from Pradodesign Spotify’s missing money-maker is artist-to-fan messaging
Streaming royalties are too expensive for Spotify to thrive as a public company just playing us songs. Spotify’s shares closed down 10 percent today during its NYSE trading debut. Luckily it controls much of the relationship between musicians and their fans on its app, poising it to build a powerful revenue and artist loyalty generator by connecting the two through native advertising and messaging that doesn’t stop the music.
Spotify already has a wide range of ad experiences built for traditional brands, from audio ads to display units to sponsored sessions where users get ad-free playback in exchange for watching a commercial. But none of these ad units are designed to help musicians grow their audience within Spotify, even if they can be bent to that purpose.
Spotify could win big by following Facebook’s roadmap.
Back in 2007, Facebook already had ads that led offsite. Think of these as Spotify’s existing audio and display ads. But when Facebook built Pages that let businesses reach you through the News Feed, it also launched ads that let them promote and grow their Pages within Facebook. Unlike the stock banner ads you see all over the web, these ads were native to Facebook, targeted with its profile data, and that used social referrals about Pages your friends interacted with to rope you in. They gave entities within Facebook a paid way to grow their popularity inside the platform.
This is Spotify’s opportunity.
Spotify’s existing ad units are designed for brands, not musicians
A few years ago, Spotify’s user base was too small for artists to focus on spending money there to get popular. But Spotify has grown to the size where it’s replacing top 40 radio, and over 30 percent of listening now comes from its recommendations and algorithmic playlists like Discover Weekly. The record labels now need Spotify to have a hit. Between that influence and it’s stature as the biggest on-demand music streaming service, Spotify has the leverage to offer artists the best tool to boost their fan base.
Spotify has already built the groundwork for this with the launch of its Spotify For Artists analytics dashboard app last year that shows a musician’s top songs, and the demographics of their fans including their location, gender, age, and what else they listen to. Spotify’s proven the power of this data with its Fans First email campaigns that let artists reach their most frequent listeners with access to concert ticket pre-sales and exclusive merchandise. It claims the emails see a 40 percent open rate, and 17 percent click-through rate — way higher than the industry standard.
But if Spotify built new surfaces for artists to reach out directly to fans within its apps, it could become the destination for record label marketing money. Since these artist ads and messages would all drive users deeper into the app rather than away from it like brand, Spotify could charge less than traditional ads and make them affordable to labels on a budget or musicians paying out-of-pocket.
Here are some ways Spotify could create native artist-to-fan marketing channels:
Sponsored songs on its algorithmic playlists could expose fans to artists in the most natural way possible. Wherever there’s recommendations, there’s room for paid discovery. Listeners could easily skip the track or switch to a different playlist, but might end up falling in love with the band, and diving into their catalogue. It’s the equivalent of Facebook’s in-News Feed native ads, but with a musician promoted instead of a business’ Page. Spotify was actually spotted testing what was effectively a sponsored song in mid-2017 above the start of some playlists. There was an opt-out option within the app’s Settings, though that’s since disappeared, so Spotify has at least considered this idea.
Spotify was spotted testing what was effectively a Sponsored Song back in mid-2017
Promoted Artists could use a similar model to Google’s AdWords sponsored search results. When users search for an artist, they could be shown similar artists who’ve paid to be promoted in the search typeahead or results page. Spotify could also insert a box within the profile of another artist you’re browsing below their top tracks. Spotify already lists a slew of related artists in text, but could highlight one that pays, perhaps showing one of their songs that could be instantly played.
Featured Artists could give artists that pay a special slot on Spotify’s browse page. With so many recommendations here, it’d be easy to slot in a sponsored section without feeling interruptive.
Sponsored Visualizations could make better use of your screen while you listen. Rather than just staring at the album art and playback controls, Spotify could let artists pitch fans their other music, tickets, gear, or social media channels. Spotify could also fill this space with entertaining silent video clips, photo slideshows, and biographical info as I suggested as a differentiator in 2016, and similar to how lyrics site Genius started doing with its Stories this week. Given users are currently listening to the artist, they might be primed for these experiences. Spotify has already tested letting artists show GIFs during playback, and has partnered with Genius to show Behind The Music factoids, but this is real estate that could help artists earn more money as well as entertain fans.
