<b>THE ARTIST AND THE BUSINESS GUY:</b> Billy Chasen (left) and Seth Goldstein at a SXSW party hosted by their company, Turntable.fm. The blue bear represents an avatar from the site. Jeff Wilson

Last summer, Turntable.fm set techie hearts pounding: Billy Chasen and Seth Goldstein, co-founders of a struggling start-up called Stickybits, had pulled an audacious pivot, scrapping their service and betting everything on online music, the most treacherous business on the Internet—and it worked.

The whimsical site they released, where users posed as cats and bears and spacemen playing songs together in a chat room that resembled a rock club, attracted more than 360,000 users in three months, then $7 million in funding at a $37 million valuation. Even celebrities backed it: Jimmy Fallon, Ashton Kutcher, and both Lady Gaga's and Madonna's managers invested. Turntable "has upended how I listen to music," blogged New York Times editor Sam Grobart in a post titled "Spotify is great, but Turntable.fm is Amazing."

Then traffic started falling. By autumn, it dwindled to less than half its peak, and the very same tech watchers started wondering whether it was all over. Goldstein says he can hear the doubt in the voices of his Silicon Valley friends. "I can tell now when people say, 'How's it going?' they mean, 'You're flattening, aren't you?' "

Chasen and Goldstein agree the music fans are still out there (music site Pandora has 49 million active users, Spotify 17 million). Their disagreement over the answer to the obvious question—how to get them back—has created a rift between them that has influenced both their partnership and the direction of the company. In some ways, it's a classic split between product and marketing. But their predicament highlights what's so weird about the social-media business: Nobody understands why certain sites grow, exactly. Yet whether or not Turntable takes off again will determine whether it is worth billions or practically nothing. And with no causal data, all that remains is buzz, conjecture, and gossip—the How's it going?

And nowhere is that chatter louder than at the annual geek migration to South by Southwest in Austin. Every consumer Internet start-up is here, beating its chest in the form of boozy parties, free food, and goofily dressed hucksters with fliers. Every year there are hot companies. Sometimes they go on to become great successes, as Twitter and Foursquare did. Other times, they just become the butt of a joke at the next year's conference. This year, an app called Highlight became hot and a joke at the very same conference, when its location-based app enthralled the crowd until its hefty power needs collectively drained everybody's iPhone battery on the first day—maybe SXSW's only unforgivable sin.

Chasen and Goldstein arrived in Texas with big news: They had just signed licensing deals with the four major record labels. By hosting two parties, a dinner, and a barbecue brunch, and speaking on two panels, they were here to stake their claim.

I find them finishing up dessert at an upscale American Nouveau place before their Saturday-night fete, a 400-person party featuring DJs AraabMuzik and Flying Lotus. They look tired. Typically, each remains on his own coast, running the 14-person company in two mini silos. (Chasen still hadn't met the lawyer who negotiated their label deals; Goldstein recently stopped calling in to the Monday staff meeting after Chasen called it distracting.) In person, they trade gibes like a married couple, and sometimes it's funny. Other times, everybody around just feels uncomfortable.

Goldstein downs a double espresso, Chasen settles the tab, and at 7 p.m., it's time to wade through the tipsy crowds to the venue, 12 blocks away. The walk reveals how both men feel about nightlife and parties: Goldstein, 41, gets a bounce in his step, excitedly commenting on stores and bars we pass. Chasen, 31, is stoic. When we stop at a crosswalk before a highway overpass, the crowds dissipate, but we still have three blocks to go. I overhear a young SXSWer ask another if she's headed in the right direction. He replies that she probably isn't, unless the party she's trying to get to is "really low rent." Chasen sighs.

When I first met Goldstein in January in California, he was dressed much as he is now—in a plaid shirt that, with his scruffy beard, made it look as if he woke up in a cluttered loft somewhere and not in the $3.75 million, 4,500-square-foot Mill Valley home he shares with his two children and wife, Tina Sharkey, chairman of the website BabyCenter. They moved to California in 2006 from New York City, where he founded a financial services company called Majestic Research, which he sold in 2010 for $56 million. He's tan now and has taken up healthy hobbies like cycling—but he is as intense about that as he is about everything else.

