Android moves to replace Google Pay music app with YouTube Music

Google wants to make YouTube the default audio app on Android in the hope of boosting its chances of competing with Spotify.

Right now the default Android audio app is Google Play Music, which does try to get users to upgrade to Google’s subscription streaming service, but doesn’t do a very good job of it and is mainly used as the interface for accessing locally stored audio files. Rather than overhaul the way that upsell is managed Google has decided to merge it with the YouTube Music app.

Music videos are arguably the most popular type of content on YouTube, with the top 30 most viewed individual videos dominated by music. YouTube monetizes those via serving ads on the video, but it would rather people paid upfront to its premium subscription service, that offers ad-free playback, background play on mobile devices (without it the music disappears if you switch to another app) and even downloading.

YouTube premium has plenty of features, but Spotify is the incumbent streaming music service, so Google has to do something special to topple it. As politicians, regulators and anti-trust authorities around the world are increasingly sensitive to, in Android Google has an incredible powerful platform for upselling its other digital products and services and it seems to have decided YouTube Premium needs the power of Android to give it critical mass.

YouTube Music is your personal guide through the complete world of music—whether it’s a hot new song, hard to find gem, or an unmissable music video,” says the announcement, tellingly published on the YouTube blog. “Music fans on Android phones can now easily unlock the magic of YouTube Music, which will come installed on all new devices launching with Android 10 (and Android 9), including the Pixel series.”

The announcement also made it clear that Google Play Music will no longer be preinstalled, which seems like a precursor to it being replaced entirely. You can still access locally stored files through YouTube Music, but on first inspection the user interface is inferior to Google Play Music, so the company may face some push-back from users on that. We’ll leave you with the top 5 music videos ever on YouTube, bafflingly headed by the entirely mundane Despacito. Contrastingly Gangnam Style has lost none of its kitsch, tongue-in-cheek charm.

 

Vivendi hopes to raise €3 billion by flogging 10% of Universal Music to Tencent

French media giant Vivendi seems to be a bit short of cash, so it’s thinking of selling 10% of Universal Music to Tencent for three billion euros.

Vivendi primarily concerns itself with the TV and music businesses, having flogger SFR to Altice a few years ago, but that hasn’t stopped it trying to run Telecom Italia despite being a minority shareholder. It has historically been frantically active in terms of M&A and rarely seems to hold on to an acquisition before looking to sell it on

Tencent is a Chinese internet giant that owns IM service WeChat, the Chinese equivalent of Twitter – Weibo, loads of other digital stuff such as gaming and ecommerce, and most of China’s music services. It’s one of the world’s biggest technology companies and is no less fond of M&A than Vivendi.

“Vivendi and Tencent are also concurrently considering areas of strategic commercial cooperation,” said the announcement. “In this context, Vivendi is keen to explore enhanced cooperation which could help UMG [Universal Music Group] capture growth opportunities offered by the digitalization and the opening of new markets.

“Together with Tencent, Vivendi hopes to improve the promotion of UMG’s artists, with whom UMG has created the greatest catalogue of recordings and songs ever, as well as identify and promote new talents in new markets. Vivendi hopes that this new strategic partnership could create value for both Tencent and UMG.”

While improved access to the Chinese market is definitely a positive for UMG, that bit of narrative also feels like an attempt to make this move seem more about business strategy and less about Vivendi needing to raise some cash. Three billion euros would buy you around 30% of Telecom Italia at today’s prices, which would give Vivendi a majority stake. Just saying.

Spotify’s ‘Duo’ tariff gives a whiff of what’s to come

Sharing accounts might be the norm in the world of content streaming platforms, but Spotify’s new ‘Duo’ tariff might be a sign of changing attitudes.

In many homes throughout the world, streaming platforms are shared. This is a truth which is generally accepted as the norm, but it does technically violate the terms and conditions of the service and does impact the experience for the user. For example, if users are sharing a premium Spotify account, it can only be used on one device at any point.

Duo seemingly addresses this point and does so at a price point which is a lot more palatable. For €12.49 a month, users can link two accounts to the same bill, offering two ‘tailored’ experiences but with a bundling discount and a single point of payment.

Spotify has already experienced some joy with the idea of bundling having launched the family plan. Here, six profiles can be linked into the same bill for €14.99 a month. Increasing premium subscriptions being reported during earnings calls suggest this is perhaps having a positive impact on the business.