The most ambitious and audacious way to let artists reach fans would be a special artist-to-fan messaging channel. Spotify got rid of its in-app inbox and messaging feature a few years ago, instead pushing users to share music via their chat app of choice. But similar to the Fans First email campaigns, Spotify could create a special artist-to-fan messaging section in its app that could alert users to new releases and playlists as brand advertising, or even push tours and merchandise as more direct performance advertising.
Spotify could give all artists a certain volume of messages they could send for free or let them reach out just to the top 1% of fans a certain number of times per month or year. Then artists could pay to send more messages beyond the limits. Alternative, it could just charge for any use of messaging.
Done wrong, any of the above options could feel like Spotify gauging artists to reach their own fans. But done right, users might actually enjoy it while. They wouldn’t be too far off from following an artist on other social media, but where people are already listening. Finding out about one of your favorite band’s new albums, tours, or t-shirts might feel less like an ad and more like an inside tip from the fan club.
Spotify might be able to get away with showing some of these different experiences to users who’ve subscribed if they don’t get in the way of music listening. Swinging to the other end of the opportunity spectrum, the company could just give away all these experiences to artists, boosting their loyalty to Spotify and getting them to promote their presence there instead of on competing streaming services like Apple Music.
If Spotify doesn’t figure out a way to improve its margins with additional revenue drivers, it may have a tough time surviving as a public company. If it becomes too profitable from just music streaming, the labels can always try to increase their royalty rates. Spotify might hope that more artists work with it directly, cutting out the middlemen, but the record labels still provide some important marketing, radio promotion, and distribution services that artists need. Meanwhile, startups including United Masters (which raised a $70 million Series A from Google parent Alphabet and Andreessen Horowitz) want to usurp the record labels and become the way artists earn more before Spotify can.
This New York Times’ chart shows why musicians feel screwed, even though it’s labels keeping their money not Spotify
These features also offer Spotify a way to combat the enduring narrative that it’s screwing over musicians. If Spotify can prove these artist-to-fan messaging options earn them more than they cost, it could be seen as the streaming service that’s actually trying to help musicians make a living.
Recorded music has always been a promotional tool for all of a musician’s other revenue streams. Streaming’s on-demand structure and no-extra-cost-per-play nature turns the curious listener who’s only heard of an artist or just likes one single into a diehard fan who shells out the big bucks every time they’re favorite act is in town.
As we shift to an experiential culture where our possessions are digitized and its our interests that define us, people want to connect to the creators they love. Artist-to-fan messaging could bring the whole life-cycle from discovery to affinity to real monetization beyond the music all within one green and black app.
For more on Spotify going public, read our feature stories:
Spotify traded down 10% on first day, achieved $26.5 billion market cap
Going public pits Spotify’s suggestions against everyone
from Pradodesign Amazon opens Echo Button games to developers
Echo Buttons are one of the stranger bits of hardware to come out of the Amazon labs in recent memory. Announced alongside the latest Echos, the little light up devices are designed to bring interactive game play to the Alexa Echo system.
The company’s already announced a handful of compatible titles, and it seems that list is about to get a bit longer, as it opens up a beta version of the Gadgets Skill API for the hardware.
Developers can platform to associate button presses with different skills and send light up animation to the hardware. A preview version of the API lead to the development of a number of experiences for the two for $20 peripherals, including light up playback of Martin Luther King Jr.’s “I Have a Dream” speech and Trivial Pursuit from Hasbro. The selections are nothing if not eclectic.
The toy company is also using the announcement to launch a new game: an Echo Button version of Simon, the popular 1980s light up memory game. You can download Simon Tap now, and Alexa will list a sequence of colors the players then match. The hardware works with most of the Echo line, including, Echo, Echo Dot, Echo Show, Echo Plus and Echo Spot.
from Pradodesign Spotify Subscriptions Helped The Streaming Company Win Listeners The streaming company proved it could get the Napster generation to subscribe. But will Spotify’s paywall make it profitable? https://ift.tt/2EhTtJ7 https://ift.tt/1P9I4xH
from Pradodesign Apple steals Google’s AI chief
Apple has just poached one of Google’s top AI executives in a move likely to have far-reaching consequences.
