All posts in “Apps”

Why content crowdfunder Patreon is halting its hated fee change

Overhauling the creative economy turns out to be quite tricky. Following massive backlash, Patreon is at least temporarily pausing its plan to change its payment processing fee structure on December 18th from charging creators 2%-10% on the first of the next month to charging patrons 2.9% plus $0.35 per transaction up front and on the monthly anniversary of their first pledge beyond the 5% Patreon takes. “We messed up. We’re sorry, and we’re not rolling out the fees change” CEO Jack Conte writes. He tells me “We got in the way of the creators and their fans.”

The subscription content crowdfunding company’s goal was to prevent patrons from being able to sign up and get access to exclusive content and then cancel their subscription before paying on the first of the next month, and to avoid users being charged immediately and then again on the first of the next month so they’d essentially be doubled billed if they pledged near the end of the month. Pro-rating wouldn’t work either since patrons could sign up for a big $100 a month subscription, experience super-premium access to content, then cancel a day later having only paid $3.

Patreon CEO Jack Conte

But the problem with the fee change was that it prevented batching payments so patrons would pay just one processing fee for all their different pledges, and instead charged patrons the fee on every different campaign they support. This significantly boosted fees for patrons who only pledge a dollar or two per campaign, and ones that pledge to multiple campaigns and therefore get charged multiple fees. Patreon also admits it didn’t get enough direct feedback from creators and rushed a mere two week timeline for implementing the change.

So after a painful week of calls with creators who said patrons had cancelled their subscriptions to avoid the higher fees, Patreon is halting the change until it can receive more feedback and find a better path forward. The retreat shows a level of maturity at the company, even if also some lack of foresight.

Patreon raised $60 million earlier this year at a $450 million valuation to build out more monetization tools for content creators from video makers and comedians to illustrators and models. With $107 million in funding, many assumed Patreon was on stable enough financial footing to avoid having to change from its existing fee structure where it takes a mere 5% rake — compared to typical 30% charged by platforms like Apple and Google’s App Stores and 45% charged by Facebook and YouTube for ad revenue shares.

But “the system that my co-founder came up with 4 years ago in 25 days” needs to be updated. Patreon has to abide by credit card processing rules while keeping enough revenue to stay alive. Conte tells me Patreon still has a bunch of new premium tools in the works for creators, a storefront for selling merchandise for example, that will be unveiled in the coming year and will help it earn more money to keep the platform sustainable. But many creators surely construed the payment structure change as a way for Patreon to jack up fees.

The episode demonstrates just how tenuous it can be to alter the foundations of monetization systems that independent creators rely on. YouTube has had its own problems with creator backlash after pulling ads and demonetizing more videos and creators in order to appeal to family-friendly advertisers. Conte tells me the plan going forward is to “Work more with creators one-on-one, show them the problems that we’re trying to address, get more feedback earlier, give creators more lead time, do more qualitative research . . . and honor the idea of letting creators own their relationships and run their businesses the way they want to run them.”

After speaking at length with Conte, though, Patreon seems stuck between a rock and a hard place. Keeping the fee structure sustainable for the startup, preventing creators from having their content accessed without fair payment, and avoiding overcharging patrons for processing fees or fractions of a month of access seems somewhat intractible, otherwise the company would have come in with a better solution than its first attempt. We’ll see if it can create something that works for everyone.

Lily raises $2M from NEA and others for a personal stylist service that considers feelings, not just fit

One of the reasons recently IPO’d Stitch Fix became so popular among female shoppers is because of how it pairs the convenience of home try-on for clothing and accessories with a personal styling service that adapts to your tastes over time. But often, personal stylists bring their own subjective takes on fashion to their customers. A new startup called Lily aims to offer a more personalized service that takes into account not just what’s on trend or what looks good, but also how women feel about their bodies and how the right clothing can impact those perceptions.

The company has now closed on $2 million in seed funding from NEA and other investors to further develop its technology, which today involves an iOS application, web app and API platform that retailers can integrate with their own catalogs and digital storefronts.

To better understand a woman’s personal preferences around fashion, Lily uses a combination of algorithms and machine learning techniques to recommend clothing that fits, flatters and makes a woman feel good.

