Matt Kiser

I really love this study by Pew on the state of mobile devices and news consumption. It crystalizes some things a lot of news organizations have ignored (or don’t realize, yet?) about the migration of users from desktop to mobile/tablet, and the effect it’ll have on their businesses.

Consumers are engaging with news more often and on more devices. The landscape is becoming more fragmented as consumers migrate from desktop (website) to mobile/tablet (app & mobile web), and news organizations are faced with increased competition for attention. To complicate matters further, the mobile/tablet ad spending is nowhere near that of on desktop. There is a major disparity in CPM rates. 2013 will likely be a pivotal year for news organizations. The reckoning is coming. 

The Pew study confirms this fragmentation and increased consumption, saying:

For most with multiple devices, there is not a single place for news. People who acquire mobile devices appear to be using them to get news on all their devices. This also suggests they may be getting more news more often. About a third, 34%, of desktop/laptop news consumers now also get news on a smartphone. About a quarter, 27%, of smartphone news consumers also get news on a tablet. While this smartphone/tablet news consumer group is small, just 6% of the population over all, it is a large percentage of those who own smartphones and tablets; fully 44% of people who own both kinds of devices use both for news. What’s more, most of those individuals (78%) still get news on the desktop or laptop as well.

That analysis seems to be echoed in this slide from Henry Blodget’s presentation on the future of mobile and how smartphone/tablet sales are now outselling desktop PCs.

This fragmentation can further be underscored in the amount of time spent using the device and the consumption of news in the Pew study:

Smartphone news users are now nearly split between their laptop and smartphone as their primary news platform; 46% still get most of their news on the desktop/laptop; 45% get most on their smartphone. Another 7% of these smartphone owners say they get most of their news on a tablet. Early tablet news users are moving in the same direction, but remain somewhat more reliant on the laptop or desktop computer. Of tablet owners, 47% still get most of their digital news via desktops or laptops, while a third, 34%, have already transitioned to consuming most of their news on the tablet. 

And, from the Blodget presentation, you can see the disparty in ad spend vs consumer time spend:

And, to complicate matters further, the news organizations are losing the war for attention as social networks are increasingly becoming the starting point. Consumers are likely becoming less brand loyal as a result. 

From Pew:

For those who get news on both the smartphone and tablet, social networking is a much more popular way to get news. Among that group (13% of all digital news consumers), fully two-thirds (67%) have ever gotten news recommendations from Facebook. That compares to 59% who get news on just one of those devices and 41% who only get digital news via the desktop/laptop.  Similarly, 39% follow news recommendations on Twitter, compared with 24% who just use a smartphone or a tablet and 9% who use only the desktop/laptop.

All in all, it’s becoming clear that consumers are using multiple devices to consume more news than ever, but paradoxically, it’s at the expense of the news organizations themselves! As consumers move upstream to smartphones and tablets, news organizations will earn less revenue per consumer till the gap closes between consumer time spend and ad spend. And, coupled with the fragmentation of sources, like social media, the news organizations are no longer the starting point. 2013 is shaping up to be a rough year for many publishers…

I’ve been thinking a lot about the rumors that Apple is going to create a Pandora-like streaming radio experience. I don’t think that’s the whole story. It obviously can’t be.

Apple left an umbrella for streaming services, which explains why the Spotify’s, Pandora’s, iHeartRadio’s of the world have been able to creep in on Apple’s turf — there’s a gap. We all see it. Apple’s also maintained a pretty hardline that ownership (.99-cent download) is more important to them than access (subscription plans). It’s important to the music industry, too, as something like 80% of all music sold is sold by iTunes. You can’t just replace download dollars (ok, .99-cents) for streaming tenths of a penny and expect everyone to be ok with it.

So, it makes a lot sense for Apple to narrow this gap and strategically defend its position as the top seller of music, but also rejuvenate their huge install base of 400 million+ installs by creating a hybrid model. I see the standard iTunes Store experience (ownership) more clearly and seamlessly paired-up with a beefier iTunes Match (access to owned content anywhere) — essentially doubling-down on the iTunes Match promise that you can “access your music from all your devices and listen to your entire library, wherever you are.” Coupled with how much iTunes Genius has learned over the years (i.e. listening habits, including time of day, type of music, day of the week, type of device, etc.) and iCloud, you can see a clear convergence happening.

Additionally, we should expect to see a programmed, streaming radio model that uses your library as a guide, but relies on the millions of iTunes Genius data points of user listening history to dictate the music mix (i.e. Genius Mixes on crack). I’ll contend that iTunes Genius is more similar to Songza, which is why I don’t think Pandora is the correct analog. Songza makes more sense from their themed, bite-sized playlists that are easy to consume and navigate. The obvious assumption is that Apple would just create a streaming radio experience and slap their lagging iAds product on it and call it a day. That’s probably going to happen to an extent, but that can’t be the full story either.

I have a hunch that Apple will use and reward users for having a vast library they own (i.e. relying heavily on the music that’s been previously paid for) and then fill in the blanks in the streaming radio programming from the 28 million+ songs in the iTunes library. I believe that the rewards for having a large library of owned music will be realized through less restrictions in the streaming radio space (i.e. no caps on skips or number of artist plays per hour, or amount of “free” listening per month per user, etc.). It’s important to remember that iTunes Match is like renting your own music. Every time a consumer re-downloads or faux-streams their own music, the copyright holder is getting paid. I can’t underscore that enough: for $25 a year you’re putting money into the music industry that was previously lost in exchange for access to your own music. Jeff Price, president of TuneCore, sheds some light on the economics by saying, “Apple keeps 30% of iTunes Match revenues for itself — the same percentage the company keeps from the iTunes and App Stores. The remaining 70% is divided, with 88% going to record labels and 12% going to songwriters. The royalties are split amongst artists based on ‘how many times someone accesses your song’ via iTunes Match and it doesn’t matter if a song is matched or uploaded — the royalty is paid either way.”