Apple has hired John Giannandrea, previously Google’s Head of AI and Search, the NYTimes reports. Giannandrea will lead Apple’s “machine learning and A.I. strategy,” the Cupertino company said in a statement to the Times, he will be one of only 16 executives that report directly to CEO Tim Cook.
Just yesterday, The Information (paywalled) had reported that Giannandrea would be stepping down from his role at Google and would be replaced by 19-year Google veteran Jeff Dean. Giannandrea first joined Google in 2010 after it acquired MetaWeb, where he served as CTO. The startup sought to make search results more contextually aware through its hefty database of tagged data.
The hire is particularly important as Apple has seemed to fall far behind its rivals in the race to build smarter software powered by artificial intelligence. Siri, the digital assistant which Apple has pumped much of its consumer-facing AI technologies into, is far behind Amazon’s Alexa and Google’s Assistant in capabilities.
TechCrunch chatted with Giannandrea at our most recent Disrupt SF conference where he chatted at length about how humans could help make computers smarter, but that we could also lend them our biases if we aren’t careful.
from Pradodesign NASA grants Lockheed Martin $248M contract to develop a quieter supersonic jet
The Concorde was a generation ago, yet its legend persists — and the dream of supersonic flight may be returning. NASA and Lockheed Martin are taking concrete steps towards the creation of jets that travel faster than the speed of sound but are “about as loud as a car door closing.”
NASA announced today that it has awarded Lockheed a juicy $247.5 contract to produce a single “X-plane,” or experimental plane, meeting certain requirements by the end of 2021. The company created a preliminary design under a previous contract.
Much of the engineering is up to Lockheed, of course, but in the end the single-pilot craft will travel at some 940 MPH at high altitude — 55,000 feet — and produce around 75 perceived decibels (compared with the Concorde’s 90) at ground level.
Of course it will be louder up close — you can’t run engines and split the air at that speed without making a racket, and this thing is using a fighter jet engine. A big problem with supersonic flight was that the sonic boom made it too loud to fly over populated areas. (The Concorde had more problems than that, but the boom was part of it.)
But there’s been a great deal of research (dramatic NASA video here) into improving the aerodynamics of a supersonic craft and carefully designing every contour to control the inevitable pressure waves it creates. This new plane will be the first to test many of those principles.
Once the craft is delivered at the end of 2021, assuming everything plays out according to schedule, NASA will start flight tests and collect community responses. Presumably that means asking if they heard anything unusual that day.
That data will be passed on to regulators as support for new rules on supersonic flight — which could in turn give the aerospace industry the green light to develop practical applications.
As you can see there’s a long way to go before a quiet supersonic jet is even built and tested, but the work is underway.
from Pradodesign GoFundMe acquires YouCaring as charitable crowdfunding continues to consolidate
GoFundMe, the startup focuses crowdfunding for charitable causes, has made another acquisition to scale up its platform: it has acquired YouCaring, a smaller rival, creating a combined community of 50 million donors in some 19 countries in the process. Financial terms of the deal are not being disclosed, but it comes amid a flurry of acquisitions in the space as smaller companies look to consolidate in the face of growing competition from the likes of Facebook, and, it seems, Amazon.
Other acquisitions among charitable crowdfunding startups have included GoFundMe buying CrowdRise (and relaunching it last month), and YouCaring acquiring Generosity.com from Indiegogo in January of this year.
GoFundMe says that current YouCaring campaigns will continue as is if they have been started on the latter site. Future campaigns will all be initiated on GoFundMe.
Crowdfunding has become one of the biggest levers for raising money over the internet. Using emotional storytelling campaigns that spread virally through social media (and more traditional media), charitable giving specifically has been given a huge boost. GoFundMe was already the world’s biggest platform for causes-based online giving, and this deal with extend its margin further.
It’s not completely clear why GoFundMe decided to gobble up YouCaring (or YouCaring chose to sell up), rather than both continuing to grow organically, but one reason could be because of changing business models in the charitable crowdfunding space.
Last November, GoFundMe announced that it would drop the 5 percent platform fee that it was charging for personal campaigns in the US (its biggest market) and opt for a tips-based model. Notably, this is the model that forms the basis of how YouCaring — which is profitable — works.
