Quick Thought: Promoted Posts in Spotify

It’s common knowledge that Spotify isn’t exactly profitable. As avid user, I’ve really liked their latest product introductions: Discover (suggested content from Spotify), Activity (what your friends are listening to), & Direct Artist Following.  With those features and Spotify’s financial struggles in mind, one revenue generating product seems obvious: sponsored content and placements. As we’ve seen with Facebook, it’s much easier to sell advertising inside an algorithmically generated content feed. And with Discover, Spotify has built just that.

Spotify builds a complex profile of your music tastes.  They get the data for that profile from a combination of places: what you listen to, what you add to playlists, what you “like” on Spotify Radio, what your friends and people you follow listen to, etc. So, let’s say I “follow” Justin Timberlake. And listen to his music. And add him to playlists. And on and on. Why doesn’t Spotify sell a placement in my Discover or Activity feed to a similar artist? Preferably, it would be an artist that Spotify’s data shows I will probably like. Or, like Facebook, Spotify should start charging Justin Timberlake to alert me inside Spotify and by email when he releases a new album. That kind of targeted email marketing is incredibly valuable to artists of any stature.

The cherry on top: if done in a clean enough way, promoted/suggested wouldn’t even intrude on user experience. In fact, it could be a genuine value add.

Seems like a layup to me….

P.S. This ad product also allow Spotify to further monetize premium subscribers. It wouldn’t be limited to “free” users.

*** Apologies for grammar, it was a quick thought. I’ll clean it up later***

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The Follow Button: Spotify’s Social Experience

I’ve written several times about how important curation is for good media consumption. When media companies pair content libraries with well built curation tools, it creates a magical experience for the consumer. Recently, Spotify (an enormous content library) made a major improvement to its music discovery tool.

Spotify eliminated the all inclusive discovery stream, replacing it with a Twitteresque “follow” model. Previously, the all inclusive stream displayed all the music being listened to by a user’s Facebook friends. This previous discovery model had several shortcomings. First and foremost, it ignored the simple fact that peoples music tastes are not homogenous. People have certain friends or tastemakers they look to for new music. Music taste is extremely personal, so assuming users are interested in ALL their friends tastes is a rash generalization.

Instead of a stream with all the music a user’s FB friends listen to, the right 1/5th of the Spotify window now contains a curated stream. Spotify users now elect which friends and artists to follow. Based on those choices, users see a stream with songs those specific friends listen to (and tracks/playlists artists recommend). This “follow” model is a proper reflection of social music exchange in real life: we’re only interested in certain peoples tastes. I believe this is the first in several product decisions Spotify will make to create a better social music expereience. This first change is focused on social discovery, and it has major product and revenue ramifications for Spotify:

  1. Privacy:

    As opposed to before, only users who specifically elect to follow me will see what I listen to. This makes me feel much more comfortable. I didn’t like that previously, seemingly the entire overlap of my Spotify-Facebook venn diagram could see my listens….. Not EVERYTHING I listen to I want broadcast out to the world. This “follow” model is much better for private listening.

  2. Better Music Recommendations: Curated Stream

    I now get to curate whose feed I see. Instead of wading through unwanted clutter, I can focus on the friends/musicians whose taste I respect. Plus, in the open graph model, I can follow anyone I wish.

  3. Advertising Value For Brands: Native Ads

    With a curated recommendation stream, Spotify can charge artists or brands to advertise their latest releases, playlists, etc. inside that stream. This creates an additional revenue source for Spotify that can even be included in premium subscriptions. The best part of native recommendation ads is that becuase they would be curated, they will genuinely add value for the end user.

I’m very excited about the most recent update to Spotify social, and am looking forward to what’s next.

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Interesting?

Competing vs Enabling

In recent years, eBay and Amazon are competing with one another more and more. As consumers, we experience the two online marketplaces quite differently. EBay is the place to hunt for a deal in an auction format, while Amazon is the site of choice for a hassle-free transaction. When John Donahoe joined eBay in 2008 as CEO, the company was struggling. EBay had stagnated. However, they have since engineered a major turnaround. EBay has reinvented itself away from the auction-based personal marketplace that made them famous. Instead, eBay is flourishing with a newfound emphasis on mobile retail and payments (PayPal).

