All posts in “apple music”

Going public pits Spotify’s suggestions versus everyone

The secret to Spotify’s public market debut is actually an acquisition it made in 2014. The Echo Nest was powering music recommendations for Beats Music, Rdio, Vevo, and iHeartRadio too before Spotify pulled it out from under them by buying it for a reported $100 million — 90 percent in Spotify equity. That deal paid off big time, as it’s turned the startup from a daunting search box for 35 million songs into a personalized mixtape.

Today, in Spotify’s SEC filing to go public through an unusual direct listing, the company writes that “a key differentiating factor between Spotify and other music content providers is our ability to predict music that our Users will enjoy. Our system for predicting User music preferences and selecting music tailored to our Users’ individual music tastes is based on advanced data analytics systems and our proprietary algorithms.”

That data came from The Echo Nest. 200 petabytes of user behavior data to be exact. That’s compared to the 60 petabytes Netflix had in 2016. Spotify logs 150 billion plays, shares, skips, follows, and other signals per day that tune its recommendations.

This all powers Spotify’s popular curated playlists like Rap Caviar that consume 31 percent of users’ listening time, up from 20 percent two years ago, and the Discover Weekly algorithmic playlist that keeps them stocked with music. Always knowing what to play next has helped Spotify climb to 159 million monthly active users (up 29 percent year-over-year) and 71 million paying subscribers (up 46 percent year-over-year).

Those users are loyal, spending 25 hours per month streaming Spotify’s content. Just 5.1 percent of subscribers churn out monthly — a low rate for a subscription service which has come down from 7.5 percent two years ago. Spotify accounted for 42 percent of the global streaming in 2016, and by 2017 its subscription fees and ads earned it $4.09 billion in revenue.

But most importantly, those recommendations are what makes Spotify the go-to streaming service for serious listeners amidst an unbelievably crowded field of competition. “We believe Spotify is differentiated from other services because we provide Users with a more personalized experience, driven by powerful music search and discovery engines” writes Spotify CEO Daniel Ek in today’s letter to potential investors. With similar catalogues and playback features, its Spotify’s understanding of what we want to hear that keeps people from straying.

And there’s plenty of places to stray. Apple and Google pre-install and promote their streaming apps on their mobile operating systems, while charging Spotify a tax on subscriptions bought through its platforms. YouTube’s vast catalog of legally grey music uploads and snazzy videos appeal to younger listeners. SoundCloud offers the newest emerging artists. Amazon is using its Echo speakers and Prime subscriptions to get its music service into millions of homes. And there are still CDs, vinyl, MP3s, iTunes downloads, FM and satellite radio, and stalwart online radio services like Pandora.

But none combine the dedicated music recommendation prowess Spotify has built up with the on-demand access listeners crave and a free ad-supported tier to lure people in. “With access to unprecedented amounts of data and insights, we’re building audiences for every kind of artist at every level of fame and exposing fans to a universe of songs” Spotify CEO Daniel Ek writes in his letter to investors.

And because music lovers trust the app to tell them what to play, Spotify has managed to build up some leverage to negotiate with the record labels and rights organizations  that control the content it streams. Spotify can favor whatever music it wants, replacing top 40 radio as the most crucial hit maker in the business. And its ads and subscription revenue payouts have helped turn the music industry around after MP3 piracy and unbundled $1 singles cratered the post-CD landscape. Musicians and their management are finally starting to need Spotify as much as it needs them.

That’s the only reason Spotify can go public despite being so dependent on these rights holders. Otherwise, they could just jack up their licensing and royalty rates, and if Spotify refused to pay, they could pull their music. That’s especially worrisome for a public company with all its financials laid bare. Earn too much profit, and the rights holders would just cut it down to size. But they’ll play nice since Spotify selects what becomes popular.

Spotify CEO Daniel Ek (left) and The Echo Nest CEO Jim Lucchese (right)

The democratization of music creation and distribution necessitates a new layer of curation that Spotify wants to provide. “The old model favored certain gatekeepers. Artists had to be signed to a label. They needed access to a recording studio, and they had to be played on terrestrial radio to achieve success” Ek writes. Nowadays with so much content coming out, “artists’ biggest challenge is navigating this complexity to get heard. We believe Spotify empowers them to break through.”

