Tag: music (Page 1 of 2)

Beat(s) It: What’s Up, Apple?

Hello again.

I am writing to you whilst listening to Metronomy on Spotify streaming from my iPad Mini using a Bose headset. Musical zen, so to speak. Earlier, I had the whole thing running via my Denon RCD-N7 with the Airplay patch (but using Mordaunt-Short speakers). Life is good.

Earlier today, I got my new iPhone 6. Spotify works on it. My Bose headphones fit into the headphone jack (but, why, of course).

What is my gripe about then, you ask? Well, you see, I hold about 5 Apple shares (that’s about it, honest). And said company has recently (well, not so recently anymore) spent some $3 billion on acquiring Beats, “that” company fronted by the much (and rightly) revered Dr Dre and Jimmy Iovine, which sells mediocre (sorry, I meant to say, totally friggin’ awesome, headphones to sports superstars (and their fans). Oh, and they also have some sort of streaming service, apparently.

Mind you, my shiny new iPhone 6 nor my equally shiny new iOS 8 show any sign of a music streaming service. Or Beats. Or both. Or either. And today, the formidable (erm) TechCrunch ponders whether Apple may shut down the Beats streaming service (because of said absence of it on the new iPhone and iOS). And the mind boggles.

Let’s have a look at the lay of the land then:

There are a number of streaming services in the world. Spotify tops the charts, undoubtedly (unless your worldmap starts and ends in the US, then it’s probably Pandora). Their valuation is pegged somewhere at North of $10 billion. I do not know a single person that uses Beats streaming service (but then, I know, I am a middle-aged white European). However, my American friends, have you heard of Deezer? No, thought not. Alas, it has 20x the subscribers of Beats though (5m vs 250,000). Could you have bought them for $60 billion? I would guess so. But they don’t have the hardware or brand value, you say. And right you are. But, come on, a difference of nearly $57 billion for this? Really?

I would posit that the Beats acquisition was – a British technical term – complete bollocks. Let’s look further:

Here’s what Apple said (BTW, that Endgadget piece is enlightening on so many levels):

It was a no-brainer for us,” said Cue, outlining the three reasons in more detail. First, Cue says the Beats team is sensational, and will be a perfect fit for Apple; additionally, Dr. Dre is an incredible artist with an incredible ear.

$3.2b for a sensational team with an incredible ear. Yeah, right… Eddy Cue, you rule (or not).

Beats hardware is middle of the road at best (I know Dre would disagree, but he’d have to, no? He’s HipHop’s first billionaire because of it, doh…). For how much could you have had, say, Sennheiser (surely a good fit on hardware), a conservative, German, family-owned company? Would a bid of $3.1b have sealed it? Of off-shore money (which would’ve, what, halved that cost? Mmmh, I wonder (that’s a yes). See, the main (and a super-impressive feat at that) of Beats was its marketing and branding prowess. But Apple really doesn’t have anything it needs in that department, does it? It is the world’s most powerful brand (more than 2x its nearest competitor).

So what is our conclusion, half-way? Apple bought a brand (it didn’t need) that produces mediocre hardware (the one part where Apple always excelled and led everyone else) with the add-on of a also-ran streaming service. $3.2b worth? Erm,  no! And now we are hearing that they’re going to shut down that streaming service (which desperate Apple lovers had quickly termed the main rationale of the genius Apple pulling off another one), You see, Apple has never been great in M&A. T (I’m available). <sigh/>

Spotify Mobile: 3UK bundles with HTC Hero

A couple of weeks ago, I pondered Spotify’s impact on music business models and suggested that mobile may have a role to play in the monetization end of it (which is, unless you’re Twitter, an inherent part of a business model indeed). It didn’t take them long:

Today, the UK arm of 3 – always one of the more creative carriers – announced a handset (and not a bad one either) to be bundled with Spotify Premium (i.e. on the go and no ads): users will pay £99 up front, and then £35 a month for 24 months for a tariff including a Spotify Premium subscription covering both PC and mobile, 750 minutes voice calls, unlimited texts, data and Skype-to-Skype calls. Listen up: all bandwidth included. For a streaming service. Now we’re talking!

3 said that the Spotify Premium service was

worth £240

which suggests that they might want to stick to the £9.99 price point (which would surprise me). But then it is hard to tell which bit of such announcements is marketing and which actual price-setting for the sake of royalties and such like…

3 also said

that the deal with Spotify would extend to other products in the coming months, including 3’s mobile broadband service.