Spotify

Netflix is another streaming platform where users may be taking advantage of how easy it is to connect and share passwords. Although Netflix does allow up to five profiles on a single account, there is little preventing these profiles from being shared outside the home. Netflix has not seemingly made a massive fuss of this so far, though we suspect this was not the desired outcome.

Ultimately these are commercial entities seeking profit. The perfect scenario for these organizations will be for every user having their own subscription, though the practice of password sharing contradicts this; why would you spend £9.99 a month when you can simply log into Mum and Dad’s account?

While there is still room for subscription growth, this is not necessarily a massive issue for the OTTs, but there will come a day where they will have to start thinking about how to tackle the issue. Considering how quickly the world is adopting the new content status quo of entertainment on demand, it won’t be too long before that glass ceiling is hit.

Spotify’s approach is an excellent way to tackle the issue of password sharing. At €12.49, Spotify will not be hording in a tsunami of profits, but it will be gaining more revenue in effectively the same position. There are two users sharing an account, paying a single bill; the platform is being used by two people. With Duo, both users are still using the service, but Spotify is collecting more revenue. It’s as close as you can get to free money.

How the other OTTs plan on tackling this issue remains to be seen, though we suspect they almost certainly will. Content is becoming an increasingly expensive habit to fuel, and at some point the companies will have to be true to their terms and conditions.

Legere gives up the weird and wonderful for loyalty-focused Uncarrier move

Revamping customer services and launching a loyalty programme might be very intelligent plays by T-Mobile, but it isn’t quite the grandeur of kick-starting an assault onto the TV content market.

Whenever CEO John Legere pulls on the magenta t-shirt, applies the gallons of mousse to the hair and presumably drinks 15 shots of espresso to get the authentic wired look, the industry has come to expect big, disruptive and combative things with Uncarrier announcements. The latest ‘challenge’ is somewhat more traditional than we are now used to as the norm with the eccentric CEO.

Back in January, when T-Mobile US completed the acquisition of Layer3 TV, it paved the way for the magenta army to tackle the convergence market. T-Mobile has been promising a disruptive TV service and is yet to deliver. When Legere decided to stoke the fire of excitement by telling us the next Uncarrier move was coming this week, assuming it would be the TV embrace would have been a fair bet. The reality is functionally a great route for the business, but it isn’t anywhere near as stimulating as what we imagined, even if Legere does his relatively-shallow excitable-puppy routine.

The banner for the new initiatives is ‘Rock Star Treatment’, which does seem to be a rip-off of the Virgin Atlantic adverts of yesteryear. The first prong will be to revamp the customer services operations, creating a proposition where the customer feels valued. Despite Legere claiming this is disruptive, it is something which should have been done anyway. The song-and-dance surrounding the upgrade just illustrates how little telcos think of their customers in the first place. Secondly, the loyalty programme is very similar to the proposition which O2 has built in Priority. It’s a very effective loyalty programme for O2, so we have no issue with Legere ripping off the UK market leader.

“Our customers get treated like rock stars with Team of Experts, and we believe they ought to be treated like that everywhere they go,” said Mike Sievert, COO at T-Mobile US. “Music connects us, so we’re connecting our rock star customers with exclusive magenta extras at Live Nation events and with Pandora. Now, when they turn on their tunes or head to a show, they’ll get an elevated experience, just for being with T-Mobile.”

On the customer services side of things, the T-Mobile Team of Experts has been launched nationwide which promises no robots or automated phone menus, and a dedicated customer services representative who will be assigned to a customer. As part of the initiative, Legere has promised you will talk to an actual person, no bouncing from department to department, 24/7 call centres, call-back features will be introduced and integration with Alexa or Google who will be able to assist negotiating the beige maze.

Some of these features are welcome additions to the customer services mix, while other are something the telco should have been doing anyway. Although this is hardly the most exciting aspect of the communications world, it is a critical one. Telcos who take customer services seriously are the ones who have the lowest churn and highest Net Promoter Score (NPS). Many business experts will tell you it is more profitable to keep current customers happy that constantly chasing acquisitions to replace the churn. It seems like an obvious thing to say, but with the attitudes of the telcos, you wonder whether it has hit home. T-Mobile is seemingly making efforts to improve here, and the second aspect of the Uncarrier launch will also add to momentum.

