Social Goes Hollywood and What That Means for Investing in Media & Entertainment

Several weeks ago, I discussed how the rapidly evolving digital landscape is changing traditional, and creating new, media and entertainment investment opportunities at Opal’s Family Office & Private Wealth Management Forum.

Digital audiences have shifted how and where they consume content, and streaming services have evolved into award-winning production studios. Possibly more important is looking at the consumption habits of younger demographics like Generation Z. This generation is bigger than the baby boomers, they are constantly connected to screens with access to content, and they have new ideas about their digital footprint. Generation Z chooses to spend a significant percentage of their time consuming content on apps and services such as Snapchat, Instagram and more. This tidal wave of disruptive channels is already encroaching on time spent on traditional media and entertainment channels (read: eyeballs), and the emergence of new platforms that seek to capture Generation Z audiences is showing no sign of slowing down.

Although Snap (Snapchat’s parent company) hasn’t been an over performer on Wall Street, as a company they understand how significant a part of Generation Z’s digital content footprint they’ve become. Generation Z Snapchat users have grown up creating, self publishing, and consuming friend and studio content side-by-side, without adhering to traditional lines of distinction. While it’s true that the majority of content on Snapchat to date has been user generated (UGC), Snap is aggressively licensing original short format video content, in large part through a partnership with investor NBCUniversal.

As reported by Cynopsis, “Stay Tuned,” Snapchat’s first daily news show from NBC News, has over 29 million unique viewers since its July 18 launch.* Alongside spinoffs of “The Voice” and “Saturday Night Live,” it becomes clear that what was once a social network has it’s sights on becoming the channel of choice for Generation Z.

In other words, Snap wants Snapchat to become Generation X’s seamless one-stop shop for content about friends, news, and entertainment. If Snap’s foray into original content is successful, Snapchat has the potential to become one of today’s primary tastemakers, much as MTV was for Generation X.

Update (8/24/17): Snapchat Shows plans to add their own scripted video content to the mix by the end of the year. While head of content Nick Bell stated that Snapchat is more of a complementary service to TV, he acknowledged that they are “capturing the audience who are not probably consuming TV at the same rate and pace of engagement that they once were.” This suggests Snapchat might become more of a direct competitor to broadcast, cable, and streaming services.

How Apple is About to Reboot the Music Industry

It was almost twenty years ago today…

While that admittedly doesn’t have the punchy ring of the Beatles’ original, it sets the time nicely for two entities, Apple Computer (still to become Apple Inc.) and Jimmy Iovine, who was already building toward a post-Napster world for the music industry from artist discovery through distribution.

But first, a little here and now.

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Apple’s 2014 acquisition of Beats, co-founded by Iovine and Dr. Dre, may have created the savior the music industry has been looking for since the late 1990s.  Earlier this month at WWDC, Apple unveiled the highly anticipated, and soon to be released, music service resulting from their acquisition.

In short, Apple Music strives to combine your music library with a subscription service in a single cloud-based offering. This pits Apple against Spotify, Rhapsody, Rdio, Tidal and others in the next wave of consumer acquisition being hailed the “Playlist Wars.”

Flashback to 1999.

In 1999 Jimmy Iovine, Chairman of Interscope Records, partnered with Doug Morris, CEO of Universal Music in a startup venture called farmclub.com. Farmclub was visionary in nearly every way. It was a three-sided website with the support of a weekly co-branded TV show on USA Network. The three sides were as follows:

  1. Unsigned bands could create pages to market themselves, upload their music and communicate with fans.
  2. Fans could discover bands, download and share their music.
  3. A&R staff could monitor activity to see where critical mass was forming in order to sign up-and-coming artists or route them to the weekly TV show.

If this sounds lackluster or like standard fare by today’s standards, consider 1999 carefully:

  1. AOL was the biggest consumer ISP (still via 28k and 56k dialup modems, not broadband)
  2. The iPod wouldn’t debut for another 2 years
  3. MySpace didn’t launch until 2003 (nearly 4 years later)
  4. Music-oriented reality programming like American Idol was still 13 years away (2002)

What Jimmy had going for him was the vision, second-to-none artist-focused music industry experience and a legitimate, mainstream cross-media outlet for artists. What he had working against him was that MP3s were still geek chic, no consumer-friendly plug-and-play handheld tech (the Rio was state-of-the-art), and an uncontrollable consumer experience (it took ~10 minutes to download a single song IF you didn’t lose your connection and have to restart the process).

