The trigger: a new technology or a shift in the digital landscape. Aspiring founders are searching for a good use case to leverage that development and turn to something they’re passionate about. Music. With a vague understanding of the music business, they proudly announce their plan that will totally disrupt the industry.
People who’ve spent a decade in music have likely seen a dozen of companies promising to disrupt come and go. Disruption doesn’t sell. Solving problems does. The most common misunderstanding seems to stem from a fallacy around intermediaries and that disintermediation always improves things. The oversimplified view is that everything besides the artist & fan is ‘extra’ and both would profit if it can be successfully disrupted.
The reality is that things don’t function as an artist-management-label-distributor-DSP-fan chain. Music doesn’t always travel through it like that. Value doesn’t always travel through that chain. Instead there’s a whole network of connections where various types of value are exchanged, connected and created. In most cases it’s not linear; it’s a network.
The above may seem obvious, but this misunderstanding occurs time and time again. It leads founders to present themselves in an adversarial way to parts of the industry that actually should be their customer. If you can do X better than how a label is currently doing that, then that label might be happy to pay you for it. Artists & their management have a ton of things to do, so in many cases they’re happy to let labels or label services companies take care of some of it.
Don’t get me wrong: there are plenty of inefficiencies and practices of exploitation in the music industry that need to be disrupted. These may occur anywhere in the ecosystem (which also includes other parties like everything related to live, merch, PROs, etc) or in the connections between players. They typically don’t apply to an entire domain, e.g. ‘all labels’ or ‘all booking agencies’. Even when they do, like in the case of inefficiencies or friction, there may be other aspects of those businesses that would not benefit from complete disruption.
What I’m saying is do your research. Create a map of the industry’s domain you’re interested in and also map out everything adjacent to it, because there will be unforeseen connections. Understand how companies collaborate, what goals they’re trying to achieve, how they add value, and where frictions may occur. Read Don Passman‘s All You Need to Know About the Music Business. Speak with people to understand whether your research is based on current-day practices, because it definitely happens that people launch companies with assumptions based on early 2000s practices.
Music is complex. Part of it unnecessarily, but there’s a reason why things are structured this way. Figure out those reasons. Learn how others leverage those reasons to pioneer new businesses. Identify the trends. Understand the complexity to avoid endless pivots and repositioning. Music is in need of innovation – do it through partnership.
While user-centric payments definitely make the landscape fairer and realign incentives by making sure the money generated by fans of certain artists actually end up in those pockets, it’s definitely not a silver bullet solution to make up for the difference between desired and actual revenue artists receive from streaming services. In other words: for the vast majority of artists, the immediate change in royalties from a shift to user-centric would be negligible.
Furthermore, it’s complex to negotiate, as SoundCloud’s VP of content partnerships Raoul Chatterjeepointed out during a recent session of the UK streaming inquiries:
“The whole investigation into user-centric is a very detailed and complex investigation that needs to be taken. It’s one potential path we’re exploring… and it would require industry-wide conversations and support to be impactful.”
SoundCloud is doing ok (especially compared to a few years ago), is reporting growing revenues, but it’s losing relevance. SoundCloud does not have time for lengthy negotiations. As a platform, they’ve lost their footing at the center of music subcultures and the longer it takes for SoundCloud to regain its position, the harder it will become.
Keep the lawyers at the (virtual) negotiation tables, but in the meantime, claw your way back.
Firstly, where do music scenes go to connect to stay connected with each other in 2021? I’ve argued that Instagram has usurped community building from SoundCloud. Of course it should be noted that TikTok is playing an increasingly important role there, especially for certain genres. To a lesser degree, groups on Facebook, Telegram, and Discord form places for people to share their latest tracks, get feedback, find people to do collabs or exchange remixes with, etc. As such, they’re also great places for fans to keep track of the latest developments in music.
