Most residents of Los Angeles view their daily commute as a traffic-clogged nightmare. Anne Kavanagh sees all that dead time as opportunity.
Kavanagh is the co-founder and chief executive officer of Steereo, a two-year-old startup that pays ride-sharing drivers to play independent artists’ music, effectively turning drivers into indie promoters. Steereo charges labels and managers of emerging artists five cents per minute of music played to passengers, three cents of which is given to the Lyft and Uber drivers. The music is played via a dedicated app on the driver’s phone, which can promote tracks with voice plugs and detect whether the car is actually in motion. The result: extra cash for drivers, extra promotion for indie artists, and music discovery for riders. Steereo contracts with 38,000 drivers, who earn an average of $120 a month through the service, and has boomed in markets such as Boston, Las Vegas, Nashville, San Diego, and San Francisco.
“Within any given day, we’re essentially running three businesses in one,” Kavanagh says. “We had to figure out a lot of stuff out in real-time — because it doesn’t currently exist in the market. A big part of it was having to be fearless and understand you’re being different.” At Steereo, Kavanagh and her team oversee a first-of-its-kind “multi-sided user marketplace” that brings together four types of users: riders (passive music listeners), artists (who are customers as well as content providers), brands (who are customers and want customers as well), and drivers (who act as distributors and also, of course, get to enjoy the tunes). The company is a discovery platform for music fans as much as it is a career-builder for artists and a source of side income for drivers.
Kavanagh — who doesn’t own a car and hatched the idea behind Steereo while sitting in traffic on the way to a conference — says her background in marketing and entrepreneurship helped her understand how to piece together different audiences in one setting. Steereo’s explosive growth has meant that she has had to keep “a solutions-oriented attitude” to running her business. For instance, Steereo doesn’t currently pay royalties to artists, but the prospect of one day having to do so has to be weighed in its future business model.
It’s early days for her passion project; whether or not Steereo will end up challenging traditional car radio remains to be seen. But it has already grabbed the attention of veteran executives in the industry. One major record company’s head of innovation, Kavanagh says, told her that she’s “either a genius or insane” — which, in the traditionally risk-averse music business, is no small feat.