MUSIC x

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?

The Value of Ephemeral Content: Becoming Part of Your Fans’ Routines

Posted on October 24, 2016 | by Bas Grasmayer

What some perceive as ephemeral content’s greatest weakness is actually its most powerful quality. In an online landscape where attention is most scarce, ephemerality is key. 🔑

Last week I had the pleasure of being on a panel with some brilliant minds at Amsterdam Dance Event. The topic: marketing music to millennials. Millennials born in the nineties have a starkly different online profile than eighties babies. For instance, for teens, Snapchat now beats Facebook and Instagram as their top social platform.

The popularity of ephemeral content has to do with a number of factors. One teen writes:

No social pressure, because the main metric is view count.
Ephemerality means you don’t need to overthink what you post.
You actually know who’s watching — if people have seen your post, their usernames are revealed.

The world these people have grown up in is different from that of older generations. Eighties babies used to think online was a bit more of a playground. I cringe looking back (and deleting) some of the photos and status updates I posted on Facebook back in 2007–2009. This generation is aware that information lives forever and their strategies for dealing with that include deleting their digital histories frequently.

So for many labels, artists, and managers the question is:

How do I develop a strategy around ephemeral content?

Your strategy will have to acknowledge a few core concepts:

Attention, not money, is the scarcest good on the internet. And everyone’s competing for it.
The online landscape is now a filtered landscape, with algorithms weighing content and deciding whether to show it to your audience, or not.
In this reality, your most important question is: how do I win my fans’ attention again and again and again?

For that purpose, ephemerality is f*#ing amazing. If you content is only visible for a day at a time — your fans will have to make you part of their daily routine. Now your have your fans’ attention: every single day.

Habit is the key to winning people’s attention over and over. There’s a reason why I send out my music tech newsletter at exactly the same time every week. Some of my subscribers actually go get a cup of coffee and hit refresh on their inbox around the time my newsletter’s supposed to come in. Not only does that lead to good engagement and nice metrics, but it also gives a great connection between you and your followers — it’s a special feeling.

Once understood, ephemerality can be engineered. If Snapchat is not your thing, or if teens are not your main demographic, there are other ways to become part of people’s habit through ephemerality. The expiring nature of Spotify’s Discover Weekly and Release Radar is the reason why those features have been so successful and have deeply influenced the product’s direction.

A great example of a music company that has been engineering ephemerality for years, is the Main Course record label. They offer all of their releases for free on Soundcloud in the first week. Many labels do the opposite and try to drive sales first, but Main Course’s strategy makes sure fans check their page once a week. Imagine doing this on a page you actually owned, instead of on a social profile. You can establish a habit and then when fans come and check, you can nudge their attention to important things like gigs or crowdfunding campaigns.

What some perceive as ephemeral content’s greatest weakness, is actually its most powerful quality. Use its expiring nature to build habit, keep your fans’ attention on you, and lead them to where you need them.

Many thanks to my co-panelists Luke Hood (UKF / AEI), Amy Jayne (Hospital Records), Siofra McComb (The Other Hand), Shane Mansfield (Ticketscript), David Ireland (Magnetic Magazine), and Lucy Blair for putting it all together. You’ve inspired me to put these thoughts down.

If you’d like me to work with you on building habit loops — drop me an email: bas@musicxtechxfuture.com.

6 questions I wish music startup founders asked more often

Posted on October 17, 2016 | by Bas Grasmayer

Keeping a close eye on the music space, I encounter a lot of startups and fledgling products. Unfortunately, a lot of them are misguided, for a variety of reasons, most of which can be prevented. Often, these early mistakes result in painful pivots or founding teams giving up, which is a real shame, as we need more applied innovation in the music business.

Here are the questions I wish music startup founders would ask themselves early on.

Does this work as a mainstream behaviour?

The biggest mistake music startup founders make is they assume that everyone loves music the way they do. Most people simply don’t care that much about music. They like it, they love it, but in a very different way from whoever’s likely to read this — let alone found a music startup.

You need to be very critical of your idea. It’s ok if it doesn’t work for mainstream consumers, but then adjust expectations and target your product accordingly.

Does this work as a mainstream price point?

So let’s say you figure out you have the perfect lean-back experience for music listeners. You’re creating something that’s not demanding of its users and doesn’t require big changes in existing behaviours. In other words: you’re ready to cater to a mainstream audience.

What about the price point? Price points are difficult to determine and people are notoriously bad at predicting what price they’re willing to pay for something. If you’re going for a mainstream audience, your safest bet is pricing for impulse purchase decisions.