Goldstein has made a career out of playing the tech zeitgeist. He founded a CD-ROM company after graduating from Columbia, then an interactive ad agency, then a concierge service aimed at PalmPilot users. In 2002, with hedge funds ascendant, he packaged Internet data for financiers (that was Majestic Research). More recently, he started SocialMedia.com and Root Markets, a website that ginned up home mortgage leads. Some were successful; others, like the mortgage business, went south. But the strategy was the same: You go where the money is.

Goldstein's latest read is simple: Coders are the new rock stars. Twitter's Jack Dorsey and Facebook's Mark Zuckerberg built sites that attract crowds of millions, but they don't completely understand how they did it—and neither does the money backing them. It's not as if they do market research. So venture funds now bet on hackers the way record labels bet on rising pop stars, hoping that someday soon, they will make something wild, new, and insanely lucrative.

Chasen is Goldstein's rock star. They met in 2006. Goldstein had read a Wall Street Journal article about a Chasen art project called Swarm, in which users downloaded a piece of software that sent miniature screen shots of each webpage they visited back to a server. As people surfed, it assembled all the little images into a blossoming mosaic—a visual representation of how crowds swarmed around the Internet. Goldstein liked what he saw: Here was a coder who had an artistic bent, who was fascinated by the online crowds in much the same way Goldstein was fascinated by figuring out how to profit from them.

For Chasen, their first meeting, held in Goldstein's lush office overlooking the Hudson River, was eye-opening. Since graduating from the University of Michigan, he had worked a corporate job, then freelanced as a Web developer in New York, then moved in with his parents on Long Island for a year to make art. He painted parodies of Dali and turned a computer monitor into a fish tank. When an idea outpaced his technical ability—like when he wanted to encase an exploded iPod in resin—he taught himself the necessary skills. But after a year, he lost motivation. He found he never wanted to sell the works, which would mean parting with them. Developing websites was easier, because he never had to say goodbye. It paid better, too.

He had always coded whimsically, creating things he dreamed up (like an image-sharing app for college friends) and sending links on to geek sites such as Reddit, BoingBoing, and Digg, in the hope the work would go viral. Goldstein told him in that first meeting he wanted his ideas and was willing to pay for them. When Chasen came back with an idea for a link-sharing app called Downfly, Goldstein wrote him a check for $10,000 to quit his other work and develop it. Soon, as partners, they sold Downfly to John Borthwick, who was building a sort of coder-artist incubator in New York City called betaworks, in exchange for equity in Borthwick's company. As Goldstein set to work on other projects, Chasen became a full-time coder at betaworks. He had entered the world of start-ups. That spring, he attended his first SXSW.

"Look at the line!" says Chasen.

As it turns out, the "low rent" comment was BS. Lots of people are here.

"What a sausagefest," Goldstein says.

Turntable's (heavily male) line stretches an entire city block, even though the weather has turned damp and cold. Chasen and Goldstein check out the venue. The stage has been set up to resemble an online Turntable room. We are in a real-life club that looks like an online version of a real-life club.

Turntable.fm makes Internet radio social. The familiar playlist sits in a cartoon concert hall, where users, represented as whimsical avatar characters, chat and play songs for one another. That's what grabbed everyone's attention last summer: Listeners didn't just hear songs—they took turns picking what played next. When others liked a song choice, they would click Awesome and the DJ would score points. Turntable was a chat room, a radio, a music discovery tool, and an addictive video game, all in one.

With 15 minutes until the doors open, Goldstein orders himself a Scotch on the rocks and looks into last-minute details—the T-shirts for guests, the avatar masks. Chasen, smiling stiffly, a Pepsi can glued to his hand, just seems awed.

Chasen has never been one to go to clubs or live shows. He told me he can't remember the last concert he attended before starting Turntable. One of his best friends told me that before building the site, Chasen didn't seem to particularly like music. He just loved exploring new things.

At the party, while Goldstein laughs and drinks and talks the club security into letting one group after another into the club, even after it's past capacity, Chasen spends much of the night anxiously eyeing the line outside. "I just can't get it out of my head," he says. "There are people out there, and their takeaway from this party is that they had a shit time outside in line. And that the net effect of this party is going to be negative rather than positive..."

The party ends up a great success. People who couldn't deal with the line went somewhere else, and it's unlikely they blamed Turntable. At SXSW, the interminable line is like a cultural institution. But when Chasen's fixated on something, he's fixated.

