Music service Turntable.fm is dead (but Turntable Live is not)

Turntable.fm is shutting down its virtual social DJ music service early next month.

The news, announced on the official Turntable blog, brings Turntable.fm’s two-year run to a close. That service brings together a group of people who take turns playing music from their library, and those within a virtual room could then vote on the selections. It was immediately popular with music fans even as it was in private beta, and it quickly grew users by the millions by the time it made a public launch.

“It was a tough decision to make because we love this community so much, but the cost of running a music service has been too expensive, and we can’t outpace it with our efforts to monetize it and cut costs,” the team wrote on the Turntable blog.

The aforementioned costs of running a music service are mostly licensing fees, which nearly every major music service has definitely acknowledged. Pandora has fought hard to bring those costs down, while Spotify’s annual reporting shows that it spends nearly 70 percent of all its revenue on licensing, (which could have something to do with why it just raised $250 million in funding).

The news also comes a few months after the team decided to shut down its mobile music service Piki as well for many of the same reasons. So the takeaway that even casual observers of music startups should know by now is that licensing makes it hard to run a successful/sustainable business.

The Turntable team will now focus all its efforts on growing its Turntable Live service, which enables people to buy access to live music performances. Apparently, this part of the business is far more lucrative (no surprise there) — both for Turntable and musicians, who are relying more on revenue from live shows than music sales these days.

But as for Turntable.fm, the team is giving people some time to cope with the shut down. Current users can export their playlists and song library and give them a new home on Spotify. The last day of service will be Dec. 2, with the Turntable team putting together a special “last day” party before the lights go out.