Secondly, where did musicians turn when they struggled to make ends meet with just the income from Spotify, Apple Music, YouTube, etc.? They turned to Bandcamp in a massive way. SoundCloud, with its creator-centric roots, wasn’t well-positioned yet to accommodate these artists, because what it offers artists hasn’t changed much from its early beginnings. In 2020, being creator-centric meant helping creators make money – and SoundCloud didn’t have much to offer beyond what it offered artists since the service’s early days. That is: a place to upload your music and present it to other people. That addresses a pre-2015~ market need: making music easy to access. Access has been solved. Monetization hasn’t.
Another place that made music easy to access, YouTube, has been SoundCloud’s most important competitor. YouTube, since its early days, has offered social functionality similar to SoundCloud’s, in that one can follow creators (once innovative! Spotify only launched this 4+ years after launch), comment on tracks, and see other users’ profiles.
By 2021, YouTube’s suite has evolved to include membership clubs with monthly fees, monetization through content identification, and livestream monetization through social features that make fans more visible in the chat (similar to Twitch).
This is the landscape SoundCloud must address & find relevancy in.
SoundCloud was strongest when it catered to its early adopter users or users who exhibit that type of behaviour. Behaviour commonly associated with early adopter users is word of mouth, being a power user, and a willingness to overlook certain flaws as long as the product delivers exceedingly well on its core value proposition. These users are not well-addressed, since the value proposition has diluted over time in order to target wider audiences (e.g. through its Spotify-like subscription service). SoundCloud has made some great initiatives to woo creators in recent years, but the unifying aspect for all users on the platform is its listening experience – and that’s a social one.
People go to SoundCloud to discover new music. To find what’s ‘Next Up’ before it’s uploaded anywhere else. If you’re into a particular type of music, you’ll follow many of the same artists as other fans of that music and you’ll see some of those fans appear in the timeline comments on tracks.
Timed comments on Masayoshi Iimori’s track Alcohol.
On profiles, which have the same feature sets for fans and for artists, this social functionality is also present by displaying who someone follows and is followed by, as well as any tracks they’ve liked and comments they’ve left. For users who don’t upload any music, the main profile real estate consists of reposted tracks (similar to a Twitter user who only retweets). All of that is social.
Do the majority of users explicitly engage in social behaviour on the platform? Unlikely and it’s probable that a small minority of users create most of the (visible) activity, as on Twitter. SoundCloud is a community product where a minority of users create the value that the majority of users get off of the platform. Unlike Spotify, which tries to help users get as much value out of the catalogue as possible, SoundCloud should focus on the value users can get out of communities and the artist-fan relationship.
Lessons from gaming
This is not dissimilar to what fueled the success of games like Farmville or Clash of Clans. In free-to-play games, the majority of users will never spend any money. Instead, they create value for the ecosystem, so that a minority of users becomes willing to spend (big).
In order to leverage these dynamics, and create revenue for artists, SoundCloud must double down on social. How?
Step 1: Leaderboards on tracks and profiles. Show off the top fans of tracks and artists. Dedicated fans will want to earn their spot as the top fan. It’s not just fans: if you’re part of a certain music scene and want to make sure you’re ‘seen’, you’ll play new tracks on repeat, so you appear on the leaderboards on day 1. (just imagine K-pop stans, if you find it hard to imagine how fan communities would approach these types of dynamics)
This functionality already exists inside the stats dashboards artists have access to. All SoundCloud needs to do is make leaderboards visible on the various pages and perhaps create a setting so people can exclude themselves from public leaderboards.
Screenshot of the top listeners of a particular track in a 7-day time period (stats dashboard).
Step 2: Track and profile pages as real estate. Leaderboards create social competition and a way for fans to earn status. Now comes the monetization: let fans pay to claim pages in a non-obtrusive way, similar to how YouTube’s Super Chat feature lets you claim visibility in a chat during a livestream. You could let artists set prices or create some type of market dynamic for this.
Step 3: Place activity & payment on the same currency. As in gaming, certain users will spend more time creating value through activity and other users will fuel the economy through payments. By creating an on-platform currency, SoundCloud could reward active users with tokens that accrue value as people purchase tokens to spend on the platform with ‘real money’.