Again, I am curious about the price point: the way it is, it would be a nice marketing deal for Spotify but it could be said that not much was going for taking exactly that offer vs just signing up as it is already. A little discounted however (with the difference paid for by 3’s marketing department) might change the ball game altogether…

It’s all good though: I for one am truly intrigued by the prospect of having more than 6 million tracks (equating to, what?, 6 terabyte or so of music) on my phone!

And one little thing on the side: it is – again – an app and not the mobile web that they choose – in spite of bandwidth apparently not being an issue at all. It is thus another argument for the superiority (for the time being) of apps over mobile web when it comes to UI and input constraints.

Carnival of the Mobilists #192

The 192nd iteration of the Carnival of the Mobilists is under way. This week’s edition is hosted by C Enrique Ortiz on his About Mobility blog and features an overview of Opera Mini 5, a background story on app stores (juicy: written by a Qualcomm exec), some stuff on mobile learning and, last but not least, my own “little” contribution on mobile’s role in the transformation of the music business (which also received a “favourite of the week” note; thanks C Enrique!).

Check it out, it is well worth a read! You’ll find it here.

Is Spotify finding the Business on the Move?

Spotify was a breath of fresh air when it hit the markets. Finally, there was someone who combined the ease of iTunes with unsurpassed breadth in catalogue. Lots of songs. Always available. And even the ads weren’t all that bad (which is why few people upgraded to the ad-free premium version [more on this below], much to the dismay of label executives who – rightly – fail to see the greater good of dependable revenue streams from those few ads; although they are getting more, mind you).

Then, back in July, Spotify submitted its iPhone app to Apple. And the big wait began. After lots of back and forth and speculation if it would or would not, Apple finally approved the app. So now it’s live, and not only on the app store (where it ranked #1 on the UK store when I checked tonight) but also on Android Market. A Symbian version is in the works.

All reviews I have read are raving: from “very impressed” (and that’s the Daily Telegraph no less) to having “to pry it out of my cold, dead iPhone” (Wired), everyone waxes lyrical about the thing. It comes with a load of stuff, too: streaming all your favourites from over 6m tracks on the go sounds promising, and one can also sync up to 3,333 (what a number!) songs for offline use in the networks’ broadband doldrums.

The trouble (!?) is: you can only use it as a premium subscriber, which means forking out £10 per month. Which brings me conveniently to the key point, which is the business underlying model.

The labels are fairly happy, it seems. Because they got shares in Spotify itself. Some more equal than others though: the majors are said to have received a disproportionately high stake). The same report claims though that ad income is only £82,000 and, in the UK, only 17,000 users had signed up for the premium version. However, shareholders and all that, Spotify still has to pay the labels a fee per streamed track, irrespective of the user paying or not. Tricky model, that. Note though that this might be different in other countries: according to reports, the world’s largest major, Universal Music is making more money from Spotify in Sweden than from iTunes!

Anyhow, all this was before the mobile app, and mobile may well be the game-changer for them… The launch of the iPhone app, glorified niche audience or not, seems to have gone fairly well (#1 position on fhe app store within days of launch). Spotify reckons that mobile is where its future lies. And this had been echoed (and well ahead of the actual launch!!!) by others in the industry, and perhaps rightly so: if users are used to (and in love with) a service they are more likely to pay for it if that means they can also have it whilst on the road. For the marriage of music with the world’s leading MP3 player come mobile phone, the iPhone, this seems to be made in heaven: I can have the smallest model and still carry 6m+ tracks around with me? Wow! Here’s value-add!

The much-discussed freemium model it is then: get them hooked on the free desktop app and convert them to paying users on mobile. It has long been known that users are more likely to pay if stuff is portable (I can still recall the disbelief of music executives when they realized that people would pay more for a monophonic ringtone than for a full-blown music track). And whilst now the link between (free) basic service on the desktop and (premium) mobile service is new, the principle is old and proven: and it is simply added value (plus the little things like being used to paying on mobile and having convenient existing billing models in place). If the user perception is that they are getting value for money, they are willing to pay. And if it is for such a fairly special thing such as music (don’t we all love and nurture our very own musical mix tastes?), the step is even easier to make.