To keep its crown, though, Spotify will have to stay a step ahead of everyone else’s recommendations. Its public filing lists their bigger brands, bank accounts, hardware, and app stores as significant risks. While Spotify has nearly twice as many subscribers Apple Music, the competitor is growing fast by giving away free one-month trials, paying for exclusive early access to blockbuster albums, and pre-loading the app on iPhones. Apple printed $20 billion in profit last quarter while Spotify has lost $4 billion to date.

Spotify will have to not only surface the best content, but create some too. By producing exclusive in-house audio and video, it could seduce subscribers and avoid royalty pay-outs. Spotify will have to figure out not only what we want to hear, but what we want to see. By displaying better ‘behind the music’ factoids, lyrics, slideshows, and more while we listen, it could add a unique dimension to the same songs streaming elsewhere. And it must be seen as a true ally to musicians, podcasters, videographers, and beyond. By winning their hearts, Spotify could get them to promote it as the home for their content that lives elsewhere too.

Surrounded by tech’s titans, Spotify may still be the underdog in the long-run. But by becoming the world’s DJ, Spotify has established itself as indispensable to the music industry. This jukebox sounds worth your dime.

Check out all of TechCrunch’s stories about Spotify going public, and read our feature piece “How Spotify is finally gaining leverage over the labels”

Even with double the subscribers, Spotify says Apple will always have an edge owning the app store

Spotify just filed for a direct listing in the U.S., sidestepping the traditional IPO process, and now we’re starting to see some of the true financial guts of the company — and some of the significant risks it faces from challenging services from Apple and Google.

Apple, for example, charges apps a percentage of revenue for subscriptions processed through the App Store. Apple Music, meanwhile, will always deliver Apple 100% of the subscription revenue that it receives from subscribers (sans record fees and all that kind of stuff, of course). Apple, too, has a direct integration with its iOS devices and also a huge amount of brand recognition even though Spotify is a massive service. Spotify says it has 159 million monthly active users and 71 million premium subscribers, while Apple has 36 million paying subscribers as of February 2018.

Here’s the full boilerplate from the filing:

Our current and future competitors may have higher brand recognition, more established relationships with music and other content licensors and mobile device manufacturers, greater financial, technical, and other resources, more sophisticated technologies, and/or more experience in the markets in which we compete.

In addition, Apple and Google also own application store platforms and are charging in-application purchase fees, which are not being levied on their own applications, thus creating a competitive advantage for themselves against us. As the market for on-demand music on the internet and mobile and connected devices increases, new competitors, business models, and solutions are likely to emerge.

As owners of the platforms themselves, Apple and Google will always be able to dictate the terms. And while Spotify is a massive service, its success still hinges on users listening on their mobile devices. It may be able to build a strong brand and create some inertia against potential changes from Apple that could incite user backlash, but at the end of the day, Apple runs the system where its users actually get the service.

As Apple begins diversifying its revenue streams to create a services branch that the company likes to say will be the size of a Fortune 100 company, music is increasingly becoming a core part of that. Google, too, owns its app store platforms, and will recognize 100% of the revenue from its own service. We haven’t seen the full potential of these companies’ approaches to the music space, in particular with Apple Music which appears to be steadily growing, but Spotify is clearly recognizing it as an existential threat.

Apple HomePod review: The best-sounding smart speaker yet

I was blown away by how clean “Bohemian Rhapsody” by Queen, a song with a wide range of audio levels and layers, sounded across the board. I could easily pick out the sharp piano bits from the drums and electric and bass guitar with no effort. I expected the highs to fall apart at higher volumes like they do on the Echo and Google Home, but was surprised at how well HomePod preserved it all.

Anything by Adele and Sam Smith sounds terrific. I almost shed a tear listening to “Too Good at Goodbyes” by Sam Smith. Nothing seems lost or muddled in the track; the slow finger-snapping, the choir, the front-heavy bass — they’re all distinctly audible.

Rap classics like “99 Problems” by Jay-Z and “In Da Club” by 50 Cent sound more vibrant than I’ve ever heard before. Less fuzzy sound and more clarity between verses; in “P.I.M.P.” I could hear 50 Cent’s breath pop while he’s spitting lyrics.