The tokens could then help artists mint their work as NFTs and create a more sophisticated dynamic for ‘tracks as real estate’. Basically, artists could earn money from playback, from selling tracks as NFTs, and by making commissions off of people speculating and reselling music NFTs (a commission percentage can be defined in the smart contracts associated with an NFT). From here, SoundCloud could come to function more as a protocol and create a metaverse-friendly version of its other early value proposition: music playback that embeds everywhere. This time with music as a vanity item that all can enjoy, but can only be owned by one person at a time while always staying associated with the creator – even when NFT ownership transfers from one person to another.
As the user-facing part of the platform shifts towards creating more value from the artist-fan relationship and the activity inside fan communities, subcultures, and scenes, lawyers can negotiate with industry gatekeepers to change royalty administration to a user-centric model.
Some of the above is actually what the Audius protocol is trying to accomplish. You could also go a lot further than what I’ve described, as Audius intends and as Mat Dryhurst explored in his essay SoundCrowd: Tokenizing & Collectivizing Soundcloud. Long term blockchain visions aside, for 2021, being a creator-centric company means being a company that helps monetize, so SoundCloud must focus on the short term and employ an “opportunities multiply as they are seized” type of strategy. That means: not standing still to evaluate distant forks in the road, because what you do along the way will determine the paths you can take from that fork.
User-centric is too slow for SoundCloud
Is user-centric streaming the right thing to do? Yes. Will it help SoundCloud in the short term? No, because artists will not see significant enough returns in order for them to drive more traffic to the platform.
Spotify is cool.. but @Bandcamp put double glazing on my house this year.
How can SoundCloud be as significant to artists as Bandcamp was in 2020?
SoundCloud must emphasize its community nature, since that’s how the type of value can be created that part of its core users will pay for. That won’t be most of the audience that SoundCloud has been marketing its music streaming subscription to (which can’t beat catalog-centric Spotify or value gap YouTube).
The platform must be selective about what type of behaviour it wants to cater to and the value it can create out of that. For that, it makes sense to use its DNA as a social music platform – something that Spotify, Apple (through Ping & Connect), and others have not been able to figure out. It needs to focus on the users that can amplify community excitement around significant monetization functionality and help make SoundCloud as culturally relevant as it was half a decade ago.
Signed,
A long term SoundCloud user with a 3-letter username: Bas (and more recently Viva Bas Vegas).
The case for a passive discovery mechanism for friends’ playlists on Spotify.
This article started with a tweet on a Saturday evening. Simply put: I wish I had a better interface to discover playlists that are popular among my friends.
Spotify should make a tool that: – every day surfaces ~5 playlists – made by friends, or regularly listened to – with some taste similarity
Mark Newman rightfully pointed out that Spotify doesn’t show much interest in surfacing user-created playlists. As a matter of fact, they have even been deemphasising them over the years. Instead they opt for sending people to their own playlists. And their priority makes sense. They have to compete with giants like Apple, Google, Amazon: companies that have money to waste, while Spotify has money to raise.
Streaming is going mainstream
I’m sure to most of us it feels like it’s mainstream already. Hear me out.
Spotify, and other streaming services, are now focusing on consumers beyond the early adopter. These are people that are happy listening to the hits from the radio. These are people that like predictable music experiences. And they’re the bulk of the market.
In order to successfully compete for them, streaming services have to deliver very consistent streaming experiences to these people. This comes in the form of speed, functionality, but also content and programming.
User-created playlists fall outside of Spotify‘s editorial guidelines and metrics that they set for their editors, so it makes it unpredictable. Then again, features like Discover Weekly carry some inherent unpredictability with them: it’s what makes them fun and addictive.
The metrics that a feature like this probably needs to deliver on would look like:
Amount of time spent listening to music on Spotify in a specified timeframe (the feature should not lead to less playback);
Some kind of retention metric (should lead to a more engaging product, with less people stopping to use it).
Spotify’s friend activity & navigation
I like seeing what my friends are listening to in the right hand bar. Occasionally, but hardly ever, I click on something someone is listening to, and musically stalk my friend.
The reason why I hardly ever tune into my friends that way, and why I think it’s probably not an often-used feature, is because you tend to see it when you’re already listening to something. It’s not really positioned inside the product as a starting point; it’s more of a distraction.