One specific aspect of eBay’s strategy caught my eye. Unlike Amazon, who competes directly with traditional retailers, eBay is partnering with physical retailers, using their mobile platforms to help bring brands online. Traditional retailers are looking at eBay as a partner and at Amazon as a threat. This strategy fits with eBay’s history, as eBay has always been more about enabling individual sellers and facilitating transactions than developing eBay as an independent retailer.

With all their dominance and success, it is hard to doubt Amazon’s strategy. However, with <10% of worldwide consumer spending occurring online, there remains an enormous amount of value in aiding physical retail brands, rather than attacking them.

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This was inspired by a NYTimes Article.

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Interesting? 

Curation is the Future

Lately I’ve been thinking a lot about the need for curation services online. The amount of content we are exposed to daily is out of control. Outside of personal communication content (email, text, photos, instagrams, facebook posts and messages, etc) we consume an amazing amount of content daily online. Sorting through all the content at our fingertips is at worst impossible and at best overwhelming.

The amount of content served to us online is ridiculous!

The amount of content served to us online is ridiculous!

One set of curation tools is our personal network. Links are recommended via email. Videos are posted to facebook. Articles are tweeted. Some content is specifically recommended for us, and some is blasted out indiscriminately. These are all sources for content, but what truly excites me is the emergence of standalone curation services. By that, I mean services that are built for curation, not a friend emailing you a link to a funny video.

Several standalone content curation services already impress me. The first is the app Prismatic, an outstanding app that surfaces content (mostly print articles) based off your social presence online. I check in with Prismatic a few times a day and am ALWAYS met with interesting articles. Another tool I love is Devour, which hand picks the best new video content. Devour’s content is edgy, and shows how human led curation remains far better than algorithms. These two services use very different strategies to successfully recommend content. While Prismatic bases their recommendations off my tastes, Devour’s curation is based of their tastes.

Some content farms have in-house curation tools. My NYTimes digital front page is different from yours, tailored to my past clicks and interests. The same can be said for my youtube homepage. However, the intention of any in-house curation tools is to keep you in-network, maximizing your time spent on THEIR site. That is why I love content curation services that are unaffiliated from content farms. They are selfless. They are exciting. They serve me with personalized content, which I sure do love to consume.

Everyone loves to consumer online

Everyone loves to consumer online

The emergence of these tools will have a variety of effects. For the consumer, it offers a promise of premium content. However, as these tools further democratize the net, curation services will put additional pressure on established producers to create GREAT content. With so much noise, good just won’t cut through anymore.

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Interesting? 

I hate to admit it, but I totally get Snapchat

I’ve been thinking a lot about Snapchat lately. I just got an Iphone 5, and have begun messing around with Snapchat. My friends have raved about how fun Snapchat is for several months but I’ve resisted, mostly due to the “creepiness” factor.

My Snapchat Inbox

My Snapchat Inbox

After using the app, I have quickly reversed my opinion of it. Today, online presences are tightly curated (facebook, twitter, instagram). We only want to show the world things that reflect well upon us. This inhibition is quite limiting when it comes to social interaction. As there are countless horror stories with inappropriate texts or emails going viral, I share many peoples nerves when employing digital communication tools. They are permanent. That’s exactly what makes Snapchat beautiful. Because no communication on Snapchat is permanent, it allows for much fuller expression.

 

Yes, Snapchat is used for sexting. However, it’s potential as an impermanent communication tool is vast. It allows users to express themselves freely, unafraid of the now commonplace repercussions for rash decision online.

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Snapchat recently raised over $20 million in venture funding. I’m excited to see what’s next.

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Interesting? 

The Death of Banner Ads

As long as I’ve been online, the Internet has been packed with advertisements. The majority of these ads are banner advertisements, the simple display ads that populate every site from ESPN to Gmail. Thankfully, the old, boring banner advertisement is slowly dying. In the past, everyone who visited a webpage in a set period of time was served the same banner advertisement.  Since their inception, banner ads have employed very basic, unimpressive technology that does little to optimize the dollars spent on the ad. This is changing as ads become tailored to the unique visitor. The evolution of online advertising from the basic banner ad benefits all parties: users (who probably prefer consuming higher quality advertisements), the advertising party (who is producing more effective advertising), and the company selling the ad space (with higher conversion rates come larger revenues).

Everything in red is advertisements. These panels take up most of the screen!!

