Tag Archives: Spotify

The Advertising business model

In today’s Western digital businesses, advertising is the main source of revenue for websites, mobile sites, mobile apps and anything in between:

In the first quarter of 2013, Google advertising revenue was $11.9 bn. Advertising revenue was 92% of Google’s revenues for the quarter.

For the fourth quarter 2012, Facebook’s revenue from advertising was $1.33 billion, representing 84% of total revenue.

Personally, I believe the advertising industry is in a bubble which is ready to burst. It is a semi-self-fulfilling industry that has been growing at a rate out of proportion to the businesses revenue which support it.

Organic revenue growth of the big four advertising companies, 2010-2012
Organic revenue growth of the big four advertising companies, 2010-2012. From Statista

Continue reading The Advertising business model

Visa Insights 2013 – day two

Visa Insights Live Day 2Here are my notes from the second (and final) day of Visa Ins. The first day’s notes can be found here.

I only went to two of the presentations because it was a half day and I was covering a the Endava stand.

Again, apologies for brevity and any grammatical or layout issues.

E-commerce comes of age

Duncan Olboy. Helps merchants.

  • Ecommerce is 24% of Visa’s business
  • Ecommerce is growing twice as fast as face to face

Trends:

  • The rate of adoption of new technologies being adopted is quickening
  • 4G will accelerate user migration from face to face quicker
  • Customers want cloud services – it simplifies things for users and feels more natural
  • Digital goods are 24% of Visa transactions
  • Apple claim iPhone users use Siri once a week
  • There was a demonstration of the ease of a mobile payment on stage (BH: but it is any easier than using a card?)
  • 40% of users want their card details shielded from anyone across the internet. That is the core foundation of v.me
  • 25% want a quick checkout
  • PayPal was launched in 2009.  It’s the only wallet at scale
  • Merchants also want a quick checkout/wallet process to reduce abandonment
  • The live demo of v.me was based on receiving an email from a retailer
  • The wallet includes delivery information
  • The user interface auto detects the bank from the start of the user entering the card number
  • 3 live trials underway, 16 banks signed on to v.me
  • Phase 2 trials are planned
  • visa’s challenge is the demand for these new layers of the ecosystem keeps growing

Shane Happach, Chief Commercial Officer, e-commerce, Worldpay

Worldpay has £300bn turnover, 120 countries, 400,000 merchants, 200 payment types

Shane spoke about ‘selling’ v.me to retailers. 80pc of v.me responds to retailer challenges

  • Needs a differentiating experience for retailers
  • v.me needs to demonstrate benefits / incremental sales for retailers

Why has Worldpay committed to V.me?

  • “Low impact technically to implement”
  • Cost effective
  • Multichannel… Shane said in 5 years’ time, no one will mention multichannel, or even omni-channel

Discussion panel

Eric Rebour, E. Leclerc supermarkets

  • Customers have changed. Going to the supermarket isn’t fun or sociable anymore, people want to shop from home.
  • The move from supermarkets to the web was a security learning experience. Increasing credit card security meant a [20%!!!] drop in customer conversion.
  • Customers asked to use PayPal. However PayPal was cost prohibitive for supermarkets (the product margins aren’t high enough to support PayPal).
  • Leclerc chose V.me because the transaction fees are far lower
  • Very customer focussed (quite usual for supermarkets). Customers want to find something easily, quickly, and secure.
  • 25% of Leclerc food orders are done on a mobile phone. Average basket size on a mobile is 42 items, so it’s not a short experience. It’s probably during a commute.

Duncan Olby

  • The payment process needs to be quick and easy. Making users think about the process any more than the physical equivalent will increase form abandonment. (BH: Through the event there was lots of discussion around the invisible, seamless experience).

Benjamin Ensor, Forrester

  • Quick and easy: that’s why people want to use a mobile device for bank maintenance, because the login process is far easier than the web equivalent of long username and password.