At the start, Lily asks the user a few basic questions about body type and style preferences, but it also asks women how perceive their body.

For example, if Lily asks about bra size, it wouldn’t just ask for the size a woman wears, but also how they think of this body part.

“I’m well-endowed,” a woman might respond, even if she’s only a full B or smaller C – which is not necessarily the reality. This sort of response helps to teach Lily about how the woman thinks of her body and its various parts, to help it craft its recommendations. That same woman may want to minimize her chest, or she may like to show off her cleavage, she may say.

But as she shops Lily’s recommendations in this area, the service learns what sorts of items the woman actually chooses and then adapts accordingly.

This focus on understanding women’s feelings about clothing is something that sets Lily apart.

“Women are looking for clothes to spotlight the parts of their body they feel most comfortable with and hide the ones that make them feel insecure,” explains Lily co-founder and CEO, Purva Gupta. “A customer makes a decision because based on whether a specific cut will hide her belly or downplay a feature they don’t like. Yet stores do nothing to guide women toward these preferences or take the time to understand the reasons behind their selections,” she says.

Gupta came up with the idea for Lily after moving to New York from India, where she felt overwhelmed by the foreign shopping culture. She was surrounded by so much choice, but didn’t know how to find the clothing that would fit her well, or those items that would make her feel good when wearing them.

She wondered if her intimidation was something American women – not just immigrants like herself – also felt. For a year, Gupta interviewed others, asking them one question: what prompted them to buy the last item of clothing they purchased, either online or offline? She learned that those choices were often prompted by emotions.

Being able to create a service that could match up the right clothing based on those feelings was a huge challenge, however.

“I knew that this was a very hard problem, and this was a technology problem,” says Gupta. “There’s only one way to solve this at scale – to use technology, especially artificial intelligence, deep learning and machine learning. That’s going to help me do this at scale at any store.”

To train Lily’s algorithms, the company spent two-and-half years building out its collection of 50 million plus data points and analyzing over a million product recommendations for users. The end result is that an individual item of clothing may have over 1,000 attributes assigned to it, which is then used to match up with the thousands of attributes associated with the user in question.

“This level of detail is not available anywhere,” notes Gupta.

In Lily’s app, which works as something of a demo of the technology at hand, users can shop recommendations from 60 stores, ranging from Forever 21 to Nordstrom, in terms of price. (Lily today makes affiliate revenue from sales).

In addition, the company is now beginning to pilot its technology with a handful of retailers on their own sites – details it plans to announce in a few months’ time. This will allow shoppers to get unique, personalized recommendations online that could also be translated to the offline store in the form of reserved items awaiting you when you’re out shopping.

Though it’s early days for Lily, its hypothesis is proving correct, says Gupta.

“We’ve seen between 10x to 20x conversion rates,” she claims. “That’s what’s very exciting and promising, and why these big retailers are talking to us.”

The pilots tests are paid, but the pricing details for Lily’s service for retailers are not yet set in stone so the company declined to speak about them.

The startup was also co-founded by CTO Sowmiya Chocka Narayanan, previously of Box and Pocket Gems. It’s is now a team of 16 full-time in Palo Alto.

In addition to NEA, other backers include Global Founders Capital, Triplepoint Capital, Think + Ventures, Varsha Rao (Ex-COO of Airbnb, COO of Clover Health), Geoff Donaker (Ex-COO of Yelp), Jed Nachman(COO, Yelp), Unshackled Ventures and others.

Mixbook photo book service acquires WedPics

In 2012, a Raleigh, NC-based company called WedPics launched on to the scene to make wedding photos a little less of a headache. Five years and seven million users later, WedPics is being acquired by Mixbook, the platform for digitally collecting and editing physical photo books.

The terms of the deal were not disclosed.

WedPics is an app that lets a bride and groom aggregate all the photos from their wedding in a single place. Oftentimes, the happy couple will set out disposable cameras and use Instagram hashtags to aggregate photos taken by guests at the wedding. Collecting all of those photos after the fact can be tedious.