The second aspect is a loyalty programme. Here, a partnership with Pandora will offer Uncarrier customers a year-long Pandora Plus subscription, and through a tie-up with Live Nation, will have exclusive and early access to gigs, as well as discounted tickets. This is an approach to retention and rewarding customers which we really like and smells very similar to O2’s strategy.

When looking at free value-adds for customers, some telcos look at big ticket items like sports. While this might attract certain customers, the risk is there is little interest from others. A focus on music offers breadth and accessibility. With Pandora, customers can choose their genre, or tap into alternative content such as podcasts and radio stations. It offers something for everyone. With the Live Nation tie up, this is relatively risk free as it gives the consumer the choice of what to purchase. T-Mobile is offering value to the customer through discounts and early access, though it is placing the financial commitments on the consumer. They choose what they want, but are receiving value through being a T-Mobile customer.

Overall, this is an alternative approach to convergence. The ventures into content are not to generate revenue directly through increasing ARPU, but focused on retention of customers. Offering value-adds for free makes the customer feel rewarded and an indirect boost for the bottom line. Securing customers for the long-term is an excellent way to improve profitability, and a better relationship with customers will only create more brand ambassadors.

While this is not the devilish and enticing Uncarrier move which we have become accustomed to with Legere and his wild eyes, it is a pragmatic business strategy to secure the user base and improve the foundations. If T-Mobile US can take it retention capabilities up to the same level as its subscriber acquisition, the duopoly might not be that far on the horizon after all.

Sony puts smartphones on the back burner as it doubles down on music

Japanese technology and media conglomerate Sony has announced its latest cunning plan and it involved focusing on content and content creators.

At the same time Sony announced it is acquiring 60% of EMI Music Publishing from Mubadala for $2.85 billion, which means it now owns 90% of EMI and, when combined with its own music publishing business, makes Sony the world’s biggest music publisher.

“The music business has enjoyed a resurgence over the past couple of years, driven largely by the rise of paid subscription-based streaming services,” said Sony CEO Kenichiro Yoshida. “In the entertainment space, we are focusing on building a strong IP portfolio, and I believe this acquisition will be a particularly significant milestone for our long-term growth.”

Sony’s new strategy focuses on investing in content and content creation, while making sure the hardware business doesn’t go down the toilet. This is an extension of the Kando philosophy Sony has been banging on about for a few years now – a Japanese word that seems to mean the excitement you get when you encounter something exceptional.

It’s all about getting closer to people, apparently, and appealing to their emotional side. This seems to be a desire to restore the Sony brand to its former highs, perhaps last experienced in the 1980s through products such as the Walkman. This would be difficult to achieve through just hardware as Apple has that crown and seems unlikely to relinquish it anytime soon, so Sony is focusing on providing people with content and helping them create their own.

So you can effectively divide Sony into three main silos now: content IP (video, music, games), branded hardware (smartphones, consumer electronics) and consumer enablers (CMOS sensors and financial services). The emphasis is on investing in the content side and keeping the CE cash cow stable, which probably means continued managed decline for the smartphone segment. You can see how this all plays out in the Sony slides below.

Sony KANDO

Sony business segments

 

Sony strategy 1

 

Sony strategy 2

 

Sony strategy 3

 

Sony investment areas

Streaming approaches half of all music industry revenues

It might not be anywhere as near as data intensive as video, but the growing influence of music streaming is another part of the network congestion question which needs to be factored in.

During the days of yesteryear, queues would form around the corner for the latest release of the next chart topper, but gone are those days. Those of more advanced years might look badly nostalgically about the anticipation of getting their hands on the latest Beatles banger (Ask Scott, Ray or Iain for more details), but now gratification is all about a simple click on the mouse.

Music is an aspect of the digital economy which is rarely discussed from a telco perspective, but it will start to have an impact before too long. Video is of course the big headache when it comes to traffic management and network congestion, but there are so many more moving cogs which collectively will have an impact; that is important to remember about them every now and then.

According to findings from MIDiA Research, music streaming is fuelling growth in the $17.4 billion global music industry, with a 39% year-on-year uplift in revenues to now represent 43% of the total revenues across the industry. An increase in revenues is the most obvious way to measure usage in the industry, but when popular streaming services like Spotify offer ‘all you can eat’ music, revenues do not perhaps tell the entire story.

Looking at the bitrates used by some of the more popular services, Apple Music uses a 256 kbps bitrate, which suggest an hour of music streaming would eat up 115 MB, while other apps use multiple options. Google’s music offering has three categories; the bitrate on low ranges from 96 kbps to 128 kbps, medium is 256 kbps and high is 320 kbps. On low quality you could use between 43 MB and 58 MB in an hour, while on high it would be 144 MB. On Spotify, the default mobile bitrate is 96 kbps and for desktop is 160 kbps, while users have the option of using 320 kbps.

In terms of users, Sportify now has at least 71 million subscribers (as of December 2017) and 157 active users worldwide. Apple has said it has 36 million subscribers, while Google has around 7 million (2017), including its YouTube subscriptions. These are not mind blowing numbers, but growth is continuing to be very healthy.

Over the course of 2017, users in the US spend more than 32 hours a week listening to music, up from 26.6 hours according to Nielsen Music research, with on-demand streaming up 12.5% year-on-year. This might not sound massive but streaming music has been normalised for years. The accelerated growth you usually see at the beginning was a long time ago, though 12.5% is still a significant number to bear in mind. These numbers will have a notable impact on the information highway.

Video is continuing to grow, but less data intensive trends are continuing to play a role in the connected era. Music streaming might not be a game changer when it comes to network congestion, but when you add up all the minor impacts of music, gaming, navigation, messaging etc. the headaches start to become a bit more varied. Always worth noting every now and then.

Have you heard? Apple is buying Shazam

US gadget giant Apple has made a rare foray into major M&A with the acquisition of UK audio recognition app Shazam.

Despite having enough money to buy the entire world and still leave a generous tip, Apple is notoriously reluctant to get its cheque book out. One exception to this is the music business, which was after all the source of Apple’s renaissance thanks with the iPod and iTunes, and which saw Apple fork out $3 billion for Beats a few years ago.

Shazam has been around forever by app standards and was one of the first bits of cleverness to appear on a smartphone. It uses the phone’s microphone to listen to pieces of audio and then tells you what they are. When it first came out it was easy to believe it might represent the future of music discovery until everyone realised that it’s very rare to hear a piece of music that a) you like, b) you can’t identify and c) is not being introduced by another person.

But Apple, in its infinite wisdom, sees beyond such trivia and can apparently see great things for Shazam. Music streaming services, a market in which Apple is a minor player but would sincerely like to be a bigger one, do apparently receive a significant amount of traffic from Shazam. It would be entirely in keeping with its closed ecosystem philosophy for Apple to buy Shazam and then stop it referring to any streaming services other than its own.

This story was leaked last week and, while Apple hasn’t issued a formal press release, it has issued the following statement to lots of media. It also hasn’t confirmed a sale price but this is being widely speculated to be in the region of $400 million, significantly lower than the company had previously been valued at.

“We are thrilled that Shazam and its talented team will be joining Apple. Since the launch of the App Store, Shazam has consistently ranked as one of the most popular apps for iOS. Today, it’s used by hundreds of millions of people around the world, across multiple platforms. Apple Music and Shazam are a natural fit, sharing a passion for music discovery and delivering great music experiences to our users. We have exciting plans in store, and we look forward to combining with Shazam upon approval of today’s agreement.”

Another possible motivation for this move could be defensive manoeuvres. It has been reported that both Spotify and Snapchat had been sniffing around Shazam and maybe Apple just didn’t like the idea of anyone else having it. The recent news about Spotify getting into bed with Tencent indicates the internet music space is heating up once more.

Here are the most Shazamed tracks this year – look at the state of it:

Ed Sheeran – “Shape Of You”

Luis Fonsi Feat. Daddy Yankee – “Despacito”

Clean Bandit Feat. Sean Paul & Anne-Marie – “Rockabye”

Charlie Puth – “Attention”

The Weeknd Feat. Daft Punk – “I Feel It Coming”

J Balvin & Willy William – “Mi Gente”

Kygo & Selena Gomez – “It Ain’t Me”

The Chainsmokers & Coldplay – “Something Just Like This”

Harry Styles – “Sign Of The Times”

Burak Yeter Feat. Danelle Sandoval – “Tuesday”

Ofenbach – “Be Mine”

Calvin Harris Feat. Pharrell Williams & Katy Perry & Big Sean – “Feels”

Portugal. The Man – “Feel It Still”

Imagine Dragons – “Believer”

Kaleo – “Way Down We Go”