Closing Plenary

Peter Ayliffe, Steve Perry and Sir Stuart Rose

  • Reminder of over 20% of visa transactions are ecommerce
  • Smartphone grows at 30% year on yar
  • One bank at the conference said their mobile app is used on average 26 times per month.

Peter gave some experiences of his own family:

  • His 81 year old father who buys art supplies from Amazon
  • His son’s girlfriend does their grocery shopping online
  • His younger son moved home and his first priority when he moved to a new house was to get the TV working and streaming content from his phone to the TV
  • His oldest son uses a NikeID chip and Spotify on his mobile. The previous day he’d received a cheque through the post from a friend.
  • Peter said his family isn’t unique (which is why the audience can relate to these scenarios). It’s not even unique in the UK, its right across Europe.

His comments on how Visa has delivered NFC:

  • Visa process over 10m transactions a month in Poland
  • London buses have adopted NFC cards, and bearing in mind there is already an Oyster contactless card in use, there have been 1m payments on buses, 90% of which are on Visa
  • The average person checks their mobile device every 6.5 mins, including checking the time
  • £1.7m downloads of the RBS app with visa payments, in the first 10 days
  • V.me is unique. It shields the card holder for the customer and moves the liability shift from the retailer. And it will be branded as the bank.

The Financial Services moving toward a Financial Information Services company:

  • Financial Services companies need to focus on the information that they have. Financial Services currently move money around the system. Soon they will be moving information around.
  • The information industry already has 50% of the revenue of the Financial Services industry.

Google can’t see the end sale take place. Visa can. This is Visa’s Unique Selling Point over Google, and pretty much any other company.

How Radio has Defied the Media Revolution

radio-scaled1000We have a Spotify Premium account at home, mainly because we want to listen the tracks offline (such as in the car), and also because the freemium model limits the number of tracks available.

I really like Spotify – the PC and iPhone apps are both easy and no-nonsense to use. The quality is great, which is important because we have speakers wired around the house.

I read an article last week explaining that when ATM machines first arrived, it was assumed that the ATM would see the demise of high street bank branches. However, 45 years after the first ATM machine in the UK, we still have bank branches.

This got me thinking about music. The appearance of Internet services such as Spotify has seen all but the end of music shops in the high street, but we still listen to music radio stations. The media group which owns Heart, Capital, Classic FM, XFM, Choice, Gold and LBC boast an audience of over 19 million listeners per week.

Why do radio stations get such a large audience in the 21st century? I think there are a number of reasons:

  1. It’s free to listen to the radio
  2. There is a huge percentage of the population who only listen to the radio in the car, and who spend huge amounts of time in their car (such as commuting or as a professional driver)
  3. Radio stats are probably as extrapolated as TV audience figures
  4. Discovery.

I listen to the radio mainly for discovery. I like the radio playing a random song, or a brand new song, when its different to anything else I listen to.

The problem with Spotify and its equivalent ‘radio’ modes is that they are trying to find music that is similar to the music you already like. There are some basic algorithms in some music players, which try to determine whether you prefer groups, male or female singers and then play only those to you. Spotify provides a little wider coverage in its radio mode, but it still won’t play something as left-field as the FM radio channels.

In a world where we select what we want to watch, when we want to watch it, and which output channel we want to watch it on (web, phone, tablet, TV, etc.) – radio has defied the odds.

And long may it thrive.

Image by Sage Ross (Own work) [CC-BY-SA-3.0-2.5-2.0-1.0 or GFDL], via Wikimedia Commons

Spotify Premium

Photo

I had a new hard drive installed in my laptop this week and when I re-synced my iPhone I lost all my MP3s.

I don’t understand how Apple can produce such a great phone, with great synchronisation with a number of computers, but be so damn awful with keeping my music catalogue together. That’s my frustration over and done with.

I decided once and for all to upgrade/buy Spotify so that I can use it on my phone. I’ve used Spotify regularly on my laptop and home PC (I should enter an award for the most varied music styles in a single playlist) for ages and even before wiping my iPhone, it was frustrating only have a couple of dozen, old MP3s available on the phone.