How does this work rights-wise in the long term?

You can’t live on the APIs of YouTube, Soundcloud or Spotify forever. At some point, you need to build your own business. Do you understand the costs involved of licensing? Will content disappear from the service?

Launching light weight is fine — if you’re looking to test an idea, using an API can be a great choice, but you need to understand your long term strategy, too, and plan for the next steps.

What are the ways in which people already solve this problem?

Changing an existing behaviour is hard work and takes commitment. It’s risky to assume people will immediately fall in love with your product, drop everything, and never look back. Problems I see entrepreneurs frequently try to tackle are: staying up to date with your favourite artists, better ways to find new music, or giving people all their music in one place.

Are these problems consumers are already aware of? We all have our workarounds, so it may not seem urgent to your target users. Understand exactly how people are currently solving the problem, so that your product fits into a certain behavior and augments it, so that it becomes better.

Radically changing a behaviour is painful for users.

Do I really need to do a consumer-facing startup?

Sometimes entrepreneurs do music startups, because they have a vision for the music business and they want to break into it. Doing consumer facing startups is often costly and makes it trickier to gauge interest and test the market. If your goal is to create a better music landscape, perhaps you could consider solving problems within the music business.

After all, many of the imperfections that consumers have to deal with have a lot to do with problems in the music business internally.

Does this already exist?

Shout out to the plethora of music discovery apps posted to Product Hunt every month.

Are donations becoming a viable part of artists’ business models?

Posted on October 10, 2016 | by Bas Grasmayer

With the rise of live streaming and new media models, donations deserve another consideration.

Napster, the early file sharing service, not only introduced many to piracy. The platform also exposed two competing world views. One believed that information should be free and the other believed in combating such ideas. They were both wrong.

As a teenager, and still today, my personal sympathy went out to those who saw a better world and wanted to accomplish that by facing down large corporations. Their envisioned world was never satisfactory enough for me, though. It seemed oversimplified. One of the most common tropes you’d hear would be:

“Artists should just release their work for free and let people donate. I’d love to be able to donate to my favourite artists.”

Donation request from a band — An example of a common donation request.

At that time, there were only about half a billion connected devices. Most of the world’s population wasn’t online yet. Those that were, and thought this way, were a minority projecting their own behaviour onto others. It’s common: most music startup founders do the same thing — overestimating how much people care about music. Simply put: the donation model could not scale.

The model didn’t take into consideration the complexity of the way music is made. Let’s say artists were able to make a living off of donations — this benefits the most visible artists; the singers, but not the songwriters. How should money from donations then be distributed so that it’s fair? Does the intention behind the donation matter? Questions like these are the reason why there’s so much legislation around creative work.

An elemental overview of merely the royalty distribution part of the music business. Via Bemuso.

Time passed and two trends have developed. Firstly, there has been an explosion of artists who do everything by themselves. Households in many countries now no longer have just 1 family PC, and music production software is easy to attain. This has led to a rise of ‘bedroom producers’, many of which are world famous and make a good living off of music.

The second trend is that the internet has become more real-time. Ten years ago you wouldn’t consider sharing memories online that would only be visible for 24 hours. Now, two of the world’s most popular apps, Instagram and Snapchat, not only encourage, but thrive because of that behaviour.

Fast wireless connections and increasingly powerful devices have enabled livestreaming. Anyone who’s ever ‘gone live’ on Facebook or Periscope knows that it changes the creative process of making a video. Live video streams are not just a new way to broadcast, they’re a creative format.

Trends mix and influence each other. If you want to understand where things are going, you have to understand how trends converge and diverge. In this case, the two highlighted trends have culminated into a particular reality: donations are becoming a viable part of artists’ business models.

Understanding how donations are becoming viable is easiest by looking outside of music. Donations are already an important part of the economy on Twitch, a platform for broadcasting gameplay, which also encourages creatives to start streaming.

Gamers use donation apps to display tip notes in the live video stream. Some apps actually automatically read out the tip notes on-stream. Tipping is done for various reasons: to actually show appreciation, to encourage the chat to discuss a certain topic (or more likely: to emote-spam), to request a song, to ask for expert feedback, to get their name or joke into a YouTube highlight reel, etc.

Twitch tip scare — And sometimes they use tips to scare streamers shitless.

For popular streamers, it’s hard to interact with the chat, because there’s just too much to read it all — and they also need to focus on their game. Tip notes provide a way for viewers or fans to rise above the noise and get the streamer’s attention.