“We have never had a platform fee and never will,” Dan Saper, CEO of YouCaring, told me earlier this year. Over 70 percent of all its users tip the company something, he added. “It has been remarkably sustainable and predictable,” he said. “We treat people like adults and let them decide who to support and how much to give.”
YouCaring also has the distinction of having hosted and run the largest crowdfunding campaign of all time, on any platform, raising $37 million for JJ Watt’s Harvey Relief Fund.
It could be that GoFundMe decided to bring in YouCaring either to help it built out is business in the tips-based space, or to work more closely with high-profile fundraisers, or (more cynically) to take out its closest independent rival in order to have less competitive pressure around how it chooses to build out fees and tips in the future. (We’re asking the question and will update as we learn more.)
For now, the combination is being described by GoFundMe as a move to strengthen its lead in the market — putting truth to the adage of “strength in numbers.”
“GoFundMe and YouCaring share a common mission of making it easier than ever for people to get the support they need. With this acquisition, we strengthen our position as the place where more people can unite to make an impact far greater than they can on their own,” said Rob Solomon, CEO of GoFundMe, in a sttement. “We’re excited to welcome the YouCaring community to GoFundMe and empower a global community of more than 50 million changemakers to help make a difference in each other’s lives.”
GoFundMe has never revealed how much it has raised from investors, but its backers include Iconiq, Stripes Group, Accel, TCV, Greylock and Meritech. YouCaring also has never disclosed how much it has raised and has only ever disclosed one backer, Alpine Investors.
from Pradodesign Alexa’s routines can now play music, podcasts and radio shows
Alexa’s routines are getting a musical upgrade. First launched last year, routines allow Alexa device owners to string together a series of actions that kick off with a simple command – like “good morning” or “I’m home,” for example. Until today, the feature included support for news, weather, traffic, smart home skills, as well as, more recently, a set of “Alexa says” commands that let you add a little personality to a given routine. Starting today, Alexa can play your favorite music, podcast or radio show in a routine, too.
To use the feature, you’ll select an artist, playlist, album or station from your music library or one of the supported streaming services. Currently, the supported services are those that already work with Alexa – Amazon Music, Spotify, Pandora, iHeartRadio, SAAVN, Deezer, and TuneIn.
Amazon says you’ll also be able to create a volume action to control the audio output on your device.
The addition has the potential to make routines more useful for those who like to have music in their home on a more regular basis. For instance, if you like to start your day with a playlist that gives you energy, you could create a “Good Morning” routine that turns on your lights and smart coffee maker, then starts playing your favorite upbeat songs.
You could also create a routine for relaxing that includes more soothing music or a nighttime routine that locks the door then plays sleep sounds. A party playlist could be included in routine that puts your smart lightbulbs into a flashing disco mode or crazy colors.
But music isn’t the only option – because some of the services support radio shows or podcasts, those can now be integrated into your routines, too. For instance, a “welcome home” routine could play your daily briefing followed by a podcast or favorite radio show from TuneIn.
Although Alexa gained the ability to run routines before its rival, Google Assistant, Google’s version already supports music, podcasts and radio. So Amazon is playing a bit of catch up here. In addition, Google Assistant routines can also pick up an audiobook where you left off – that’s oddly not one of Alexa’s routines options today, even though Alexa can read to you from your Audible library. Presumably, Audible support in routines is in the works.
Music is an increasingly important business for Amazon, so better integration with Alexa makes sense. The company this week told Billboard it now has “tens of millions” of paid customers, confirming earlier reports that it has become the third-largest music service behind Spotify and Apple Music.
The ability to customize routines with music and other audio content will be available within the Alexa app for iOS and Android. However, the feature is just now beginning to roll out – so you may not see the option immediately.
from Pradodesign YouTube Shooting Spree Injures 4, Kills 1 Police say one dead and four wounded in shooting at YouTube headquarters in San Bruno, Calif., Tuesday afternoon. https://ift.tt/2GRMufj https://ift.tt/1P9I4xH
from Pradodesign Where’s the beef? For Impossible Foods its in boosting burger sales and raising hundreds of millions
Any company that’s looking to replace the over 5 billion pounds of ground beef making its way onto tables in the U.S. every year with a meatless substitute is going to need a lot of cash.