Back at betaworks, that was both his blessing and his curse. Four products occupied his time there. First was Downfly, the link-sharing software he and Goldstein brought with them. When that didn't take off, Chasen turned his attention to an idea he called Fichey, a tool that took full-resolution screen shots of webpages. Then Firefly, which allowed Web surfers to see the cursors of everyone else who was visiting a given webpage, and even write messages to one another. Users found Firefly novel but could never get past the weirdness of seeing other cursors floating around. A byproduct of Firefly, however, was that Chasen had real-time data on how many visitors were on a site, so he built that into Chartbeat, a piece of Web analytics software. It was instantaneous data, and very sleek. It even had a clear business model.

But when Chartbeat was coded and the project became less about making and more about selling, Chasen lost interest. Eventually, he and Borthwick agreed they would have to part ways. (Borthwick, who now manages dozens of creative coders at betaworks, says he has become familiar with coders who have Chasen's mentality. He would handle it differently today.)

Goldstein, meanwhile, jumped at the opportunity to reconnect. "John [Borthwick] would always say, 'Billy, he's such an artist,'" Goldstein says, mimicking disdain. Then he breaks into a smile. "And I would say, 'Billy, he's such an ARTIST!' "

Chasen had another idea for Goldstein. He called it digital graffiti. It went like this: In a city like New York, there were so many places you felt alone—a booth in a bar, a seat on the train—where many, many strangers had sat and felt alone before and would in the future. What if they could leave one another digital messages with their phones? Goldstein suggested they introduce the company, which they called Stickybits, at the upcoming SXSW. With the conference just three months away, Chasen hacked together a simple version of his idea using coded stickers: Users could snap photos of them with their smartphones, which would load a site on which the users could view and add content—a virtual version of scribbling on the wall.

When attendees arrived at SXSW, their welcome bags contained bundles of Chasen's stickers. Soon messages were going up. Meanwhile, Goldstein took Chasen to lunches and dinners with investors, advertisers, and business development guys. The meetings led to partnerships with Pepsi, Campbell's Soup, and Intel. Venture capitalists went nuts. "A bunch of us climbed all over each other to get in that deal," says Chris Sacca, managing director at Lowercase Capital, who managed to take part in a subsequent venture round that May.

Investors, advertisers—the business people loved Stickybits. Chasen quickly realized that the original idea was technically out of reach (the app was never going to work without the stickers), and so he agreed to refine the product as a straightforward business application more akin to what advertisers wanted. You could scan a pint of Ben & Jerry's and win a T-shirt, for example.

But users didn't really care. In the press, Goldstein and Chasen avoided answering questions about user numbers, hoping that deals with major brands would attract more, and more engaged, users. But they knew.

Then, during a fateful company softball game, Chasen dove for a fly ball, landed wrong, and broke his collarbone. Confined to his apartment for a week, he reflected. A chunk of Stickybits's funding remained—a few hundred thousand—but the product bored users. And him. This wasn't working. He called Goldstein. He had an idea for a music site.

In an e-mail to Stickybits's investors, the pair explained Turntable and gave them a choice: They could take back what money remained or stick with them. All except one kept the faith. Chasen's announcement, made the day the staff returned from the winter holiday, was abrupt: The developers, with one exception, would cease work on Stickybits immediately. The business side would wind down client relationships. Left unsaid: All except a skeleton crew would soon leave the company.

Chasen spent that spring coding. With no product to sell, Goldstein took time off to travel and paint. He liked the new pace. They agreed Chasen would be sole founder; Goldstein would be chairman. "I had convinced myself that start-ups are a young person's game, that I should get away from the Silicon Valley echo chamber," Goldstein says.

Alone in New York save for two employees, and eventually just one, Chasen cranked on Turntable with no outside suggestions, no business rationale—nothing but his own vision of a cartoony little concert room where bears and cats played songs together.

The site was ready in May. After TechCrunch wrote about a Turntable listening party Goldstein put together, word spread. Within a month, Turntable had 100,000 registrations.

Thrilled, Goldstein bounded back into fundraising mode. He raised $7 million that summer. Cleverly, he also reserved $500,000 in equity, which he offered in chunks of $10,000 to $50,000 to musicians and celebrities—Kutcher, Fallon, even Questlove (a real DJ!)—piquing the blogosphere.

