Interview

What if Spotify turned Daily Mix into a standalone product?

Posted on October 31, 2016 | by Bas Grasmayer

Implementing the obvious missing feature could point to a new product direction for Spotify.

About a month ago, Spotify introduced Daily Mix, a new set of playlists that lets you ‘rediscover’ your favourite music. It mixes past favourites with tracks you might like and its stated aim is to take the work out of organizing daily listening.

For years, Spotify has focused on creating better ‘lean back experiences’ that allow for more passive listening. A music tech product’s typical early adopters are people that are heavily invested in the process, but as they achieve greater market penetration, they need to target new audiences.

At first, Spotify focused on human curation and it remains a strong focus. More recently, after the Echo Nest acquisition, Spotify has chosen to give algorithms more play, such as through Discover Weekly and Release Radar, and now Daily Mix.

The obvious missing feature from Daily Mix, and much requested, is the ability to download tracks to your device through an offline sync feature.

Their official explanation for it, frequent updates and large amounts of tracks, doesn’t really seem to add up. Many users offline sync large playlists that are regularly updated. If it’s an issue, then users just pick one or two favs of their Daily Mix playlists and sync them.

As I thought about it, it reminded me of what I envisioned Soundcloud’s future as a subscription service would be. Soundcloud’s current proposition of serving dead artists’ music alongside the brand, brand new for $10 / month, doesn’t make any sense and likely got forced upon them by labels taking a tough stand and impatient investors.

What I always thought Soundcloud would do, was simply to release an app that would allow users to offline sync their favourites and charge users about $2 to $4 a month. As Spotify’s reportedly in talks to acquire Soundcloud, perhaps Daily Mix can be their first step into launching more price points.

Let’s imagine Daily Mix as a spin-off.

New price point

Spotify’s in need of a new price point. On average, the monthly spend of Spotify’s new subscribers is $3.09, not $9.99. This is due to discounting. Spotify, and others, are having a difficult time bringing in the mainstream music consumer at $9.99 per month.

Spotify user price by Midia — From: The End of Freemium for Spotify?

Spinning off Daily Mix as a separate product for the mainstream consumer could provide those users with a limited, but focused experience and monetize them without discounting.

The price point is a great way to onboard users. A user may use Spotify’s main app in ad-supported mode, but pay for Daily Mix. They’ll get used to having a monthly payment in music. Meanwhile, if they want to hear more by a certain artist in their Daily Mix, they can tap the artist name and be directed to the main Spotify app.

Inside Spotify’s main app, they can work to upsell users to higher price points for additional functionality.

Moving beyond all-you-can-eat (AYCE)

The original proposition of music services was that if you pay $9.99 a month, you’ll get all the music out there… However, with streaming holdouts and exclusives, this doesn’t seem viable. Due to the original frame, consumers are sometimes unwilling to spend more on digital music.

Music services need to shift away from having users associate their payments exclusively with the content, and instead monetize functionality around music.

Cannibalisation?

There remains the question of cannibalisation. Part of Spotify’s users who currently pay $9.99 / month may actually find that a Daily Mix app serves them well enough and subsequently downgrade. This makes an app like Daily Mix tough to license.

There are precedents though. Apps like MTV Trax let users download & listen to the most popular hits on a daily basis and in some markets, like Spain, they charge around $1 / week.

Alternatively, Spotify could wrap Daily Mix into some kind of trial, minimize functionality and hide the playlists to give it more of a radio feel, or work on the premium offer to be able to retain more premium subscribers, as well as upsell more effectively.

Another idea: expand Daily Mix with something not included in the main Spotify app, so that music aficionados can be convinced to spend some money on top of their $9.99.

Extra features for power users in $9.99

In a multi-app strategy, there are 3 things Spotify must do:

Make sure user conversion funnels for each app are functioning;
Make sure the lower tier apps don’t cannibalize the higher tier too much;
Optimize upsell funnels across its products.

Spotify likely needs it current feature set with Discover Weekly, Release Radar, Daily Mix and other features in order to onboard and retain users. Also, they don’t want to piss off subscribers, so they need to come up with product propositions that differ enough from the scope of the current product.

Some examples of features that could be sold at extra cost:

Buy Pacemaker and let Spotify create actual mixes for you;
Playlist creation games, eg. with friends or well-known artists;
Direct-to-artist subscriptions for exclusive content, interaction, discounts, etc. Think Apple Music Connect, done right.

They’ll have to figure out the specifics out soon and work out a plan on how to counter cannibalisation. As more mid-tier price point music subscription apps are entering the market, Spotify will need to compete.

Who would you rather lose a customer to? Someone else’s app, or your own?

