PeopleSound
| Company type | Private |
|---|---|
| Industry | Music streaming |
| Founded | 22 June 1999 |
| Founder | Ernesto Schmitt |
| Defunct | 2008 |
| Fate | Acquired by Vitaminic; later defunct |
| Headquarters | London , United Kingdom |
Area served | Europe |
Key people | Ernesto Schmitt (Founder), Bruno Heese, Martin Turner (COO), Paul Levett |
| Products | Music streaming platform |
Number of employees | 85 (2001) |
PeopleSound was a UK-based audio streaming service established on 22 June 1999 by Ernesto Schmitt. Officially launching in October 1999, it became the first music streaming platform in Europe and ranked among the continent’s most frequented entertainment websites, attracting millions of registered users. At its height, it secured a spot within the top ten most popular European entertainment portals and stood out as a prominent internet startup.
The platform combined the reach of new media with conventional music publishing methods, allowing users to explore music by artist or genre and discover curated recommendations. Differing from traditional distribution dominated by record labels, PeopleSound contracted unsigned musicians, compensating them with £100 per song submission plus 50% royalties on physical album sales; streaming music on the site was offered free of charge.
With headquarters in London, and additional offices in Paris and Munich, PeopleSound successfully raised funds that valued the company initially at $200 million (£70m), later increasing to $280 million (£100m). Following the burst of the dot-com bubble, it was acquired by Vitaminic and subsequently listed on the Italian Stock Exchange. The New York Times acknowledged PeopleSound as a frontrunner in European downloadable music and a trailblazer in mobile music streaming, setting the stage for future platforms such as Spotify and Apple Music.
History
Established in June 1999 in London by 28-year-old Ernesto Schmitt, previously a consultant at Boston Consulting Group with no prior experience in the music industry, PeopleSound’s mission was to transform online music distribution. The company aimed to challenge the dominance of major record companies and open new avenues for emerging artists.[1] Its approach centered on harnessing technology to facilitate music discovery while supporting unsigned talent.
The initial management team featured Bruno Heese; Martin Turner, formerly head of CompuServe UK; and Paul Levett. By September 1999, before its official launch, PeopleSound had a valuation of £12 million, employed 35 staff members, and engaged 400–500 talent scouts. Early financial backers included Bernard Arnault's Europe@web Internet Fund, which also invested in MP3.com.[2] By October 1999, the company’s valuation had climbed to £20 million.
Early expansion
In Autumn 1999, Schmitt told the BBC that PeopleSound planned to “begin operations in the UK and quickly establish subsidiaries across Germany, France, Italy, Spain, the Benelux countries, and even Turkey.” Supported by grassroots marketing efforts, they employed approximately 150 individuals throughout the UK dedicated to scouting bands and sourcing content.
Capitalizing on the dot-com surge, on 29 May 2000 PeopleSound announced new financing that valued the firm at over £70 million ($200m adjusted for 2022). Among investors were Finnish wireless operator Sonera Corporation, acquiring an 8% share; Ladybird Ventures; and Zouk Ventures holding 2.4%. This agreement made PeopleSound the exclusive provider of free music for Zed, Sonera’s global wireless portal. This partnership was instrumental in enabling direct mobile phone downloads of music. Schmitt emphasized that this collaboration would allow fans to enjoy their preferred songs anytime and anywhere.
Rapid Expansion
By mid-2000, specifically July, the New York Times identified PeopleSound.com as the foremost music platform in Europe and the leading site for downloadable music across the continent, despite being in its infancy. The platform supported multiple languages including English, German, Dutch, Spanish, and Italian, placing it among the top ten entertainment websites and establishing it as a significant tech startup in the UK. The French publication Les Echos highlighted founder Schmitt as an influential personality within London's digital economy, while ZDNet described him as "one of the UK's more prominent Web entrepreneurs". The company was anticipated to launch an IPO during summer 2000, with a valuation estimated at £100 million. Had this public offering taken place, early employees stood to gain substantial financial rewards through share options, potentially creating up to 100 millionaires. COO Martin Turner noted that expansion into the US market was planned post-IPO, citing the considerable costs involved.