Starting points, in Spotify, are either search or are presented in the left-hand menu. They are your playlists, or the other navigation points, such as podcasts, browse, and Daily Mix.
The prominent placing of Your Daily Mix stands out to me. I find the feature a bit dull and repetitive, but perhaps that’s because I’m on the end of the user spectrum that explores more than returns to the same music. The point is: Spotify gives prominence to an algorithm that generates 5 daily playlists for users. It’s somewhat unpredictable, compared to what they feature in Browse, but it tries to get people into a daily habit, and its prominent placing suggests that this may be working.
What should also be noted is that none of these navigation items include anything social, despite the entire right-hand bar being dedicated to it.
Browse is boring
I’m always disappointed when I open the Browse tab. I never really see anything surprising and I keep seeing the same things over and over, despite not engaging with them.
There are so many super interesting playlists on search, particularly those by third parties, and I need a way to surface them without finding out on curators’ websites, social media, by using search, or by visiting artist profiles.
Your Daily Friend Mix
So, back to my original tweet, and the requirements for getting a social feature to work well:
Should lead to people regularly coming back;
Should lead to increased playback (or at least no decrease).
What are the constraints?
Not enough friends to meaningfully populate an area;
Friends don’t listen to playlists;
Friends only listen to the same playlists as you;
Friends’ tastes are too dissimilar.
The first issue here is already tackled by the way Spotify handles Discover Weekly and its Daily Mixes: if they don’t have enough data on you, they won’t present these features to you. So in short: if there’s not enough useful data to present meaningful results to you, the feature should not be shown.
However for many users there would be meaningful data, so how to make sure that the suggested content is also meaningful?
The UX of recommendations is a big topic, but in simple terms, there should be thresholds and ceilings on similarity:
Recommended content should not have a similarity higher than 90% to user’s collection;
Recommended content should not have a similarity lower than 10% to user’s collection & listening history.
The recommended content can be playlists made by friends, or ones that friends regularly listen to and / or are subscribed to. The percentages are made-up, and there are a lot more things you could factor in, but this way you make sure that:
Content in the section is interesting, because you’ll discover something new;
And it’s not too random or too far from your taste, so you’ll always find something you’d want to listen to while opening the section.
If that’s taken care of, then people will keep coming back. Why?
Because it’s super fun to discover how your taste overlaps with friends, or to discover new music with friends. I also think such a feature would work better for Spotify‘s demographic than the more active one-on-one music sharing type of functionality (that Spotify removed recently).
Spotify needs a passive way to connect with music through friends
The messaging functionality that Spotify removed showed low engagement. That’s because music one-on-one recommendations are demanding on both sides. Instead, what has shown to work best on big streaming platforms, are lean back experiences. Discover Weekly is an example of that: it’s focused on the result, rather than the action. The action for discovery is exploration: with Discover Weekly, it’s Spotify‘s albums that do most of the exploring for the user.
That’s what the social side of the service needs. The Friend Activity feed is boring. It hardly ever shows something I’d like to listen to, but I do know my friends listen to music I’d be interested in…
What I need is a section that I can go to when I’m looking for something new to listen to, and then shows friends as social proof for that content. It allows me to connect to friends in new ways. Perhaps even strike up a conversation with them on Facebook Messenger.
Doing a consumer facing music startup is hard. Especially if you don’t understand what gives music value.
One of the hardest aspects of building music startups is the fact that you’re dealing with a two-sided marketplace scenario. This means you have to build up one side of your marketplace in order to attract the other. It requires creativity, or a lot of funding, in order to build up the music side of your marketplace in order to attract the consumers.
This two-sided marketplace makes decision making more challenging: when to focus on what? How do you convince artists to use yet another platform, before it can really show its value through a well-populated marketplace?
But that’s not the number one thing people get wrong.
The number 1 thing music startup founders get wrong is overvaluing their content
This is the most important lesson I’ve learned while working on 3 different music streaming startups and a bunch of other non-streaming music startups. Music in itself has little value to a user (bear with me). Your value proposition needs to be better than: “come here, there’s music” and often times music startups don’t have anything better than that.