In fact Spotify is so good that I’m considering changing our in car stereo to one that accepts a line-in (i.e. from the headphone socket in the iPhone) rather than an iPhone specific connection – to make it futureproof.

A major advantage of the iPhone app is that it downloads the music to your phone rather than streaming it – which means you can carry on listening without an Internet connection.

The one remaining issue in the house is that with the kids starting to get MP3 players of all shapes and sizes (and budgets), Spotify is only useful to my wife and I. The kids still require me to buy MP3s for their devices.

We think of music as ultra portable nowadays, but in reality, compared to records, tapes and CDs from the past, you can’t swap music as easily as you used to, when music really was social!

Hoping bad luck only come in 3s

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They say bad luck comes in threes – well the three came thick and fast this week in the Howard household.

We bought a dog from the RSPCA rescue centre in Peterborough 5 weeks ago and on Friday it developed a rare form of pneumonia and spent three nights in hospital at the Queen Mother Hospital for Animals in South Mimms. Lexi (that’s the dog) is on the mend at the moment, however we suspect it will take a few more weeks before she’s back to her normal self. The reason I started off with Lexi’s background is because she’s still within the first ‘no claim’ fortnight of pet insurance…

The next thing that went wrong is the family computer. We all share a single computer and use different accounts to log in.  Frustratingly I (promise) was planning to do a full backup over the Christmas break, however we had a physical hard drive error on Wednesday, and everything on the hard drive has gone. I bought a licence of the SysTweaks Advanced Disk Recovery to run on my work laptop over the holidays. ADR took 2 days to do a ‘Deep Scan’, then a few hours to restore the files I selected. All (100%) of those files are corrupted and can’t be opened. It’s been a very frustrating experience. And now, the hard drive won’t even be recognised by my work laptop.

What has been interesting out of this experience is that the kids are totally unaffected – all of their work is stored on a variety of websites (aka ‘the cloud’). A lot of my wife and I’s ‘stuff’ like photos are also in the cloud at various places (at least, the good photos). It’s some of the smaller stuff like wedding speeches that are permanently gone. I think I will take out a Spotify subscription in the new year (after paying off the vet bills and a replacement PC) because whilst we ripped all of our CDs last year on to the computer, when the hard drive went, I just thought it wasn’t a problem because they’ll all be on Spotify anyway.

The third piece of bad luck happened when playing my son on the (3 year old) XBox 360 yesterday and the game paused. No response. Switched the console off and on – and a three quarter red ring came on the power button. I’ve heard about ‘the red ring of death’, and we have now succumb to it. We need a new XBox.

Needless to say (but I’m quite depressed so I’ll say it), it’s been quite an expensive week. The vet bills alone could buy a family car, the new family PC will be my wife’s opportunity to finally get rid of our old CRT monitor, and the XBox may be an opportunity to get Kinect…

Photo courtesy of tomasland.

Spotify Freemium rebalance

Spotify

I see that Spotify is trying harder and harder to convince more subscribers to pay for the service, rather than rely on advertising income.

Tonight the new Brandon Flowers album is only available to Premium users. Spotify are [perhaps rightly so] preserving many of the advanced features and new content solely for their tenner a month subscribers.

If I worked at Spotify, I would try and poach experienced ad sales people from traditional radio stations such as Absolute or Global Radio (owners of Capital FM, Classic, XFM and others).

Clearly those stations have a ad sales business model which keeps them afloat. Those radio stations would love to have the CRM information that Spotify has at their disposal, which would further help traditional sales people.

As many people in media have been suggesting for a while, New Media companies have a lot to learn from traditional media companies – many of the business models are the same.

Micro micro payments – the future of content

Coins

Image courtesy of Joe Shlabotnik

Last September I gave an opening speech to the English Premiership clubs discussing loyalty and the future economy of content.