Spotify fully expects this to fly: they are upgrading their servers already. Labels are said to be still a little jumpy but I reckon their experiences over the last decade or so have shown that their is a need to re-think incumbent models…

Orange UK: Mobile Broadband Roars!

Orange UK, one of the large carriers in the country with 15.8m mobile subscribers, has released its “Fifth Digital Media Index”, containing a set of interesting numbers on the data uptake on their network, and it makes for intriguing reading!

The carrier recorded a whopping 4,125% (!) increase in data use over dongles using their mobile network in the last 12 months with dongle subscriptions growing by 504%. Data use from handset increased by 108% and that, I might add, without the help of the iPhone (which is exclusive to O2 in the UK). The increase from dongles will be connected to a big push this offering has seen in the UK (as in other countries) over the past period. Carriers have been and are promoting these aggressively, helping uptake of mobile broadband significantly.
Here are some highlights from the report:
  • Music and video downloads increased both by 38%.
  • Games only grew by 8% (but at least they grew; anecdotally, some other carriers recorded sometimes dramatic drops in take-up) to a total of 770,000 downloaded games, which equates to a market share of 23% of all UK games downloads (the total UK games market would hence be 3.35m downloads for the year with Orange claiming top spot). From the top 10 downloaded games in 2008, 8 were part of the carrier’s embed programme, which shows – again – that users appear more comfortable if they can try it out before (embedded games normally are trial versions).
  • Social network use over mobile increased by 129% in page impressions per month and 48% in unique users. The monthly average number of pages per user was 397. In terms of popularity of social networks, Orange’s Mark Watt-Jones (@MWJ) fed us additional bits via the Twittersphere: Facebook dominates, Bebo is significant, MySpace less so and Twitter grows very quickly (what was the Oprah moment in the UK?)
  • An average of 386,000 GB of data have been transferred via dongles and handsets per month.
  • Mobile search grew by 120% with 45% of the results being “off-portal”, i.e. outside Orange’s domains.
  • Good old SMS still looking good, too: 19% growth with 1.7bn sent every month.
Another key point Mark brought us via Twitter: 99% of access to social network sites came from non-smartphones. This is quite noteworthy indeed as it arguably shows that mobile data usage now transcends beyond the power users on sophisticated handsets and also that content leads the uptake: give people compelling content, and they’ll use it. Mobile data for the masses seems to have arrived!

Mobile Music on the Rise: 40-45% of Digital Revenue for UMG

January is MIDEM time (even though, sadly, I cannot go this year), which means that music dominates the news. In an interview, the EVP of Universal’s eLabs, Rio Caraeff on the revenues of Universal Music Group that:

“about 40 to 45% of our overall digital business is coming from mobile channels like Verizon and AT&T. […] On much of our frontline pop or R&B or urban releases […] we’re seeing mobile comprising 20-45% of the [overall] revenue for those artists.”

Wow! Universal’s digital sales have been growing by 33% during the first 3 quarters of 2008, and they seem determined to fully converge “online”, “mobile”, etc into one:
“The consumer doesn’t want a mobile-only experience – they want an all-digital multi-platform experience. They want to consume their music on their mobile handset [and] on PC and other online platforms. Partners like Verizon and AT&T wanted to have multi-platform online experiences as well. […] Now at Universal, we don’t have a mobile business. We don’t have an online business. We just have one multi-platform digital business.”

Amen to that! And how right he is. Universal also adapted pricing, so that a song costs the same no matter on which digital platform you buy it. And, apparently, mobile storefronts play a role, specifically Amazon‘s MP3 storefront, which is pre-loaded on the G1, the first Android phone. So it’s app stores (or markets) all over this year, huh?
This shows that the majors learned from the pain of recent years and now get a grasp on the digital world. Good stuff that!

Comes with Music Comes to Mama

Nokia’s “Comes With Music” service (unlimited downloads of 4m+ music tracks), which you get when you buy a phone, had been announced with much fanfare but it went a bit quiet after that. Now “early results” from the service show that it is mothers appear to be amongst the leading adopters, according to a Nokia executive. Unfortunately, that seems to be amongst the few bits of information they would let out into the public, the only other one being fairly obvious: recommendation is a driver (did they consult Amazon?) and chart coverage matters (Popularity matters? What?).

It would be wonderful would Nokia actually release a showcase of what it achieved with the service. I appreciate that they will want to wait since the service has gone live in the UK first and that only recently but I do hope that they will enlighten us… 

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