People don’t care about the music. They don’t have a problem listening to music. And if they do, they’re likely not aware of it.
Ironically, when doing consumer-facing music startups the music is an extra. It’s assumed it’s there. Not having good music on your service will kill you, but having it does not distinguish you. It’s the same with restaurants: we don’t visit a restaurant because they have the best food necessarily, but because it’s around the corner, they have something we feel like, the staff is nice, etc. Music, on a music service, is like the basic expectations of what we expect in a restaurant: food, drinks, a place to sit, and a toilet. Not having music, like not having toilets, will kill you, but it’s not the reason why people visit you.
This is why so many music discovery apps fail, why so many social jukebox or recommendation apps fail: people don’t need more content. Music’s availability is not where the problem is, the context is where the problem is.
Building music startups is about the functionality you add. That’s what people pay for, that’s how people stick to your platform. Not the ideals of better-paid artists, not ‘high quality streaming’ – these are basic expectations by now. People need to find a very simple answer to the question: what can they do with your service that they can’t do elsewhere?
Then the next question is whether it’s distinctive enough. I think that’s why high quality streaming startups tend to remain marginal: lossless streaming on its own is not enough to convince large consumer segments. It has to be about behaviour, about function. By now, lossless streaming isn’t hard to find, so people look for the checkbox and then look at what else the platform has to offer.
At the peak of its popularity, Crazy Frog as a track on iTunes was $1. As a ringtone, it was $3. The functionality is what made it valuable. (hat tip to Ed Peto for bringing this up)
I also think 360-degree concert videos are not distinctive enough from other types of video. As a matter of fact, I think the inconvenience of them outweighs the value when compared to other types of concert videos.
Let’s widen the perspective.
The value of music is elusive
A single song can mean the world to someone. It can help sell millions of products, it can inspire revolutions.
But in an ocean of millions of songs, that are easily accessible, its value is close to zero for a person as a consumer. This is why nobody cares about your free download anymore.
So how do you get the value out?
You use the music to create the environment in which you shape the type of thing people are willing to pay for. Going back to the restaurant metaphor: music means your walls, your tables, your staff, your bathrooms, your building, your ambiance. People pay for that, but indirectly: by paying for the food you serve them in that context.
Just to be really clear: I think music has immense value and I dedicate most of my waking hours to it. When I talk about ‘value’ in the above piece, I talk about it from the consumer perspective, from the marketing perspective, and as a USP for a product. I am not saying that people are not willing to pay for music. Millions already are, every month, through streaming subscriptions, but also digital and physical sales. And that’s where the problem begins for music startup founders: if people are already paying for music, what more can you sell them?
The short answer: sell functionality that augments experience and behaviour.
This is for all my newsletter readers, or for anyone else building products, launching campaigns, or figuring out how to apply innovation to what they do on a day-to-day basis.
With all the options out there, things can get overwhelming.
You see the status quo, and know things need to change. Lots of things. And so you start making your plan.
You start using all those things you see tech reporters talking about, all the latest toys from Product Hunt, shiny new technologies and programming languages, perhaps you’ll even add blockchain, AI, and do some growth hacking.
And then you don’t get things done.
Either because you’re always shifting attention and don’t see things through, or just because you spend too much time on things that don’t matter. Or both.
For most of us reading this, the question is: is this something people are interested in? Not conceptually, not intellectually, but would they actually use it regularly? Would they pay for it? Would you do things the way you are doing if you already knew it wasn’t going to work?
Serial maker and digital nomad Pieter Levelsadvocates putting a buy button on websites even when the product isn’t ready. Even when you haven’t started on it. The button doesn’t have to work, it can just show a message that thanks people for their interest and asks for their email address. The point is, you’ve registered someone’s intent to commit.
Every week I speak to about 1,000 people in the music business. Maybe more. Those are the same people every week, and that group is growing. I do that through my newsletter. Which turned into a website, consultancy agency, and now a community. I get my articles cross-posted on popular music blogs, and in newsletters. I get people to cross-follow MUSIC x TECH x FUTURE on various social media, learned to convert people to my newsletter from said social media, generate referral traffic, convert article readers to subscribers, and automated all of those things. But it started small.