With WedPics, the couple simply sends an invite to the app to everyone attending the wedding. Folks upload all the photos they take to the app so the couple and guests alike can easily see everything in one place.

The app itself is free, but premium upgrades like the ability to print high-res source files, customize the overall look and feel of the digital album and use personalized URLs, are also available on the platform.

More recently, WedPics introduced printing to let people create physical photo albums of their wedding, which accounts for about 60 percent of the company’s revenue.

This falls in line with Mixbook’s business, which focuses primarily on the digital to print business. As we move more and more towards a fully digital existence, weddings remain one of the biggest reasons to print out actual photos.

As part of the deal, a ‘handful’ of WedPics 15 employees will head to Mixbook, according to WedPics founder and CEO Justin Miller. The WedPics brand and service will continue operating under the umbrella of Mixbook, who will help the company with its print business.

Line adds unsend for recalling missent messages

Messaging platform Line has added the ability for users to retrieve messages they’ve sent in error.

The unsend feature, which has been added via an update out today, gives users a 24 hour window for unsending missives — so it’s considerably more generous than the unsend option rival platform WhatsApp added in October (which offers a mere seven minutes for users to realize their regrets).

Line doesn’t cite WhatsApp in its explainer for launching the unsend feature — claiming instead that it wants to give users “peace of mind” and expand their “communication choices”.

Line’s unsend feature can be used across chat types — in one-to-one conversations, multi-user and groups chats.

It will also work whether a message has been read or not.

Message types that can be deleted within 24 hours of being sent are listed as: text and voice messages, stickers, images, videos, URLs, Line Music links, contacts, location information, files, and call history.

However smartphone OS notifications cannot be deleted. In addition, Line’s implementation of the feature displays a notification in the chat room indicating that a message has been deleted.

Which means there will always be a trace of any regretful texts you’ve sent in the previous hours — even if you’re gaining the ability to nix the actual content.

Mobile and desktop versions of Line support unsend, with the (current) exception of the Google Chrome version of Line which will only let users receive notifications for messages their friends unsend. “If you wish to unsend a particular message, please use Line on a different device,” it notes on that.

An additional caveat for the feature to work as billed is that you’ll need everyone in a chat where you want to recall a message to have updated to the version of Line that supports the feature. So there will inevitably be a period of time when unsend will not work as intended.

But, down the line, once all your contacts have updated their apps then Line message recalls should be good to go.

To use the feature, a Line user needs to press (or right click) on the specific message or content they want to recall and then select ‘unsend’ from the menu.

To fix SoundCloud, it must become the anti-Spotify

Startups die by suicide, not competition. It wasn’t that anyone was stealing SoundCloud’s underground rappers, bedroom remixers, and garage bands. SoundCloud stumbled because it neglected these hardcore loyalists as it wrongly strived to usurp Spotify as the streaming home of music’s superstars.

But four months ago after laying off 40% of its staff, SoundCloud scored a do-or-die investment of $169.5 million that saved the company and brought in a new CEO. Now the question is whether SoundCloud can get back in the groove. I sounded the alarm about SoundCloud’s mishandled headcount cuts, misguided direction, and morale problems, so it feels important to lend some suggestions alongside the criticism.

SoundCloud has something no one else does: the world’s biggest archive of user uploaded music and audio — around 120 million tracks. And so that must be the center of the service.

It once was, but rather than doubling down on independent creators, helping them monetize with ads and commerce, and selling subscriptions to enhanced ad-free access, SoundCloud wasted years chasing the major record labels in hopes of building a Spotify competitor full of the most popular music. Finally in mid-2016 it launched the $9.99 SoundCloud Go+ subscription with ad-free access to mainstream music and indie stuff, but it was already years behind Spotify and Apple Music.

In the meantime, the distraction led to extraordinarily slow progress on scaling up advertising, both in terms of the volume of ads on the sites and the independent artists who could get a revenue share. Ads weren’t a big part of SoundCloud, so many users don’t feel its worth paying to get rid of them. Creators strayed to YouTube and Patreon, investing their attention and driving their audience to where they could earn money. And spurious take-downs of creators’ music that they already paid SoundCloud to host further burned the company’s cred with its core constituents.