Chasen, too, was thrilled. To him, it proved that if he stuck to his instincts and resisted business concerns, he could make something great. He grew more confident, stubborn, and protective of Turntable. Coding came before meetings or e-mails—even those from investors. Goldstein, rankled, pestered him to stay in touch. "It's relationship management...you're making investors feel useful," says Goldstein. "It's not like writing a bar mitzvah thank-you to your aunt."

Chasen reiterated that these were his decisions; he was the founder. Turntable's value was the website-the product he made.

"I'm an artist; I want credit for the things I create," Chasen told me over sandwiches in Austin, after a photo shoot he had only grudgingly agreed to let Goldstein appear in.

Of course, Chasen developed Turntable in Stickybits's offices, while receiving a Stickybits paycheck and working with two Stickybits employees.

"He had an idea that he owned 100 percent emotionally, in a company that he owned far less than that economically," says Goldstein. "That's the tension."

In the green room before Turntable's first SXSW panel, it's easy to see how months of this personality friction has worn on these two. When Goldstein arrives, he asks to see Chasen's 10-minute presentation, the one he wanted to make alone before the panel discussion and Q&A.

Chasen barely looks up from his laptop: "You can watch it onstage. I have work to do."

Goldstein chats with the others for a while, but then he can't help himself. You should start off by addressing the traffic drop-off, he tells Chasen. Maybe sort of explain that we're growing again.

Chasen shoots daggers at him: "That's a defensive position. That's such a different story from what users are feeling right now."

"You just need to be ready for the question."

"That's fine. But telling me to come out with that? And I already have my response to that question."

A perky stagehand interrupts: "Turntable...are you guys ready to go?"

Chasen plans to enter the room wearing a Turntable T-shirt (slogan on the front: "I Listen to Bands That Don't Even Exist Yet") and one of the giant avatar heads the company had made before SXSW, $1,500 contraptions built on top of baseball helmets. Backstage with the head on, he mugs with the stage crew, picking at the front of it. "Do I have something in my teeth?" he jokes. A few minutes later, he's more serious, and concerned about the size of the audience. "How packed is it?" he mutters through the little air vent.

At 12:30 p.m. sharp, a masked Chasen takes the stage. Polite, somewhat bemused chuckles ripple through the crowd. I count 428 people in the audience, just over half capacity.

Then the Twitter messages, inevitable at any SXSW event, begin.

"Last panel for me and first that hasn't been full," writes @whatsfordina. "Maybe different if it was last summer?"

Chasen removes the avatar head and starts his presentation. He lists some of the most popular songs on the site. No. 1 is a remix of "Lights" by Ellie Goulding.

"That's because the last time people used turntable regularly was when Lights was popular. Zing!" writes @ajt.

It strikes me how bizarre this is. To a SXSW audience, Turntable is already past its prime, even though during last year's conference, the product didn't yet exist.

Chasen continues. Since launch, Turntable has 130 million songs played, 65 million Awesomes, and 5.28 hours of music played per minute. Which, if you do the math, is just 317 people on the site listening at any given time. (Most traffic comes during the workday; there is a lot of dead air at night.) After four minutes of stat-rattling, he delivers the news about Turntable's record-company agreements. Licensing deals like these are considered major accomplishments for any music site. Retweets of the news wash away the snark.

Chasen joins Goldstein for the panel discussion and Q&A. The questions are softballs. The traffic drop-off question never comes up. But if it had, here's the best explanation of what happened last year: In June, negotiations with the record labels required Turntable to cut off all access to international users while licensing agreements were hammered out, killing some traffic right there. Then a big rush of folks left—probably those who surfed the site once or twice but weren't really into it. Then it started fading more gradually. Chasen believes it's because of problems with the product—that the model is based on users' being intensely involved, when other music sites can play in the background. Goldstein, meanwhile, has wondered whether they just never got the word out far enough to hard-core music fans instead of techies. Since early January, Chasen says, the site has been adding new users every week.

Then there are, as the Q&A makes clear, still plenty of people who really, really love it. Nearly all the questions are requests for new features to the site. Could there be new game elements? Could the avatars dance more? Chasen responds vaguely: Yeah, that's probably coming. Sure, that would be great.