Songs with big bass like “Where Are Ü Now” by Justin Bieber and Jack Ü and “Finesse” by Bruno Mars (feat. Cardi B) pack some serious punch, but not in an overpowering kind of way. It’s another testament to the impressive sound separation HomePod is capable of. The same songs on Google Home Max play louder with more thumping bass, but it, along with the vocals, get crushed and distorted at louder volumes. Apple says HomePod’s A8 chip overcomes distortion by analyzing the next 30 milliseconds of a track while it’s playing, adjusting the bass so it doesn’t break up.

And if you enjoy classical music — holy cow, you’re in for a real aural treat. Bach’s “Suite No. 1 in G major, BWV 1007” performed by Yo-Yo Ma just glides on HomePod. This cello composition is one my favorites and it sounded lighter, airier, and more delicate on HomePod versus the other speakers, which were a little more two-dimensional.

Not to mention, HomePod sounded great no matter where I placed it. Music sounded as pure in the middle of our huge photo studio that’s surrounded by glass walls as it did on my desk in my bedroom and on a bookshelf in my living room. I tried to trick HomePod into sounding worse by placing it on various surfaces like a fabric-covered ottoman and an aluminum rack, thinking the acoustics would be noticeably different, but it sounded the same to my ears.

Siri on HomePod is a master at trolling

We all know Siri. Most probably remember it as the digital assistant on their iPhone whom they once asked about the weather and then never talked to again. Others might know it as the colorful wavy lines that appear on the bottom of your iPhone screen when you accidentally press the home button too long. A few might even think of it as a valuable virtual companion.

But I recently got to know anther side to Siri: a DJ with a master’s degree in trolling.

Here’s what happened: Fresh from its unboxing, the Apple HomePod was sitting in the middle of the Mashable studio, the centerpiece of an impromptu listening session. Senior Tech Correspondent Ray Wong, Video Producer Michelle Yan, and I were sitting around Apple’s new smart speaker, each taking turns at commanding Siri to play songs, adjust the volume, and other actions.

On one of the times it came around to me, I had a wisp of childhood nostalgia and hit Siri with what I thought was an easy one.

“Hey Siri, play the theme from Spider-Man.”

Now, I realize there are many Spider-Man movies and TV shows, and that asking for the Spider-Man theme, with no other guidelines, might be confusing to a computer, even if it is a glorified one like a HomePod. Still, I would expect that from even a cursory analysis of which Spider-Man theme people play the most often, it would have to be the now-iconic theme from the classic ’60s cartoon. Indeed, anyone with even a tiny level of cultural knowledge should know it’s the only Spider-Man theme music that everyone knows. It should be the default.

But instead of the familiar theme song, Siri announced it would play a version of the song by some group called the Sound of Monday. I could only get about 12 seconds into the cover’s showy horns and obnoxious-sounding lead singer before I gave the order: “Hey Siri, never play that song again.”

Siri understood loud and clear, or at least she seemed to, telling me she would save the preference.

With that song essentially blocked, I tried again, “Hey Siri, play the theme from Spider-Man.”

And here’s where things went south. Siri, seemingly with no memory of our exchange just seconds earlier, went right into The Sound of Monday cover — again. 

Annoyed, I said, “Hey Siri, I just told you to never play this song again.”

“OK, turning Repeat on,” she replied, taking her obliviousness to a new level of aggravation, leaving me gape-mouthed and Ray LOL-ing. Ray and I repeated the whole experience (you can see part of the exchange in the video below) to make sure it wasn’t just a one-off. 0166 9c22%2fthumb%2f00001

To be fair to Siri and the HomePod, the actual theme to the ’60s Spider-Man TV series doesn’t appear to be in Apple Music. You can find it on Spotify and Amazon Music, but it’s buried in compilations of TV show themes.

So I’ll give Apple’s digital assistant a pass on not finding the right song, even if it’s one of the most well-known songs in the world. But playing a song I just said never to play without so much as an “Are you sure?” (which she’s more than capable of asking — she hits you with the question every time you want to turn the volume up to 100%). And then turning on Repeat when I admonish her for it?

Now you’re just trolling, Apple. d595 dc8d%2fthumb%2f00001

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