Neil Young talks about Pono, his new music player, during a presentation at SXSW in March.

Image: Dustin Finkelstein/Getty Images Entertainment

By Seth Fiegerman2014-04-13 03:59:34 UTC

Neil Young has been disappointed by the sound of his own music for more than 30 years.

Back in 1982, Young listened to some of his songs on a CD for the first time and couldn’t help but “question what had happened” to the sound quality. CDs had just come to market that year and some, like Young, believed there was a noticeable drop in quality from vinyl and certainly from what was heard in the recording studio. That fidelity only worsened in the years that followed as the industry shifted to mp3 downloads and streaming music. The evolution, or devolution, of music formats weighed on him.

“I felt really guilty about selling mp3s,” Young told Mashable in an interview earlier this month. “People were paying for this thing that was only a fraction of what I created… It sounds so compromised that you really don’t get the feeling of the music. You don’t get into the depth of the music and get the soul of it because there’s not enough of it there.”

Sometime “around the turn of the century,” Young says, he began thinking about the sound quality problem more. He thought about trying to introduce a cloud-based music system for higher-quality tracks, but realized the bandwidth wasn’t there. He considered a download model that would work on smartphones, but came to believe the system required a dedicated music player. At one point, Young even talked with Apple’s visionary cofounder Steve Jobs about the project, but he says Jobs believed “an iPod was as good as it needed to be for what it was.”

“He was right, but he went home and listened to vinyl,” Young says of Jobs’ thinking, with a laugh. He didn’t even bother to have conversations with other top tech executives. “They were succeeding. They were selling lots of mp3s,” he explains. “People had never heard anything else. What’s the problem? There was no problem.”

About three years ago, Young started laying the foundation for a standalone company called PonoMusic (pono means “righteousness” in Hawaiian) that would develop an ecosystem for high-quality digital music. The first product, a Toblerone-shaped device, would let users store 1,000-2,000 digital albums of studio master quality music that they would be purchased through a dedicated online marketplace. In essence, it would function like an iPod to give music listeners of all types access to the sweet, full sounds of vinyl or better.

The Pono music player would be like Young himself: something very much out of time.

First-edition Pono player

Image: Pono, Kickstarter

The worst kept secret

When John Hamm (not to be confused with Mad Men‘s Jon Hamm) was first introduced to Young through one of the company’s board members a little over a year ago, PonoMusic was only a “business” in the loosest sense of the word. It consisted of a very small staff, rotated through a couple CEOs and had yet to advance beyond the prototyping stage for a product.

“There was no business plan. There was no real financing plan. There was no sense of what the brand would be,” says Hamm, who eventually took over as CEO of PonoMusic. ” Neil was focused on a lot of things that were part of his mission, but that didn’t have a realistic grounding in a business idea.”

Few musicians command as much respect as Neil Young. Over the course of a recording career spanning six decades, he has sold millions of records, been inducted into the Rock and Roll Hall of Fame and influenced artists ranging from Bob Dylan to Pearl Jam. But his success recording music hasn’t always translated to success starting businesses.

Young invested in Lionel Trains and later invented a couple products for the company based on his love of model trains. As David Carr wrote in a 2012 profile of Young in The New York Times, “Young lost a lot of money on his investment, but he’s still a board member at Lionel and ended up with a lot of cool gear, so it all sort of worked out.”

The man who wrote the lyrics “don’t let it bring you down, it’s only castles burning,” is unsurprisingly not overly concerned about his business acumen or lack thereof. “I only do what I’m interested in,” he says. “I just let the rest of it take care of itself.” Young did choose to surround himself with a few business advisors to set up PonoMusic and picked Hamm to run the day-to-day operations so that Neil Young can do what Neil Young does best: come up with ideas and connect with musicians and music fans.

That hasn’t stopped Young from pitching ideas that would be questionable for the business. According to Hamm, Young was interested in bringing bluetooth or Wi-fi to the music player and even pursue a “second screen video” experience, both of which would be costly and difficult for the first-generation device.

“We just said to Neil, ‘These are all great ideas, but they need to come at their logical place in the evolution of the product,’” Hamm says. “The key was to ship a product this calendar year.”

Part of the reason for the rush is that Young had already gone on a media blitz for the Pono player back in 2012, talking about it in his autobiography, in the 2012 New York Times profile and even showing off an early version of the device during an appearance on The Late Show With David Letterman.

“It was one of the worst kept secrets in the world,” Hamm says. Now the company needed to actually deliver a product.

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Kickstarter success

After narrowing down the focus for a first-generation product, Hamm and the PonoMusic team made the decision over the winter to simultaneously do a public launch for the company, its website and a Kickstarter campaign at SXSW in March.

Even by recent Kickstarter standards, the Pono campaign has a jaw-dropping number of stars. In a promo video, Arcade Fire, Tom Petty, Norah Jones, Eddie Vedder, David Crosby and others all talk about the ear-opening experience of using Pono for the first time. The inevitable press, and perhaps the novel idea, paid off.

The Pono Kickstarter campaign hit its $800,000 funding goal in just one day. Contribution options range from $5 in exchange for a Thank You note on Pono’s website to $400 to preorder the device to $5,000 to have a VIP listening party with Young. The campaign is now closing in on $6 million from more than 17,000 backers with four days to go, making it the third most successful Kickstarter campaign ever.

The goal of the campaign wasn’t to raise funds but rather to raise awareness by introducing the idea to a broader audience. Hamm says the company did quietly raise funding through traditional means to finance getting the player to prototype stage as well as setting up contracts with the major record labels. PonoMusic had been in talks with about 10 parties for a followup funding round, but he says “they probably wouldn’t have been deals we would have liked at that point.” Following the success of the Kickstarter campaign, the company is seeing more investor interest. The plan is to do an equity financing round in May or June.

The next step for PonoMusic will be to make good on delivering pre-ordered devices starting in October as well as to build up its content library of high-quality tracks provided by the major and independent labels. Beyond that, the company is evaluating whether and how to innovate with home stereo systems to car systems. The team argues that the Kickstarter campaign is validation that there is a market for high-quality music beyond just a handful of audiophiles.

“I’m gratified by the amount of pledges that we’ve had,” Young says. “It’s going to be challenging for us to keep up with the demand for Pono now that we have the ball rolling, but we will do it.”

Pono is the third most funded Kickstarter campaign ever, behind the Pebble smartwatch and Ouya game console.

Keep on rockin’ with or without Pono

Despite the success that PonoMusic has had on Kickstarter, some industry watchers doubt its market potential.

“Convenience trumps quality,” says James McQuivey, VP and principal analyst with Forrester Research. “It’s why mp3 works. It’s why streaming works.” It’s possible, he argues, that Pono could eventually attract a user base in the hundreds of thousands and become a “sustainable niche” business, but he doesn’t expect it to ever achieve mass market success.

Young remains confident about Pono’s potential and will continue to invest much — though not all — of his time in the company. “I think Pono is going to take a lot of time and a lot of dedication,” Young says. “At the same time, I continue to play my concerts and write songs and they don’t seem to get in each other’s way. “

From the beginning, he has had a bigger goal in mind than simply launching a business. He wants to show consumers that there is another option for listening to music beyond mp3s. Regardless of what happens with Pono, Young believes he has already succeeded on that mission.

“It’s just the beginning now, but we have created a knowledge that there is something else,” Young says. “And people talk about it. That speaks much louder than I can.”

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