By October 2000, PeopleSound had amassed over 10,000 unsigned musicians under its wing, holding rights to both masters and recordings, alongside a user base exceeding 1.5 million registered members. In 2001, Management Today recognized PeopleSound as one of "The UK's Most Visionary Companies," reflecting its innovative position in the industry.
Collaborative Ventures
PeopleSound formed a strategic partnership with MTV, co-branding in promotional campaigns valued at several hundred thousand pounds for the V2000 music festival held in August 2000. Later that year, in November, the company secured distribution agreements with major players such as Amazon, AltaVista, LineOne, Liberty Surf, and intermusic. The collaboration with Amazon facilitated direct music purchases from PeopleSound artists by users, thereby broadening the platform’s reach.
In September 2000, recording giant EMI announced an extensive partnership with PeopleSound. This marked the first European alliance bridging new media platforms and traditional music businesses. Through this agreement, PeopleSound gained access to EMI’s worldwide administration services for its artists while jointly owning prominent artists and sharing royalty revenues. Additionally, EMI benefited from a digital A&R system provided by PeopleSound to discover emerging talent on the platform, solidifying PeopleSound’s association with a major industry leader.
Music Licensing Platform
In October 2000, PeopleSound introduced a service designed to help marketers easily find and license music for television, digital media, and offline advertisements at just a fraction of the typical cost and with much faster turnaround times. The company intended to roll out a feature that would assist users in locating tracks with similar sounds. Before its official debut, PeopleSound collaborated with prominent brands such as Microsoft, Casio, Virgin Media, and Smirnoff Vodka. Simon Miller, the business director, emphasized that "ninety per cent of ads want music that fits the brief," highlighting the platform’s focus on meeting specific advertising needs.
Dot-Com Era Expansion
By June 2001, despite facing a difficult economic climate, PeopleSound—then employing 85 staff members—entered negotiations for a merger with Vitaminic, a pan-European digital music firm publicly traded on Milan’s Nuovo Mercato exchange. Vitaminic had previously expressed interest in acquiring PeopleSound, which had nearly been sold to Terra Lycos earlier that year. On 11 June, Vitaminic completed the acquisition of PeopleSound for €34 million in cash, forming one of the largest three online music platforms at the time. Shareholders of PeopleSound retained a 19% ownership stake in Vitaminic, representing one of the few successful exits following the dot-com bubble collapse.
This merger united two competitors and created a combined catalogue surpassing 329,000 tracks along with contracts involving over 1,200 record labels. Founder Ernesto Schmitt highlighted their complementary market positions: "Vitaminic is very strong in southern Europe and the US and on the subscriptions side we're very strong in northern Europe." Although some analysts expressed doubts about Vitaminic’s appeal compared to PeopleSound, Schmitt maintained that the agreement would "reshape the traditional music industry." The newly merged company continued its listing on Milan’s Nuovo Mercato.
In August 2001, after the internet bubble burst, Schmitt stepped down to take on a senior executive role at EMI in New York as senior vice-president of strategy and business development across both recorded music and publishing sectors.
Revenue Model
PeopleSound utilized a freemium approach, allowing users to stream music without charge while enabling artists to sell physical copies. Musicians paid £100 for a non-exclusive global license and were provided with their own page on the platform where they could set their prices. They received royalties amounting to 50% on physical sales—well above the industry norm of 17–20%—while streaming remained free of charge.
The platform accepted roughly 80% of submissions, aiming to democratize access to music distribution. Customers were offered two complimentary tracks from each artist as samples and could assemble personalized compilations available in CD format or digital formats such as RealAudio or MP3. PeopleSound differentiated itself by employing former A&R professionals to screen out substandard content, positioning itself alongside companies like MP3.com as pioneers in redefining traditional retail and record label roles.
Subsequent Developments
By 2004, plans were underway to relaunch PeopleSound.com as an advertising-supported community platform targeting record labels and content providers. Although the domain remained active until 2008, updates ceased by 2006; the last release listed was Billy Bragg’s Volume 1 box set (2006).