The takeaway here is that donations do not seem to occur for altruistic reasons in most cases. The exact ratio would make for an interesting study. Much of the donation behaviour happens due to the desire to interact, stand out or to get a request fulfilled. It’s a behaviour enabled by the immediacy brought on by the rise of high quality live streaming.

DJ live streaming on Twitch — Some streamers highlight their top donators by keeping their names visible (in bottom).

Musicians that want to incorporate donations into their business model will need a clear strategy. Firstly, it’s unlikely that donations on their own are viable if the goal is to make a living off of creative work. Although if you do it all yourself, like many artists these days, you get to keep the whole cut.

Secondly, the reason why donations are becoming viable is because of live streaming. This means the artist needs to be able to consistently generate audiences and that takes time to build. One-offs are a recipe for failure, especially if they don’t sit within a broader strategy.

Live streams being a creative format of their own means that there needs to be an intrinsic motivation to work in this way. Else one won’t be able to muster the consistency and grit necessary to succeed. The question for the artist is: “is this medium compelling enough for you to spend a significant amount of your time on it?”

Whatever the answer, the trend is clear. As artists are embracing the live format, with younger ones even coming into maturity with it, we’ll see donations make a comeback. This time, not as charity, but as a well-planned part of artists’ business models.

An example of donations on Chew.tv, a live video streaming platform for music.

Two words to boost your digital strategy: and then?

Posted on October 3, 2016 | by Bas Grasmayer

Repeating the same question over and over to cut through the nonsense and set the right priorities.

I regularly discuss digital strategy with bloggers, DIY musicians, managers or people running their own record label. My intention is to help people think more like startups, set clear goals, collect data and know how to act on data. There are useful frameworks for this, like the AARRR framework, but they take a while to get acquainted with.

Even in quick conversations, I want to give people something useful, uncomplicated. You’re not going to be able to go through an entire framework with sets of metrics. When constructing narratives for brands, it helps to ask the question why? over and over. In digital strategy, this question is:

And then?

These two words won’t help you determine what to do, but they will help you validate your actions and uncover tasks that might need to be completed before acting. An example:

A Buddhist rapper, let’s call him Jimi Zendrix, desires to sell more merchandise. He knows that to do that, he needs to build a bond with his fans. He has the perfect solution: a newsletter.

And then?
Jimi: then I’m going to share what I’m doing with my fans.
And then?
Jimi: then they’re going to feel more engaged.
And then?
Jimi: then I’ll develop merch and link to it from my newsletter.
And then?
Jimi: then people are going to go there and buy the merch.

Each one of these answers reveals a set of tasks and extra questions.

How are you going to share what you’re doing with fans? Do you have time to prepare that every week? Are there easy ways to aggregate your social feeds like Instagram? Or do you need to use a different newsletter service for that?
How do you know that people feel more engaged? This means you have to make assumptions, before launching your newsletter, about open rates and click rates of fans. If they’re really more engaged, you should also see it in the data in other places, so you need to have a way to track that.
How will you develop this merch? Can you use the data from your newsletter and other sources to develop better products? What’s the best way to display merch in mailinglists?
Can you track sales from when someone opens the email, clicks the link, looks around the site, to purchase? Are you using a merch shop that allows you to understand this and lets you optimize? For example, you may find that newsletter readers are more likely to buy hats. You may want to show hats first to people who click through from your newsletter, but not to normal visitors.

Loads of stuff to consider before launching your newsletter. Don’t overwhelm yourself: the lesson is what’s most important. Pick something you want to do, make an assumption, then test it. Repeat.

And then there’s fallacies…

“And then?” doubles for “so what?” We often obsess with numbers called ‘vanity metrics’, which are kind of pointless to focus on.

Try to imagine an answer for these:

I want 5,000 likes on Facebook. And then?
I want to have 1,000 visitors on my homepage. And then?
I want my tweets to be retweeted more. And then?

Your answers likely contain a hypothesis. You may think that getting more retweets leads to more followers leads to more fans leads to more sales. Now you have something to measure.

Do retweets lead to more followers? You may want to exclude spam accounts, or accounts that follow tens of thousands of users.
Do followers lead to more fans? How will you be able to tell?
Do those people who stumble upon your tweets eventually convert to paying customers?

Each of these have conversion ratios. So you go from a number to a much smaller number at the end. You may determine, before even getting started, that it’s not worth your time to research hashtags and write tweets that aren’t even directly related to your music, just to get retweets.

“And then?” helps you cut through the bullshit and get your priorities straight. Don’t spend too much time on things you can’t measure or that are not part of a funnel.

Each step in your digital strategy needs to lead somewhere.

Don’t stop asking “and then?”

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.