It’s me, picking a day of the week to write an article (sometimes long, sometimes short), pick the most interesting music & tech links I’ve come across, and then sending it out with the easiest newsletter tool I could find (Revue). The only tools I used initially were Medium and Revue: both free. I started small and it grew, so other things got added on. Now I have the honour to be able to bring the people I write about together into the same room as I help the c/o pop convention with music tech panel curation (explore the topics).
Start small.
If you want to do something, start doing it. Get good at it. Figure out what people expect and get better. If it takes a lot of effort or a long time to build what you want to build, find a way to build something that mimics it. For example, if you want to start a label, maybe start with a YouTube channel. If you want to start a music service, build a page with music that people regularly come back to.
It’s like building a bridge: your first priority is making sure people can get across – else you won’t even know if people will use it. Once that’s going well, move on to the next step. This is how you make it easy for yourself to make use of all those innovative things you see out there.
Almost every week, Spotify adds a Moby track to my Discover Weekly or Release Radar playlists – probably the playlists I listen to the most. The problem is: I don’t like Moby, and he’s not going away.
I’ve figured out exactly why Spotify keeps recommending me Moby. I’ve also figured out what types of user behaviour can discourage a recommendation system from continuing to recommend certain music. On Spotify, skips are weighted heavily. That is to say, if you skip a track, Spotify interprets it as you not liking a song or artist. I quite consistently skip the Moby tracks in my recommended playlists, but a week goes by and there he is again.
The Moby problem is not actually about Moby. It’s about the way recommendation algorithms work, and about the way we feed music data to them. The reason why Spotify keeps recommending me Moby is because I have a few Moby works in some of my playlists. I actually like his early rave stuff from the 90s, but I don’t care much for his chill out and trip hoppy stuff. Moby is perhaps also one of the most remixed electronic artists. Occasionally (and rarely), a really great remix sneaks into my playlists.
Hypothesis: playlists are weighted more heavily than skips
Three factors around playlists seem to be playing a role in Spotify’s assumption that I love Moby:
Moby’s inclusion in my playlists (passive)
Moby being played from my own playlist (active)
Moby being added to my playlists (active)
The weight in the algorithm should probably get heavier towards the bottom of this list, since it signals stronger intention and commitment. There may be many other factors at play too.
The fact that I like a couple of songs from an artist, some of which from over 20 years ago, does not mean I’d like to be kept up to date on his newest music though. Most of the Moby tracks that appear in my Release Radar are actually inter-genre remixes, so that really doesn’t make much sense either (e.g. if I like drum & bass, why would I like a techno remix of a drum & bass song?).
The remix problem
Then there’s another issue with remixes. One of my most-played playlists, called If Red Bull was Music, includes an EDM remix of a Moby track. It’s the only Moby track I listen to regularly, besides perhaps the Moby stuff in my Discover Weekly and Release Radar, when I forget to skip.
The problem is: it’s not a Moby track anymore. Sure, Moby is the original artist, but it doesn’t sound like a Moby track at all. It’s almost like categorizing a hiphop beat that samples Mozart as a piece of classical music.
It seems like Spotify is barely taking this into account when two artists can be lumped into the same category (electronic), even when that category is too broad to mean anything.
The solution
Let me banish artists! Give me a big fat ban button.
But hey, I’m a product person: I know the Moby problem is a symptom and you shouldn’t develop features to address symptoms — that’s how you kill a good product.
Personally, I think it’s important for them to look at how users interact with the music in their recommended mix playlists, and then weigh that much heavier. No engagement with a certain artist (or actually: skips), then that artist slowly becomes invisible, like in the Facebook news feed.
So to whomever is succeeding Matt Ogle, one of the creators of Discover Weekly, who just departed Spotify for Instagram, please solve my Moby problem. Let me escape this filter bubble.
(Just in case: hey Moby, I love your music, but most of it just doesn’t fit my taste so well. Keep doing what you’re doing!)