On the latter subject, my personal view is that content cannot stay free for the long term. Our children will look back on the web and ask us what is was like living in a bubble of free video (iPlayer), free radio (any radio station’s website/ iPhone app), free high quality music (Spotify), free text content (over 99% of websites), free storage (YouTube, Flickr, etc.), free search (Google, etc.) – it’s all free free free. I think we will answer our children by saying “Yes, it was a pretty cheap time – companies advertised on these sites, and we thought that covered the costs” – at least, this is the public’s perception.

So what will replace this massive amount of free content and free applications?

At the Premiership event I said that in the future we will have some sort of e-wallet, and each web page that you navigate to, and each search will take fractions of a penny out of your wallet. Listening to music might cost a little more, and video might cost a little more than video. The funds from your e-wallet will be redirected in part to your ISP and a part to the content owner. A bit like local and premium rate phone numbers – some money goes to the telco provider, and some to the company who picks up the phone. My gut feel is that a regular user will spend £10-20 (in today’s money) per month on this e-wallet.

That was all last September, and this week there was an article on TechCrunch (thanks to James at Endava for pointing this out) which described a new service called Flattr, which will adopt a similar-ish model. Flattr’s model is more proactive though – the content owner needs to install a Flattr button, and the user needs to press the button for funds to go to that owner. It’s a start though.

The future – live events funding free content?

Major League Baseball team the New York Mets are suffering falling attendances, despite the attraction of their new $800 million stadium, Citi Field..

The New York Times reports that the average attendance so far this season, after 22 home matches, is 31,892, compared to 38,744 last season. The 18-per-cent drop is puts the Mets second in percentage terms in falling MLB attendances this season. The Cleveland Indians are down 30 per cent on their last year’s average, although this translates to a loss of only 6,585 fans a game, less than the Mets’ 6,852.

Bad weather and poor performances by the Mets are being blamed.

“The problem is last year the tickets were really expensive and the team stunk and that can really stick with fans for a while,” said Jon Greenberg, the executive editor of Team Marketing Report, a sports industry research company.

Greenberg said a trend of new stadiums boosting ticket sales that was evident in the 1990s had tailed away.

“Stadium fatigue sets in much faster than it did before.”

The Mets cut ticket prices by up to 20 per cent after last season – their first at Citi Field – in an effort to pre-empt the “stadium fatigue”. However its monthly report to the MLB’s commissioner’s office in March, showed ticket sales had dropped 40 per cent from the same period a year earlier.

via sportbusiness.com

With more and more content appearing free, or nearly free of charge – such as Spotify and iPlayer, there is a widespread opinion that live events will become more popular.

There are more music concerts than ever before, and these are likely to remain premium, high ticket cost (with a huge reliance on revenue from merchandise and other outlets at the venue).

However, American sport is the first report that I’ve seen which shows that even live events are being hit. This may be due to the recession last year, and this article suggests it’s also to do with team performances.

If I was a media owner distributing my content for free, this article may provide some worrying evidence of having to find yet another business model.

Warner to quit free music streaming

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I have been saying for a while that we currently are at a peak amount of receiving free content on the Internet. We currently receive free news, music, radio, TV, books and podcasts.

This is not commercially viable in the long term. The concept of always finding advertisers to fund this is too risky – it’s the continuous balance of finding an equilibrium of advertisers and content owners.

Today’s news of Warner stopping licensing of free songs on Spotify and other services should come as no surprise. Quite the contrary – we should expect this to ripple through the rest of the industry.

However I will be interested to see if Warner do allow premium Spotify subscribers access to it’s catalogue.

Maybe this is the start of the demise of the ‘Freemium’ business model.

Ten Digital Media Predictions for 2010

Here are my predictions for the coming year. In 12 months time, let’s review what actually happened!

1. Reinvestment in Digital Media.

Based on a lack of investment in 2009, I think a lot of companies will see a website revamp, or a new product version appearing in 2010. This will be especially true of companies who chose to ‘cut corners’ in 2009, for example deciding to build their own proprietary CMS. This coming year, they’ll choose to re-engineer the same site using an off-the-shelf, or even open source CMS.

