success at businesses that are already playing off the independent or local vibe already," he says.
In an effort to keep startup costs low while the team tests the marketability of the idea, licensing for Overhead.fm is currently based on a sort of barter system: Hebson and Wells approach acts or labels and offer exposure and analytics in exchange for the rights to stream their music.
"It can be hard to establish a presence outside of your home city or state, but we give them really in-depth analytics so they can see when and where they are getting played," he says.
Eventually the team plans on using some of the $10,000 in legal services from the business plan competition to devise a fixed rate, per-play payment plan for participating artists. "Local acts would be making as much per-play, but larger acts would be getting more plays," Hebson says.
The legal assistance is particularly helpful for a venture ever-wary of infringing on a band's public performance rights. "It's been a huge boon for us because legal fees could be very high for a business like ours," he says.
Overhead.fm has had some early success in luring customers away from Sirius XM Radio, a satellite-based music subscription service for individuals and businesses that requires subscribers to pay a monthly fee and purchase a receiver unit.
Sirius XM offers users up to 90 channels of themed content, from jazz and classical to talk radio and indie music, but doesn't track one's taste or allow users to skip individual tracks. "It's kind of old technology, most people now expect something more now," he says.
Hebson spent a summer as a digital media and analytics intern at Portland-based advertising firm The VIA Agency, and says its neighbor, Coffee by Design, would be an ideal early adopter.
As luck would have it, CDB co-owner Mary Allen Lindemann says the company is currently looking to switch its in-store music provider from its current service, Time Warner's Music Choice.
"We have been finding that as time goes on, it's not been as progressive in its choices," Lindemann says. "We like having music we consider progressive and contemporary without being over the edge."
Lindemann has been exploring services like Sirius XM and will test out a new service in one location before implementing it across their three Portland locations, she says. A fan of local music, Lindemann says she is intrigued by a Portland-centric streaming service like Overhead.fm.
Once the Portland and Providence test markets are up and running, Hebson says the team could well be headed to California to work with a business accelerator program that has strong ties to the music industry. "The music industry is centered in New York and L.A., and that proximity is worth something," he says.
Editor's note: This is a corrected version of the original story.
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