One of the more exciting advertising innovations can be found in social. Because social media and search firms have enormous amounts of data regarding users’ individual interests, they tailor advertisements to the specific user (social or local optimization: i.e., what a users friends like, and what is geographically relevant to the user). More recently however, even tailored advertising seems flawed, as smaller screens (mobile) do not have the space to waste on additional panels. In response, both Facebook and Twitter have introduced native ads, which are placed directly into their users’ respective feeds. By placing native ads directly into a stream, there isn’t any wasted screen space, which must be used sparingly on mobile devices.

Banner ads are generally considered a waste of screen space.  However, as native ads have emerged, firms have begun producing advertisements more appropriate to online consumption. Funny videos or deals that can be easily shared and spread through the social web are becoming commonplace. Essentially, online ads aren’t total crap anymore, and when tailored for a specific audience, they can be much more effective.

Last year, Hulu made a fascinating change to their advertising policy. Going forward, Hulu only charges advertisers for ads watched in their entirety. If a viewer does not watch an entire ad, the advertiser doesn’t pay. First, I doubt there has been much financial fallout from this, as on Hulu, ads are shown between segments of a show. Viewers either close out of a tab before advertisements begin or they wait until the show restarts, as in most cases they have already decided whether to continue watching.  In addition, Hulu must have had lots of data before making this policy change and deemed it worthy. Second, this generous policy allows Hulu to enforce a higher standard for ads on their platform. Premium ads stand out online, so the higher standard may in turn make users happier to consumer ads. Personally, I find the ad content on Hulu to be much better than Youtube, and 100x better than a basic banner advertisement. Hulu delivers outstanding content to me for free, so watching a few premium ads is hardly bothersome.I understand the necessity, and don’t feel taken advantage of.

There had been very little innovation in Internet advertising, but that has changed drastically over the past few years. Tablets and high-definition screens create opportunities for more immersive, full-page ads. Social and local optimization generates more useful content for users. As conversion rates improve, so will the economic strength of the entire digital media ecosystem who depend on advertising for revenues. It’s an exciting prospect.

Jeff Bezos on Charlie Rose

Just watched the Charlie Rose interview with Jeff Bezos. Twas very interesting. Bezos is an extremely passionate guy, a trait I find fascinating after running Amazon for 18 years. The interview left me with several thoughts I wanted to share:

  • Inventors, Not Disruptors: Bezos kept harping on how Amazon focuses on inventing, not necessarily disrupting. He views disruption as a byproduct, even a consequence of great invention.
  • Customer Focus Above All Else: The other central component of Amazon’s identity is being customer focused. They are constantly asking themselves “What do the customers want?” “What will they love?” “What do customers need and how can we make getting it easier/cheaper/better?”
  • The Internet is still in its infancy: Bezos believes that the societal reinvention brought on by the Internet is very young. he believes we are still in Day 1, as things are moving faster than ever. When it begins to slow, he says, we are in Day 2.
  • Brick and Mortar is not in Amazon’s immediate plans: Again, Bezos is focused on invention. He is only interested in getting in brick and mortar if Amazon can bring something new to the table. He is not interested in a “me to” approach to retail. All about invention.
  • He’s an optimist, and has a hearty laugh.

Watching the interview gives two clues as to why Amazon has persisted and flourished for so long. First, as Bezos states, there was an incredible demand for such a company. They filled a clear gap in the market. Bezos says that the hardest times for Amazon was the process of raising money to found it. Success was almost instantaneous.

The other clue is Bezos himself. He has an incredibly impressive eagle’s view of the Internet/Ecommerce/Technology industry, and approaches every decision through the lenses of customer focus, invention, and teamwork. Listening to Jeff makes the staying power of Amazon much less mysterious. He has incredible vision.

What a fascinating guy.

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Interesting? 

A Conversation About Facebook With An Old Person

I sat down with my writing Professor today. He’s a great guy, worked at Newsweek for many years. Our talk eventually turned to Facebook.  I was shocked to hear that he first joined about 3 years ago… and LOVED it.

My prof spoke about how easy it was to use and how fun it was connecting and reconnecting with people.  However, he deleted his account about 6 months ago. When I asked him why, all he said was, “too much crap!”

The Facebook experience is too crowded. Yes, I still check it daily, but that is only because I want to see if friends have contacted me (yes, FB still has potent network effects). However, I never post anymore. The reason is because spending time on the service is becoming rather obnoxious. I am constantly getting notifications for things I do not care about. Most of my newsfeed is stuff I simply do not wish to read.