Monetizing remix culture: Beatport’s former CEO about his new mission

Posted on September 26, 2016 | by Bas Grasmayer

Matthew Adell about founding MetaPop and the surprising amount of money being left on the table by artists & labels.

It’s 2016 and artists still have to think like lawyers when working on remixes. As someone whose music consumption primarily exists of remixes and sampled works, this is a very personal pet peeve of mine. The topic is, finally, getting some attention beyond lawsuits and takedown notices.

Earlier this year, a task force from the US Department of Commerce presented their findings of a 2-year study, suggesting that a compulsory license is undesirable. Instead, it recommends that the marketplace be left alone to figure this out. An upcoming key player in this marketplace, is MetaPop: a platform that connects labels, producers and remixers, co-founded by former Beatport CEO, Matthew Adell. To date, MetaPop has signed on over 5,000 labels and helps them clear and monetize fan remixes.

I spoke to Matthew about how it got started, why remixes are so important, and the future of the remix landscape and MetaPop’s place in it.

A year after selling Beatport to SFX, Matt decided to step down and take some time off. After some time spent relaxing, he started looking for a new challenge, asking:

“What is not getting solved, because people just think it’s hard?”

This question formed the basis of Matt’s search for intractable problems in the music business. Having always had an interest in derivative works he decided to investigate this problem, because “especially in music, we’ve seen the behaviour of people making remixes without authorisation really become explosive,” indicating that remixes account for 10% of all music listening on YouTube.

To find this out, he teamed up with Michael Mukhin, former CTO of Boomrat, and built a piece of technology called Remix Finder. The purpose of the technology was to understand derivative works online. To start, they created a huge index of remixes, mashups and DJ sets on YouTube. The index contains track information, metadata, and engagement metrics, and over time they could also start seeing the speed and frequency at which these derivatives were taken down. If at all.

“What we learned is while mashups have hits every now and then, there aren’t a lot of mashups that generate a tremendous amount of engagement on YouTube. DJs have some of the tastemaker names in the world, but we found that other than after-movies from really big festivals, DJ sets weren’t really generating that much engagement on a global scale. The work that was really generating the most engagement, and was leaving the most possible revenue on the table, was what we call the single-song remix.”

So as a starting point, they honed MetaPop’s technology on single song remixes and found that they’re better at finding single song remixes than YouTube’s Content ID tool. On YouTube alone, they identified over 8 million remixes that are currently not monetized for the original artist nor the remixer. This could mean hundreds of millions of dollars currently being left on the table, because according to MetaPop just 2.5 million of those fan remixes generate over a billion plays per month.

“So, we have built a system now that allows rightsholders and remixers to come together on our platform to authorise and monetise all of these fan remixes.”

The platform is intended for all genres. In fact, they found that country music is one of the more popular remix genres on YouTube. But why should artists care about remixes in the first place? Matt explains how back in the day, one would have to press vinyl bootlegs to get remixes out there. It was a slow process.

Now music has become part of a constant flow of social media. As a musician, it’s nearly impossible to create enough music to feed this constant flow by yourself, he explains. For remixers, it can help them get noticed, and for the original artist it means an expanded fanbase, and increased revenue.

It makes sense. If you make country music, and someone makes an EDM remix of your track, suddenly you’re reaching another demographic that you otherwise wouldn’t. MetaPop’s revenue split, 70/15/15 to the original artist, remixer and MetaPop respectively, can form a great incentive to monetize remixes, as opposed to taking them down.

If it’s so valuable to artists and there are hundreds of millions of dollars on the table, then why has nobody cracked this before?

“It wasn’t solved before, because there was no money. And it’s complex. Each country has its own laws for how to deal with derivatives.” The rise of streaming means that now there suddenly is a way to monetize. You wouldn’t be able to track the vinyl bootlegs and monetize them, but with all the music platforms out there now, there’s suddenly a lot more data.

Matt also understands that older generations of original artists were more wary of remixes, but this is becoming less the case today.

In the next 10 years, he expects remixes to become even more prevalent, because the software and hardware necessary to create them is becoming ever-accessible. In this landscape, we’ll see much less takedowns than we do today, with there being more systems in place to monetize instead. This is where MetaPop’s place is, as a rights-clearing house for derivative works.

There’s still a long road ahead. The team currently consists of 5 people, with all the technology being built by 1. The thousands of labels, remixers, and original artists they’ve managed to attract and host is an impressive feat, and testament to many years of experience the team has throughout music & tech.

MetaPop’s currently in the process of raising a Series A investment round, so that they can start going global and bring in more music from more places. Besides single song remixes, they want to expand their footprint to cover other forms of derivatives, too, like mashups. The goal is, quite simple: to be able to monetize derivatives more widely and more efficiently.