It’s a big vision with lots of implications for the world — from climate change and human health to challenging the massive, multi-billion dollar industries that depend on meat — and luckily for Impossible Foods (one of the many companies looking to supplant the meat business globally), the company has managed to attract big name investors with incredibly deep pockets to fund its meatless mission.
In the seven years since the company raised its first $7 million investment from Khosla Ventures, Impossible Foods has managed to amass another $389 million in financing — most recently in the form of a convertible note from the Singaporean global investment powerhouse Temasek (which is backed by the Singaporean government) and the Chinese investment fund Sailing Capital (a state-owned investment fund backed by the Communist Party-owned Chinese financial services firm, Shanghai International Group).
“Part of the reason why we did this as a convertible note, is that we knew we would increase our valuation with the launch of our business,” says David Lee, Impossible Foods chief operating officer. “We closed $114 million in the last 18 months.” The company raised its last equity round of $108 million in September 2015.
Lee declined to comment on the company’s path to profitability, valuation, or revenues.
Impossible began selling its meat substitute back in 2016 with a series of launches at some of America’s fanciest restaurants in conjunction with the country’s most celebrated young chefs.
David Chang (of Momofuku fame in New York) and Traci Des Jardins of Jardiniére and Chris Cosentino of Cockscomb signed on in San Francisco, while Tal Ronnen of Crossroads in Los Angeles were among the first to
“When we launched a year ago, we were producing out of a pilot facility,” says Impossible co-founder Pat Brown. [Now] we have a full-fledged production facility 2.5 million pounds per month at the end of the year.”
The new facility, which opened in Oakland last year has its work cut out for it. Impossible has plans to expand to Asia this year and is now selling its meat in over 1,000 restaurants around the U.S.
Some would argue that the meat substitute has found its legs in the fast casual restaurant chains that now dot the country, serving up mass-marketed, higher price point gourmet burgers. Restaurants including FatBurger, Umami Burger, Hopdoddy, The Counter, Gott’s and B Spot — the Midwest burger restaurant owned by Chef Michael Symon — all hawk Impossible’s meat substitute in an increasing array of combinations.
“When we started looking at what pat and the team at Impossible was doing we saw a perfect fit with the values and mission that Impossible has to drive a stronger mindset around what it is to be conscientious about what is going on,” says Umami Burger chief executive Daniel del Olmo.
Since launching their first burger collaboration last year, Umami Burger has sold over 200,000 Impossible Burgers. “Once people tried the burger they couldn’t believe that it was not meat,” says del Olmo. “They immediately understood that it was a product that they could crave. We are seeing 38% increase in traffic leading to 18% sales growth [since selling the burger].”
At $13 a pop, the Impossible Umami Burger is impossible for most American families to afford, but pursuing the higher end of the market was always the initial goal for Impossible’s founder, Patrick Brown.
A former Stanford University professor and a serial entrepreneur in the organic food space (try his non-dairy yogurts and cheeses!), Brown is taking the same path that Elon Musk used to bring electric vehicles to the market. If higher end customers with discerning palates can buy into meatless burgers that taste like burgers, then the spending can subsidize growth (along with a few hundred million from investors) to create economics that will become more favorable as the company scales up to sell its goods at a lower price point.
Brown recognizes that 2.5 million pounds of meat substitute is no match for a 5 billion pound ground beef juggernaut, but it is, undeniably a start. And as long as the company can boost sales for the companies selling its patties, the future looks pretty bright. ‘”To get to scale you have to sell to a higher price-point,” says Brown.
That approach was the opposite tack from Beyond Meat, perhaps the only other well-funded competitor for the meatless crown. Beyond Meat is selling through grocery stores like Whole Foods in addition to partnerships of its own with chains like TGIFridays and celebrity backers like Leonardo DiCaprio.
“From a brand building standpoint it would have been insane for us to launch in supermakerts given that we had the opportunity to launch with great companies like Umami and great chefs like Dave Chang,” says Brown.
Heme is their best shot
At the heart of the Impossible Food’s meatless revolution is the development of a vegetable-based heme molecule.