2. Lack of new products due to R&D being slashed in 2009.

I’m not sure we’ll see so many new Spotifys (Spotifies?) appearing in 2010, because of a lack of investment/R&D budget last year. Maybe we’ll see new stuff appear at the end of the year though. The exceptions will be anything from Apple, with the imminent launch of their iSlate.

3. A number of live events on YouTube.

Yup, live is where the value is. And Google know this. So expect some new live events appearing on the platform in 2010.

4. More Flex applications, less Silverlight.

Flex will succeed because the creative agencies like Adobe and not Microsoft. This might change in the longer term, but for 2010, expect to see some sites migrate into very funky (I can’t use the adjective flash here!) Flex applications.

5. SecondLife to further decline.

Yup, not many people are writing about SecondLife these days. My own personal view is that in the long term, the web will be accessible through a graphical interface probably not far off SecondLife, but for the next 5-10 years, the standard browser is very much here to stay. The LindeX (the market to sell real world cash for made up cash – quite remarkable really) is in a steady decline, and the data has been moved from publicly available to a free signup. Here’s the graph as of today. Next yearm expect the graph to be totally unavailable, or in steep decline. A shame, but some technologies are just too ahead of their time.

6. The UK to start accepting blogging at the same status as the US.

In the US, bloggers have almost the same status as journalists. That’s a bit of a sweeping statement, and my apologies to journalists who have had a turbulent couple of years, and an even bleaker future for a trade that’s totally unfairly undervalued. Anyway, in the US, bloggers are often quoted by journalists and news organisations, whereas in the UK they are dismissed by the news organisations. Of course there are some exceptions such as The Guardian, but in the main, most people think that bloggers are nerds/IT geeks. This is a view which Twitter & the term ‘microblogging’ has helped to change slowly, but by 2011, I expect to see some famous UK bloggers be quoted by the press.

7. Offline browsers make a comeback.

My view of the Internet is that the same applications are constantly being re-invented. Facebook is like a modern version of Compuserve (a nice clean, walled environment); Skype is ICQ on steroids; Spotify is Real Networks (OK, just sort of!); Twitpic is like a billion free image sharing sites; today I even stumbled across a ‘directory’ of Twitter users – and directories kind of died off a few years ago! I remember installing offlines browsers on my Palm V in the mid 1990s, which effectively downloaded snapshots of a website on to my Palm, for me to read on the way home. I had a similar application on a few early mobile phones. Expect similar applications on iPhones, Kindles and iSlates to start appearing, so that users of the Tube and other areas can read articles on the move, outside of an RSS reader.

8. The FIFA World Cup sees huge use of video over mobile & broadband.

Put it another way, if it doesn’t, expect to see broadcasters and mobile operators to pull out of mobile video for the foreseeable future. Expect some amazing stats for broadband use from Sky, ESPN & FIFA. In 2005 we were discussing a 10 deal for bandwidth that went into Petabytes, and everyone thought we were mad. Expect to see that word banded around a lot during the World Cup.

9. Expect ebooks to take off.

This has the potential for a huge market. I estimate football club programmes, concert programmes, manuals, etc. all to be available in ebook formats, either free or very low cost by the end of the year. It will be a mini-reinvention of MP3s…

10. 2010… the year of Web CRM

I have no idea why it’s taken so long for a vendor to come up with a Web based CRM system. Facebook Connect, Windows Live signin & Google Orkut are the main contenders, but does a major website really want to release their list of customers to be shared with Facebook, Microsoft or Google? No. There are CRM vendors who charge a ‘per user’ model – which is useless for a free sign up model. A number of the newsletter systems are extending into this area – with Traction probably being the most attractive. But if you want a standalone web authentication and single customer view with Single Sign On (SSO), who are the sub $50k vendors? Exactly. So expect to see new players start appearing here.