Are MetaPop going to be able to crack this problem? Matt is confident.

“Nobody else has the right mixture of experience, tech and relationships.”

Personally, I’m happy to see people cracking away at this problem, because its importance is underestimated. There are 2 trends that make it urgent to create a legal base for derivative works:

Adaptive music: generations are growing up expecting interactivity from everything in their environment. This is the generation that is growing up trying to swipe magazines, televisions and windows, believing they should be able to interact with it. Their music is going to be adaptive to fit the situation and whims of the listener.
The remix is the internet’s language: whether it’s attaching a gif to a tweet, changing the caption on a meme, or filming yourself playbacking on the wildly popular Musically, we use the remix to express ourselves now. Music genres are increasingly behaving like memes: they often start with remixes by bedroom producers giving existing tracks another twist. Take vaporwave, moombahton, nightcore or even edm-trap as an example.

This is the way people interact with music now. The world shouldn’t have ignored the inner city kids sampling in the 80s and 90s to create hiphop, but now there’s just no getting around it.

Remixing is the new default.

Matt and I are both speaking at Amsterdam Dance Event (19–23 Oct).
Come see us.

Interview: Wil Benton (Chew.tv) about building a livestreaming platform for DJs

Posted on August 22, 2016 | by Bas Grasmayer

Can Chew be to music what Twitch is to gaming? Find out what it takes to build the world’s largest video platform for DJs.

Chew team

Wil Benton is one of the founders of Chew, a service that lets performers create a livestream of their DJ or studio sessions. They were launched in January 2015 and signed up tens of thousands of creators, broadcasting over fifty thousand performances.

Not only does Chew provide a platform where you can interact with DJs while they’re playing — it also functions as a massive archive of DJ sets, easily rivaling those of Boiler Room, and providing a more visual alternative to Mixcloud.

This is the first edition of a series of interviews with music startup founders and professionals. With the series, I want to shine a light on what goes on in music startups, how they work and what their challenges are. So, first up: Wil about building Chew.

Chew.tv logo

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How has the journey been since graduating from the Ignite startup accelerator?

It may sound cliched, but we really wouldn’t be here today without the support and guidance we had on the Ignite accelerator. The team were the first to believe in Ben Bowler and I as founders, investing in us as a team (our idea pre-programme wasn’t quite as strong as it is today!) and giving us the focus and headspace to start building what became Chew at the start of last year.

Our continuing success is testament to the Ignite team and all that they do — so can’t really say more than that!

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Some people argue that investors are wary of investing in music startups due to uncertainties with rights and monetization. Have you encountered this?

In a word, no. Not yet anyway!

I think, had we not been demonstrating ‘interesting’ metrics and engagement on both sides of our creator & consumer marketplace, we would’ve found it harder to raise the two rounds of seed funding we’ve raised to date — but, on the whole, raising investment’s been a pleasure so far!

We’re gearing up to our first institutional round towards the end of this year; and conversations there have been promising too; again possibly thanks to the numbers we’ve got. That and the large amount of time we spend talking to our investors (both currently and looking to invest).

Chew presentation

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You ran a crowdfunding campaign letting users invest & get equity. What made you choose this?

We looked at crowdfunding as a way to fill part of the seed round we did at the start of this year. We’re building a community-based business, so it made sense to look at crowdfunding as a way of allowing our EU-based users to invest.

What better way to demonstrate we’re building something of value than our users actually investing in what we’re building?

We ended up having 122 individuals investing in the campaign; many Chew users but also supporters who saw value in what we’re doing. Seedrs, the platform we used, operate a nominee structure where their legal entity represents all 122 investors’ interest — but we have a great relationship with both parties and keep them in the loop with news on the business every fortnight.

Crowdfunding as a route to accessing capital isn’t the easiest thing to do — but as a way of generating interest in our community, product, and offering, it was unparalleled.

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How did the idea of Chew come about?

Ben and I met the summer before we launched Chew — introduced by a mutual friend because we shared a love for music and tech. The predecessor to Chew was called EatBass (sticking with the culinary theme here!) and we spent a few months on that before I left my job at an advertising agency at the end of 2013.

Ben had spent a lot of time working with live streaming at his job with AEI and was being asked back to stream club nights and other events after having left. That’s originally where the idea for a live streaming platform for music came about. I started working full-time on Chew in that guise at the start of 2014, in a marketing and biz dev role. Meanwhile Ben covered the tech side by working evenings and weekends until joining me full time in August 2014.

Wil Ben Chew

It wasn’t until our time on the Ignite accelerator in October that we focused the idea being a platform and community for DJs and the electronic music community, though.