Think about it: you’re paying to access music either way. It’s either a subsidized version of your music library paired with the iTunes library of 28 million songs ($25/year + whatever you buy + ad revenue), or it’s Pandora’s 800,000 songs ($36/year -or- just ad revenue) or Spotify’s 15 million songs ($120/year -or- just ad revenue) you pay to access. But in either scenario, the music industry is going to make more money from Apple. And, by Apple keeping people in their ecosystem longer and rewarding them for owning music in the form of subsidized streaming radio, they’re able to sell more music and put even more money in the pockets of the music industry — something none of the other streaming competitors can provide sans potentially Amazon and Google, which we haven’t even talked about. In a nutshell, the pitch is that for something like $25 a year, you can get all your music anywhere at anytime on any device — oh, and one more thing — you can also listen to exceptionally awesome iTunes Genius-powered streaming radio, too. I’d buy.

I’m incredibly excited to say that I was included on Hypebot’s list of top innovators, industry leaders, and all around resourceful people in the music industry and tech space who are worthy of following on Twitter!

I put together a complete list (plus a few of my own suggestions!) of my favorite wonks in the music industry and technology space.

I stumbled into this article today by Steve Guttenberg where he suggests that music has become unimportant and simply a soundtrack to other activities. He blames everything from the “loudness wars” to mobile devices being a distraction to fewer records being made (!?) for music’s lack of importance today. He argues that artists aren’t making money the traditional because of Napster and piracy, saying “Once paying for recorded music became a purely voluntary act the value of music plummeted. What’s potentially free is certainly worth less. How can bands survive and make record music when the old revenue streams are drying up?”

I think that’s kind of the point: the music industry got disrupted and failed to innovate. Music never lost its importance, the perception about paying for recorded music simply changed. There was no single event, or product that caused this turmoil. Not even Napster. Selling records is yesterday’s business model. Selling an experience is today’s.

One of the most important truths that became transparent falling out of this changing industry is that music is abundant. It always has been. It’s just that the music industry spent the better part of a half-century indirectly convincing consumers that music was scarce — only so many records could physically be stocked at a time, played on the radio, or promoted by labels. More importantly, the industry (also indirectly) taught consumers that the music was free (think radio) and you paid for the medium (think vinyl, cassettes, and CDs). A good example of this is the CD. It never cost $18.99 to produce a CD. You were paying for the medium, because it theoretically offered superior audio quality to the cassette, which (allegedly) offered better quality to the vinyl record before that. There were other value propositions, ranging from the CD being easier to listen to on the go (remember G-Shock protection anyone?) to it being more durable. We all know how these turned out.

Music is finally, truly part of our lives in every aspect, in every moment, and at every event. It’s become ubiquitous and more important than ever, really. That’s not without saying that the experience around discovering music, and later consuming it, sucks. It does. You have interoperability issues where platforms and services don’t talk to each other — I can’t share a Spotify song with an iTunes user, just like I can’t share my vinyl record with a guy holding a CD player. The abundance of choice on Spotify can make enjoying music hard. The question “what should I listen to?” use to be an easy one. You only had so many physical objects on hand — a perceived scarcity. Now you have the entirety of recorded music at your fingertips — an abundance; a commodity. It’s not that music lost its importance, it’s that consumer’s perceived value of recorded music changed as the medium evaporated.

Ultimately, fixing the industry’s woes will be about creating a compelling experience for music discovery and consumption where the consumer votes with their dollars.

We like to talk about “social music” as it pertains to music shared with our friends across social networks. Spotify and Rdio’s integration into Facebook being the obvious example of social music. But, that’s not social music. Nor is Facebook’s “Listen with” feature. Even Turntable.fm for all its interestingness is close, but not an actual social experience. 

This is social music:

Imagine a venn diagram. In one circle is music I like. In the other circle is music a friend likes. The overlap is the sweet spot where music crosses over from being an individual experience, to music as a social one. In the vastness of the canon of recorded music, this is the spot at which the two of us intersect — this is where our musical compatibility and relationship begins. That’s powerful knowledge. Now take that concept further and extend it to music recommendations: music you like that your friend might also like. 

Think about it for a second: we don’t actually know what our friends will like. Do you really have a good answer to “what should I listen to?” for every single one of your friends? I’m an outlier and spend an extraordinary amount of time listening to music, and as good as I am at recommending it, my success rate is pitifully low. A “normal” person would have an even lower success rate. 

The ability to make recommendations “smart” and personalized on a person-to-person level is what I love about working at the intersection of music, media, and technology. 

If we could take this concept of social music and apply it to entire friend circles, the results would be incredibly interesting since it would highlight the natural affinity groups centered around particular artists and genres. Further, it would reveal the sub-sub-groups we form when we listen to music communally. Which, in reality, is what being social is about. 

Fantastic read by Joe Kraus on the culture of distraction we’ve created for ourselves with new technologies.

Gaps used to happen all the time. Now they’re disappearing. You’re eating lunch with a friend and they excuse themselves to the restroom. A gap. Now, you pull our your phone because being unstimulated makes you feel anxious. Waiting time in a line at the bank? Used to be a gap. Now it’s an opportunity to send an email or a text.

We didn’t think gap time and “boredom” were valuable. Now that we’re losing it, we get a sense of just how valuable it was.

Simply put, at the heart of creativity, insight, imagination and humaneness is an ability to pay attention to ANYTHING – our ideas, our line of thinking, each other. And that is what’s most threatened.

(via Joe Kraus)