It’s on this guy, SoundCloud’s new CEO Kerry Trainor, to right the ship. I’ve met him, and he’s cooler than he seems.  (Photo by Todd Williamson/WireImage)

Luckily, SoundCloud has now booted its former management team, replacing Alex Ljung with former Vimeo CEO Kerry Trainor. That gives SoundCloud an opportunity to realign its strategy with the creators who made it unique in the first place. Here’s what we think it needs to do:

Don’t Fight Spotify Head On

SoundCloud will never be the #1 pop music streaming platform, and it needs to accept that. It got started on subscriptions too late, doesn’t have the industry buy-in the way Spotify does from taking the labels on as investors, the recommendation data Spotify got from acquiring Echo Nest, the massive device install base or war chest to leverage like Apple Music, or massive ad-supported audience like 1 billion-user YouTube.

So instead of trying to compete with the big dogs directly, SoundCloud should invade from downstream. Rather than marketing its $10 SoundCloud Go+ subscription to casual music fans, it should concentrate on locking in hardcore listeners who love its indie stuff via its free tier or $5 SoundCloud Go subscription just for user generated content. Then it should upsell them to the $10 plan by touting the convenience of listening to everything in one place, rather than paying $10 a month just for mainstream music elsewhere. The $5 plan should be the focus, and the $10 plan should be the bonus.

Protect The Legal Grey Area Of Music

SoundCloud buddied up to the major labels at the expense of the DJs who fueled its ascent. The legal grey area of unofficial remixes and DJ sets are what made SoundCloud indispensable, but are also what got criminalized and sometimes booted off the platform after its label deals. SoundCloud needs to figure out how to settle the copyright payouts on this kind of content so it can stay up on the platform. Whether that means developing its own rights disbursement technology, partnering with a provider of this payout distribution tech like Dubset, or outright acquiring it, SoundCloud must be a safe home for this content you can’t find anywhere else. Otherwise, SoundCloud isn’t special.

Become The Musician Fan Club Platform

Everyone knows streaming music platforms only pay out a fraction of a cent per listen. That can add up to millions a year if you’re Taylor Swift, but often isn’t enough to support the livelihood of smaller niche artists. But no matter how big or small, almost every artist has a percentage of listeners who are diehard fans, willing to pay far more than they’d earn a creator in streaming royalties or ad revenue share.

That’s why artists of all types have turned to subscription patronage platforms like Patreon where you don’t need millions of fans, just a few thousand paying a buck a month. YouTube, Apple Music, and even Spotify have failed to go deep in assisting artists with direct commerce. YouTube is testing Patreon-esque Sponsorships, and Spotify offers some tiny merchandise and concert ticket options on artist profiles.

BYRON BAY, AUSTRALIA – MARCH 27: Fans react to The Wailers performing live on stage at the 2016 Byron Bay Bluesfest on March 27, 2016 in Byron Bay, Australia. (Photo by Mark Metcalfe/Getty Images)

But SoundCloud has a massive opportunity here because it knows its artists can’t sustain themselves on royalties, and the type of listeners on SoundCloud are serious music aficionados. SoundCloud should provide bold options for artists to sell merch and tickets and teach them how to use data to create goods their fans want to buy.

That also means pushing artists towards new revenue streams like offerings exclusive experiences. Help artists sell phone calls, meet-and-greets, signed memorabilia, webcam footage of studio sessions, exclusive video streams, and more. And finally, provide a channel for artists to communicate directly with their top listeners in more intimate ways than email blasts and Twitter broadcasts.

SoundCloud should be the modern fan club. In an era where you don’t “own” music anymore, the app’s audience of early-adopting hipsters might be eager to show their allegiance to their favorite artists with their wallets, not just their ears. And that’s good for everyone.

Let Spotify and Apple Music be the impersonal place for superstars who don’t care about you. SoundCloud could give listeners a deeper experience, artists a bigger paycheck, and itself a lucrative corner of the otherwise overcrowded music space. So, Kerry, what are you gonna do?

Featured Image: Bryce Durbin/TechCrunch