Heme is present in most living things and, according to Impossible Foods, it’s the molecule that gives meat its flavor. The company says that it’s the presence of the heme molecule in muscle that makes meat taste like meat. Impossible Foods engineers and ferments yeast to produce that heme protein naturally found in plants, called soy leghemoglobin.
“It’s the iron containing molecule that carries oxygen in the blood… what makes meat red or pink… It’s essential for every living cell on earth,” says Brown. “The thing that we discovered was that pretty much the entire flavor experience of meat that distinguishes it from all over foods is due to heme. Heme transforms fatty acids into the bloody flavored odorant molecules and when you cook meat, the protein that holds the meat at a certain temperature unfolds and lets loose.”
Brown says Impossible Foods can make fish flavors, chicken flavors, and pork flavors already, but is going to stick to ground beef for the foreseeable future.
The next trick for the company is to manipulate the flavor profile of its meat substitute so its burgers can win in blind taste tests against any other combination of meat patty.
“The company’s mission is to completely replace animals in the food system by 2035,” says Brown. “The only way to do it is to do a better job than any animal at producing the most nutritious, delicious, affordable, and versatile foods. And it will be a very interesting proof of concept landmark when we have a burger that is — for flavor and deliciousness — the best burger on earth… that’s going to send a very important signal to the world.”
The global impact
If Impossible Foods, Beyond Meat or any of their competitors that are working on developing cultured meat cells in a lab are successful it has huge implications for the world.
These lab-grown meats and meat substitutes could use up to 75% less water, generate 87% fewer greenhouse gases and require 95% less land than what’s used for meat production.
Those statistics have attracted investors like the Open Philanthropy Project, Temasek, Bill Gates and Horizons Ventures (backed by the Hong Kong billionaire Li Ka Shing). Those billionaire backers have invested in multiple rounds of funding for the company alongside other early financiers including Google Ventures, UBS and Viking Global Investors.
The fundamental economics are so much more favorable for us than for the cow,” says Brown.
Those economics could also be compelling for potential meat production partners, he says. Brown envisions a potential future where production facilities that use fermentation processes could be used to manufacture the company’s ingredients to get to scale. “In order to scale rapidly we didn’t want to have to build the entire supply chain from the farm up.”
Given that the main ingredients are wheat, potato, and the manufactured heme protein, there’s a chance that the company could actually create an alternative supply chain to the meat packers, butchers, and slaughterhouses that dominate the landscape.
The meat industry has taken notice and is beginning to push back.
According to a report in USA Today, the U.S. Cattlemen’s association filed a 15-page petition with the U.S. Department of Agriculture earlier this year calling for an official definition of the terms “beef” and “meat”.
“While at this time alternative protein sources are not a direct threat to the beef industry, we do see improper labeling of these products as misleading,” said Lia Biondo, the association’s policy and outreach director, in a statement. “Our goal is to head off the problem before it becomes a larger issue.”
For Brown, it’s another step along the road of how humans sustain themselves. “People act as if science and technology have been outside of the food system,” he says. “The whole food system is a combination of nature and science that makes the food that we eat come into being.”
from Pradodesign Facebook reveals Russian election troll content, shuts down 135 IRA accounts
Facebook is showing an unprecedented level of transparency around its latest effort to suspend Russian trolls trying to influence elections and mislead the public as it tries to regain the trust of users and the government. The company shared both stats about the account deletions and samples of the content they shared.
Facebook has removed 70 Facebook accounts, 138 Facebook Pages, and 65 Instagram accounts run by the Russian government-connected troll farm and election interference squad the Internet Research Agency. Facebook chief security officer Alex Stamos cited the IRA’s use of “inauthentic accounts to deceive and manipulate people” as “why we don’t want them on Facebook. We removed this latest set of Pages and accounts solely because they were controlled by the IRA — not based on the content.”
95 percent of the accounts operated in Russian and targeted Russia or Russian-speakers in nearby countries including Azerbaijan, Uzbekistan and Ukraine. 1.08 million users followed at least one of the Facebook Pages, and 493,000 users followed at least one of the Instagram accounts. The accounts had spent a combined $167,000 on ads since the start of 2015.
By detailing the specifics of its efforts rather than dragging its feet or waiting for government inquiries, Facebook may be able convince people it’s not asleep at the wheel of its social network.