Twitter and Prismatic. Those deliver great content directly to me. It’s all curated. Facebook is a mess.

Startup School Recap Part 2: Joel Spolsky, StackExchange

Joel Spolsky reassured me.

As a student very interested in technical entrepreneurship, most of what I read about are the companies getting tons of press. These “hot” companies are the ones most people know. This isn’t unreasonable, as it makes sense that Facebook appears on TechCrunch more often than KissMetrics. However, as I want to work for a startup (and perhaps one day found my own) this is very intimidating. There can only be so many billion dollar ideas, and the smaller successes tend to get lost in the clutter of Silicon Valley reporting/analysis.

There is a sense that the only successes an entrepreneur can have is to build an enormous company (billions of dollars of value), or sell your smaller company to one of those larger firms. Joel Spolsky directly addressed this apprehension of mine.

In relating the details of his two major entrepreneurial endeavors (Fog Creek and Stack Exchange), Joel spoke about how there IS still opportunity for small bootstrapped businesses to find success. Specifically, he encourages entrepreneurs to figure out the market for your company EARLY.

1) The “Land Grab” Scenario: Get Big Fast

  • Network Effects- The more users you have, the more valuable the network is. Think Facebook, its value lies in the # of users. I want to be on Facebook because everyone I know is on Facebook.
  • Scale Quickly- Network Effects create Lock In. No one is going to leave Facebook for a social network that is 50% or even 100% better, as all of their friends are already on Facebook. That value cannot be as easily replicated as product features.
  • Make lots of Mistakes- Iterate quickly. Move fast and learn as you go. Mistakes can be covered up through VC money that you raise externally. Mistakes won’t cost customers like in bootstrapped business.
  • Take VC Money- Don’t fret about profitability from the start. Instead, focus on growth.
  • For Joel, Stack Exchange is an example of this type of scenario (well built question and answer sites). Network Effects are HUGE in this space.

2) The “Organic Growth” Model: Grow Slowly With Paying Customers

  • Bootstrap- Live very cheaply. Build a product that you can begin to sell immediately. Reinvest everything in company.
  • Market Fit- Unlike “Land Grab,” where there is probably an open market, the marketplace is going to be crowded with competitors in an Org Growth model.
  • Don’t Make Mistakes- You need to retain paying customers to survive! Mistakes can KILL your business.
  • Growth- Slow and steady. You are trying to steal customers, one by one, from your competitors. You must be in it for the long hall.
  • End Goal- It isn’t to sell the company or be acquired. It is to build a long term, sustainable business.
  • For Joel, Fog Creek Software took an Organic Growth model.

This was my take on his speech, and it really put me at ease. There is still hope for entrepreneurs who just want to build a viable business; companies don’t need 25 Million users to be successful.

You can watch Joel’s speech here.

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Interesting? 

Startup School Recap: Ben Silbermann, Pinterest

Last weekend, I attended Y Combinator’s Startup School at Stanford. To say the least, it was an empowering, informative experience. Not only did I meet many like minded individuals, but sitting in on talks from the leaders of the tech world was just plain awesome. Over the next several days, I’m going to publish short recaps/responses to my favorite presentations of the day.

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Ben Silbermann, the co-founder and CEO of Pinterest gave one of my favorite talks of the day. In short, he spoke about tenacity. He described feeling this overwhelming passion to build a great product, one that truly added value to people’s lives. Pinterest, despite all its current success, started extremely slowly. Neither Ben nor his original co-founder are technical wizzes. Many, many investors passed on Pinterest as it struggled to gain traction. People did not understand the product. The challenges seemed endless.

Yet, Ben was very encouraging. He said that we should take advice, even from very accomplished individuals, with a grain of salt. Want proof? look at the returns in the venture capitol industry! The fail:success ratio is not pretty. Instead, trust your gut!

Many entrepreneurs spoke about hard work, disruption, or product integrity. All are valuable. But Ben’s speech stood above the rest for me. His passion for EVERYONE to unabashedly pursue their dreams was very empowering. It made me feel like Pinterest would be an amazing place to work.

Sidenote: The potential business model for Pinterest was extremely intriguing. Not your standard add-based model for a social site (future post coming).

Here’s the video of Ben Silbermann’s talk.

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Interesting?