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How did you assemble your team?

We raised an SEIS investment round in April 2015 after we’d finished Ignite, which gave us the capital to hire our CTO, Sam. We spent ages trying to hire for the full-stack role we wanted to fill; and Sam ended up finding our listing on the AngelList profile. He joined us the week after graduating with a Computer Science degree.

We’re still a team of three today; Sam as CTO, Ben as CSO/CVO and me as CEO. This year, we’ve been lucky enough to welcome a few ‘grownups’, who bring extensive industry experience to the team on a consultancy basis as we continue building out the business.

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What are you happiest about regarding Chew? What pains you?

Our continuing success — and hearing about the value we’re adding to our users’ lives and careers on a daily basis!

Pain points are, thankfully, few and far between at the moment. Finances, given we’re working on a limited runway, and resource, being a team of three, have their downsides — but I wouldn’t have us operating in any other way!

Chew office setup

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What are you happiest about regarding Chew’s current feature set? And what bugs you?

We’ve achieved a huge amount in our short history — especially given we’ve only one (truly awesome) developer!

Our ability to plan, build and execute features to a reliable schedule — on top of bug fixes, community support etc — never ceases to amaze me.

In terms of personal bugs, it’s more of a resource issue than a problem with our features. We’ve got so much more to do, but our team is at capacity — so we need to expand to be able to improve what we have. So not necessarily a bug of mine; just conscious awareness that there’s only so much we can do as the lean team we are today!

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You have over 25,000 DJs and producers on the service… How did they find out about Chew?

We had just under 30k users sign up in our first 18 months. We spent four or so months last year testing low level spend on Facebook ads (less than £5k) and, having just looked at the data, our numbers (in terms of engagement and platform usage) are actually better if we ignore the data from the duration of the Facebook spend.

Otherwise, our growth has been purely word of mouth. We turned Facebook ads off in August last year and haven’t looked back! We’re pretty active on the socials and in terms of community support, and we find that keeps our DJs and creators happy.

The happier [the DJs] are, the more content they produce on Chew and the larger the audiences they bring.

We’ve also just acquired our largest competitor, Mixify. The users we’re transitioning onto Chew is more than ten times our registered user number — so seeing how that impacts our numbers will be a fun journey!

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How do you think DJs can benefit from live broadcasting?

Live streaming is an open, democratic process that allows anyone, anywhere in the world to share what they’re doing in realtime. It’s the realtime aspect that connects us as consumers, the ‘spontaneous togetherness’ we get from sharing this experience. Josh Elman, one of the VCs who invested in Meerkat, wrote a great blogpost about this.

For DJs, music producers, and personalities, it levels the playing field and enables anyone at any stage of their career to build an audience, drive that engagement that defines success as a musician and ultimately monetise their activities. That’s what we’re seeing with Chew — bedroom DJs building a global fanbase, established artists communicating with an engaged audience from their bedrooms or studios and record labels sharing new content from their artist rosters.

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You mentioned spontaneous togetherness. How have you tried to foster that?

We are as hands off, from a platform point of view, as our creators want us to be.

Everything that happens on Chew is user-driven; our contribution to that is making sure the tech and platform makes things as easy as possible for our creators and consumers to engage with each other.

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Do you think live streamed shows should be an essential part of any performing DJs digital strategy?

Yes — but potentially more than just shows. We see the best consumer engagement when our creators break away from the ‘let’s stream a show’ mentality.

It’s more about creating a consistent flow of content than sticking a webcam behind you in the club.

Live video is probably the most powerful thing, second to only live events, in a DJ, producer, or personality’s digital strategy for a number of reasons. Frequency and consistency are key, though. Without them, we don’t see as good an engagement from the audience side.

Wil Benton of Chew.tv DJing

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**You mention frequency and consistency being key. Does that in any way contrast with ‘spontaneous togetherness’?**

Great point — I hadn’t thought of it like that! Being consistently spontaneous kind of defeats the point doesn’t it 😉

I think, like I said earlier, allowing every creation and consumption decision to be user-driven helps drive this togetherness — but it’s the regularity of spontaneity that drives the behavioural change from a consumption side of things, which allows creators to maximise their audience’s engagement.

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Are you going to be launching Twitch-style monetization options like donations and subscriptions?

We’re working on a number of new features — watch this space!

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Do you have any words of advice for people with a genius music startup idea and other founders?

I’ll let Betaworks/ Startup Vitamins answer this for me.

One of the things we learned on Ignite:

You can never have a product in users’ hands too quickly.

Build, launch and iterate as fast as you can.

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Follow Wil & Chew on their journey: