For years the number that musicians and their business partners, managers and record labels, would focus on was the soundscan results. From the soundscan website:
Sales data from point-of-sale cash registers is collected weekly from
over 14,000 retail, mass merchant and non-traditional (on-line stores,
venues, etc.) outlets.
My friends in the music business would always say things like "we scanned 25,000 units last week". In a world where the sales of CDs (and before that albums) was the key goal, it made sense. Scans were revenues.
But the world has changed and more and more music is available on the Internet for free or via subscription services every day. And just because you scanned a record, doesn't mean you listened to it.
I think it is time to stop focusing on scans and start focusing on listens. But how do you do that?
I bumped into my friend Spencer Hyman yesterday at breakfast. Spencer used to run last.fm. I asked him if you could use last.fm as a panel, like Nielsen or comScore, to measure music listens. He said you could but you'd need to do some statistical weighting by geography and genre.
If you think of the people who scrobble their listens to last.fm as a panel, then you can scale up these numbers to get to worldwide listens. Last.fm hasn't done this work but they should. They could be the new soundscan as the key metric moves from scans to listens.
All of that is hypothetical to some degree but hopefully instructive. Music is moving from a physical good where scans is what matters to a virtual good where usage and engagement matters. So let's start measuring it correctly. That may help the artists get paid correctly.
Tenacity is probably the most important attribute in an entrepreneur. It’s the person who never gives up – who never accepts “no” for an answer. The world is filled with doubters who say that things can’t be done and then pronounce after the fact that they “knew it all along."
I agree with Mark that tenacity is a key attribute in successful entrepreneurs. It's hard to see it in a person in the short "get to know you" period you have on many investment opportunities. But if you can get to know an entrepreneur over a longer period of time, you can see it.
Avner Ronen, co-founder and CEO of Boxee, showed a lot of tenacity to me a few years back. As I outlined in the post announcing our investment in Boxee, Avner originally pitched us in mid 2007. At that time, they were pitching a hardware play. I said no. Then he came back in early 2008 with an open source software play. I said, "better, but no users". Then he came back in the summer of 2008 with 10,000 users and a nice growth curve. And we closed an investment in November of 2008.
Reece Pacheco is a young entrepreneur just getting going. He's an active member of this community so many of you know him already. He and I emailed early this week about a pitch meeting he had with a friend of mine for an angel investment. I pointed him to that Boxee story and told him that:
raising money is about turning nos into yeses
He was all over that. I've met Reece and I suspect he's got the required tenacity to be a great entrepreneur too. He's showing it right now as he is building his company, Home Field, and hearing a lot of nos, a few maybes, and just enough yeses to keep him and the team going.
Tenacity comes in all shapes, sizes, and sexes. It's an equal opportunity employer. But it's not easy to see and reveals itself over time. If you want to be a successful venture investor, keep your eye out for it. It will lead you to a lot more wins than losses.
One thing I've noticed over the years is that most comments on posts over a couple weeks old tend to be comment spam. Disqus makes it very easy to delete comment spam (you just reply to the email with the word delete), but even so it's a bit of work to keep old threads clean of spam.
So I've decided to close comments after a post is two weeks old. I hope everyone is ok with that. Please let me know in the comments if you think that's a problem.
If you have a disqus powered comment system and want to do the same thing, you can go into the settings page and select a time period for "automatic closing".
That's a controversial post headline and I don't mean that social will always beat search, but there's a rising chorus out there about "content farms" and search optimized content creation that is worth touching on.
When a web service like Google controls a huge amount of web traffic (>50% for many sites), it's going to get spammed up. Google has thousands of employees working to combat that spam. And it is doing the best it can. But it is hard to beat spammers. The best you can do most of the time is tread water.
What's worse, and what Mike and Richard are talking about, is the act of search engine driven content creation. These so called "content farms" look for the top search terms and create content especially for them. Arrington compared this content to fast food; cheap, easy, and ultimately unhealthy.
I left this comment at the end of a very long comment thread on Arrington's post:
social tools will allow us to decide what is crap and what is not. our social graphs will help us. search engines won’t. it’s a lot harder to spam yourself into a social graph.
The Internet is a massive content creation machine. We are witnessing an explosion in the amount of content getting created every day. Most of it is garbage. But some of it is not. Machines can help us find what is good. But with the help of machines, our friends and trusted sources can and will do that even better.
Mobile phones here in the US are sold by carriers and often locked down so that the device and the network are hard wired to each other. The iPhone is the best known example of this technique. I've written a lot about this bundling of device and network and why I think it is bad for consumers and software developers.
Google is not the first device manufacturer to do this in the US. Nokia has been doing it for a while without much success. Unlocked phones are more expensive to the consumer because they have no carrier subsidy. So it is not obvious that consumers will take to this way of buying phones.
But there certainly is a minority of users who prefer to buy unlocked phones. I am one of them. I buy a fair amount of phones for myself and my family and I never take the subsidy if I can help it. I want to be able to run my phones on whatever networks I choose.
I believe the carriers should focus on making their networks as fast and reliable as possible. Device manufacturers should focus on building the best and most innovative hardware configurations they can deliver. And software developers should focus on building the best operating systems and mobile applications and services.
This is the PC architecture and I've been hoping we will see it emerge in mobile. I think the Google phone is a big step toward getting there.
So let’s talk traffic. We’ve got people who love this goddamn phone so
much that they’re living on it. Yes, that’s crushing your network. Yes,
3% of your users are taking up 40% of your bandwidth. You see this as a
bad thing. It’s not. It’s a good thing. It’s a blessing. It’s an
indication that people love what we’re doing, which means you now have
a reason to go out and double or triple or quadruple your damn network
capacity. Jesus! I can’t believe I’m explaining this to you. You’re in
the business of selling bandwidth. That pipe is what you sell. Right
now what the market is telling you is that you can sell even more! Lots
more! Good Lord. The world is changing, and you’re right in the sweet
spot.
One of the frustrating things about being a blackberry user (I've tried to move to iPhone twice and Droid twice) is that most of the stuff is there for an awesome mobile experience but RIM just makes it too damn hard to experience it.
A classic example of this is blackberry apps. I got a new blackberry last week (the bold 9700: awesome phone) and have been putting my favorite apps on it.
I also have a beta version of an app from one of our portfolio companies but I've been asked not to talk about that.
App World isn't as slick as the iPhone app store but it works well. Only problem is it didn't come pre-installed on my phone. How can that be? If you want to compete with Apple, you have to at least bring your 'A game' right out of the box.
While I'm on the topic of the app store, I think its fantastic that Blackberry allows developers to provide downloads of their apps directly from the mobile web. I used App World for some of my apps and the mobile web for others. Both modes work, especially for free apps.
My biggest beef with blackberry apps is the popups they create around trust and security. Its confusing as hell to me to figure out what boxes to check and when to say yes and when to say no. It's like the privacy hell Facebook is putting its users through right now. More options and checkboxes is not better.
Maybe its because of apple's rigorous (and long) approval process, but iPhone apps don't put users through all this trust and security nonsense and I think Blackberry ought to fix this problem.
It's really bad for mobile apps that use a lot of third party apis (something we'll see a lot more of in the near future). Each time the mobile app makes a call to a new api, you get the damn popups. Its a painful experience. And if you want to reset the application permissions, good luck finding the settings to do that which are buried three levels down in advanced settings.
I could go on and on but I'll stop my critique in hopes of keeping this post brief.
Once you get the apps installed and working right, the experience is incredible. Blackberry supports multitasking and so I'm listening to Pandora and BBM'ing at the same time I am writing this post (on my blackberry of course).
The phone is great, the software is powerful, but the browser is awful and the entire user experience is too complicated. Blackberry can and should fix this because iPhone and Droid are coming on strong, even in Blackberry's core enterprise market, and they don't have a big window of time to get it right.
The thing that makes all of this possible is a group of top notch software engineers and they are looking to hire a bunch more. This job posting explains exactly what they are looking for. But for those who need some more data before clicking on that link, here's a quick summary:
Our stack includes Ruby, Scala, C++, Javascript, Rails, Sinatra,
Solr/Lucene, message queueing, and Postgres/PostGIS. We build mobile
apps (iPhone, Android), Web apps, and API's. We're agile where it makes
sense, but mostly sensible, intelligent, clever and hard-working. We
prefer generalists who have lots of successes committing at every layer
of the stack.
We want you to have one or more of the following areas of interest and real-world experience:
Geo: Geographic data, geometric containment and mapping API's
NLP: Passion for text analysis and semantic extraction, with a particular eye towards balancing accuracy and throughput
Ad Serving, Monetization, Optimization and Exchanges: OpenX, DFP,
Google Ad Manager, RightMedia, etc... revenue performance metrics and
A/B monetization strategies
So, if that piques your interest, please click on this link and learn more. I can assure you its a great company to work for and the software engineering challenges are both interesting and problems worth solving.
I never worry about action, but only inaction. - Winston Churchill
It's cheating to start a blog post with a quote from Winston Churchill. He was that good. But sometimes you need to cheat and I'm doing it today.
People ask me all the time about the traits I look for in entrepreneurs and action orientation is at the top of the list. I'd much rather back someone who makes 100 decisions a day and gets 51 of them right than someone who makes one decision a day and gets it right.
I believe that in startups, like venture investing, the cost of making a bad decision is not nearly as great as the benefit of making a good one. So I like action oriented leaders.
When you make a bad decision, you can always realize it was bad and change it. By being action oriented, you put a lot of things in motion and can evaluate what is working and what is not.
I am not advocating a "throw it up on the wall and see what sticks" approach. I believe entrepreneurs need to me more insightful and strategic than that. You need to have a game plan for sure. But within that game plan, I believe it is better to try more things than less things. And I believe that perfect is the enemy of the good.
Dick Costolo, co-founder of FeedBurner and now COO of Twitter, describes a
startup as the process of going down lots of dark alleys only to find
that they are dead ends. Dick describes the art of a successful startup as
figuring out they are dead ends quickly and trying another and another
until you find the one paved with gold.
It's another form of the classic direct marketing technique of test, measure, test, measure, test, measure. You can think and debate about stuff all day long or you can try stuff out and see what works. From my experience, the latter approach is a much better one.
There is a cost to action orientation. You need to be able to hit the quit button. You need to be able to deal with the broken glass that results from doing that. It's a messier way of doing business and some people have a hard time with mess.
A good example of that is hiring. If you are "action oriented" in your hiring, you'll make more hires and more of them will not work out. Which means you'll be firing more people and dealing with the inevitable headache and heartache that results from showing someone the door.
But as I've asserted earlier about startups, the benefits of making a strong hire vastly outweigh the costs of making a bad hire. Strong hires can lift an entire organization almost single handedly, especially when you are a small company. Bad hires can be toxic, but not if you recognize them quickly and move them out.
Great entrepreneurs are hard to work for. They jerk you around, change things up, and are always pulling the rug out from under you. And often a company outgrows that leadership style and needs a calmer more organized leader.
But if you want to create something great and do it faster than the competition, you need to be action oriented. You need to be decisive. And you should not worry too much about making bad decisions as long as you are prepared to recognize them quickly and unwind them.
So Google and the music industry have teamed up to create Vevo, which aims to corral all music videos into a separate part of YouTube where they will be monetized by higher quality (and higher cost) video advertising.
Vevo launched last night and I spent some time on it this morning. At first look, I'm not sure I get this thing.
The first thing I did is search for Arctic Monkeys and I get a response that there are no results for that term.
Second thing I did is click on the link to Kid Cudi and watch the Pursuit Of Happiness video. But before I could watch that I had to sit through a 15 second AT&T pre-roll. That's not a great experience. I wonder if people will really sit through a 15 second pre-roll to watch a music video.
Then I went to YouTube and did a search for Kid Cudi Pursuit Of Happiness. The video I saw on Vevo is absolutely not on YouTube, but there are plenty of Pursuit Of Happiness videos there to watch including a really cool Steve Aoki remix.
It's probably that Vevo is not completely rolled out yet but it would seem to me that for it to be successful, the Vevo videos will have to show up in YouTube and Google search results. And they don't right now.
It is absolutely true that for many, YouTube is their streaming music service. There is so much music on YouTube. You can get a result for most any song you look for. So it makes sense that the music industry is trying to get its arms around this new form of music discovery and listening.
But I wonder if cordoning off the "official" music videos into a separate site will achieve this goal. We'll see. I'm not that optimistic about this one.
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