Afterward, a gaggle of fans come up to talk to Chasen. Some are trolling for jobs; others just want to meet the guy who made Turntable. Chasen soaks in the attention. Then, two fans step over, not to him but to the big vinyl avatar head that's resting onstage. "Can we try it on?" one asks, a big smile on her face.

Chasen's smile falls. He hesitates.

"No."

Chasen guards Turntable reflexively. Candidates for developer jobs face meticulous testing, and he rejects nearly all of them. The search for a VP of engineering, whose duties include adding new features, took six months. Not just anybody can touch Turntable code.

Chasen tends to group his Turntable duties into two categories: product development work and distractions. He says he doesn't mind Goldstein's efforts to market Turntable through music festivals, celebrity performers, and parties—so long as they don't interfere with the site or his development budget. When I ask whether he thinks the tactics are effective, he shrugs. "Seth is a business guy," Chasen says. "He thinks you can throw a level of marketing on something mediocre and make it great." If crowds aren't flocking to Turntable, he says, it's because it needs fixing. If anyone fixes it, it will be Chasen.

A company run by someone so obsessed and so talented creates beautiful products. It also follows inspiration over strategy, falls behind schedule on nearly every project it attempts, and, if it makes money, does so as an afterthought. Goldstein finds all this frustrating. But this is how business works in social Internet, he says: Twitter, Foursquare, Facebook—they all have coder chieftains, and all scored huge counterintuitive successes. Plenty of similar start-ups have failed, too, of course.

Chasen wants a larger audience for Turntable, though for different reasons from Goldstein's. "No artist ever makes something just for himself," he says. His solution, unsurprisingly, is a new product, the latest idea on his list. Code-named Kiwi—inspiration struck during a New Zealand vacation—it will be something like Pandora, but with playlists based on the recommendations of the user's Turntable friends. This will attract passive listeners interested in hearing friends' favorites, just not chatting or collecting points in a live Turntable room.

This time, Goldstein wants Chasen to at least consider Turntable the business. Before the most recent board meeting, he e-mailed Chasen five questions he should be prepared to answer: Can Turntable's live product still attract more users? Will Kiwi engage Turntable's cult fan base? Will Kiwi integrate with Turntable live? How will it affect the record-label deals? And finally, Goldstein asked Chasen to think about management process.

Chasen wouldn't answer the questions before the meeting. "But I saw that he thought about them," Goldstein says. A small sign.

The board meeting went well. Fred Wilson of Union Square Ventures supported the Kiwi idea—it's similar to the way Zynga, another of his investments, moved away from its live Poker game to Words With Friends and FarmVille, which people can play at their leisure. Afterward, he sent an e-mail to Goldstein: "Great board meeting. Best yet...I think we're finally starting to operate like a business."

"One of the great lines in couples therapy is, 'Stay connected through conflict,'" says Goldstein, who has been married 13 years. "That's what Billy and I continue to try to do. Neither of us is a great communicator."

Later on, Chasen agrees. "We all have the same goal, and Seth is always trying to help guide me," he says. "I can be stubborn sometimes, but it's good to have somebody calling me on things. It sometimes comes off as bickering or fighting. But we both help each other."

On Turntable's last night in Austin, the company throws a massive party for 1,500 festival attendees, starring Questlove, The Jane Doze, and electronic pop stars AraabMuzik, A-Trak, and Diplo. Goldstein is everywhere: handing out Turntable T-shirts and avatar masks, persuading folks in the back of the line to wait it out, shuttling friends backstage. By 11:30, the crowd is so frenzied by the 64,000 watts of electronica blasting into their skulls that people start climbing onstage to dance. When the first young woman gets up, Goldstein spots his opportunity. He runs out, brandishing a Turntable T-shirt, and holds her handbag while she puts it on. Then he grabs an avatar head and, as she gyrates, shoves it on her. For the next two and a half hours, this is his job: finding dancing fans and plunking avatar heads on one after the other. At 2 a.m., Goldstein rushes into the green room, his shirt soaked through with sweat, his eyes wild, and grabs two more Turntable heads. "They're gonna shut us down! Get out there!" he yells. But I'm the only one there. Chasen wasn't interested in promoting Turntable this way himself. He had flown back to New York the day before.