Back to the future… and that much needed reboot of the music industry.

The Internet heralded in an era and consumer mindset that has been called the “end of the album.” For historical purposes, it’s important to realize that even The Beatles started out in a what was then a singles driven business. While the “death of the album” is a fun debate over drinks (after all, who doesn’t want to talk about how life-changing “Wish You Were Here” was?), it’s a wasted argument from a business perspective. We’ve come full circle and are now in a world led by singles again.

Partially in the face of declining sales of digital singles, numerous “all-you-can-eat” subscription services have emerged. Tech companies in spirit, many have played to their strengths, focusing on playlist models created by algorithms or social curation.

It’s no secret that Apple has had an interest in the music industry for a long time and, while on the surface this could be seen as a defensive play to protect the leadership position of the iTunes ecosystem, there’s a lot more at stake than continued consumer acquisition and market dominance. If Apple Music is successful, it could be the much needed reboot of the music industry.

If Apple Music, by way of its parent company and iTunes ecosystem were a Big Mac, Jimmy Iovine is most definitely the “secret sauce” the competition should be most concerned about. In addition to Jimmy having worked with artists that includes John Lennon, Bruce Springsteen, Tom Petty, U2, Gwen Stefani, Lady Gaga, and Iggy Azalea over the past 40+ years, this isn’t his first foray into the post-Napster world.

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Here’s why Apple may not only lift their bottom line, but the entire industry in a way that their competition cannot:

  1. Jimmy: He’s a veteran insider with a music first and an artist forward perspective, not a tech startup focus, doing it from the “outside.” He has the industry weight, credibility and track record with artists and labels to get buy in across the industry. He’s spent nearly 20 of his 40+ year career learning, experimenting and getting ready for this play. While he was brave enough to fail with Farmclub, now he has the power of Apple behind him.
  2. Apple: The #1 paying customer base and paid digital music ecosystem, and history and credibility with record labels and artists which includes the highest royalty percentage in the industry.
  3. Subscription: In a move that harkens back to the days of FM radio, Apple Music is betting on trend-setting music tastemakers, DJs who curate playlists out of music epicenters New York, Los Angeles and London. This expert-driven music subscription with physical homes in cultural epicenters steeped in music history is their bet on the future. In addition to the aforementioned streaming services competition, paid radio service Sirius / XM also better watch out.
  4. Artists First: Apple retracted their initial plan (via tweet by Eddie Cue) to be royalty-free for the first three-months, during which the service will be free to consumers. While this was, at least in part, due to a letter Taylor Swift sent to Apple, it demonstrates that Apple is willing to be open-minded about the need to support artists.
  5. Social: Apple music provides a system that allows up-and-coming artists and unsigned acts to not only market themselves and engage with fans, but to convert to revenue, something that has been elusive for artists on social networks like Facebook (and once upon a time, MySpace).
  6. Your Music: Icing on the cake is that Apple Music is a one-stop-shop. In addition to the subscription service, all your music is also accessible right from the same app.

Although I’m skeptical that Apple will allow direct integration with my Sonos system, I’m looking forward to the free 3 month trial that starts later this month… and what’s to follow for Apple and the music industry as a whole.

For context and transparency, I led the development and delivery of farmclub.com on the Internet for Jimmy Iovine and Doug Morris in 1999-2000.

Originally published on Digital Surgeons’ blog on 6/23/15.

Hey Look… Up In The Sky…

Conan BlimpIt’s a bird. It’s a plane. No… it’s super… wait a minute. Yay, it’s Conan!!!

Over the New York City skyline is a piece of one of this year’s most well thought out cross-channel marketing efforts: a drive to the premiere of Conan on TBS.

Flying over the 5 boroughs is a bright orange blimp (that has nothing to do with Nickelodeon). If you see it in the sky, you can check into it using Foursquare, at which time you’ll receive a special Conan “blimpspotter” badge. The badge has no real value, but offers one-click bragging rights when you announce to your friends and followers on Facebook and Twitter that you got something they don’t. I got it on October 20,2010 at 3:34pm. Conan Blimpspotter Badge

Not surprisingly, the Team Coco had the blimp heading over to Yankee Stadium (big audience with open sky access, free TV coverage, you know the drill).

This also benefitted Foursquare, which took advantage of the crowd by distributing a “Swarm” badge to everyone who had checked in once the total reached 50. They even used marketing speak in the email, by calling it a “flash mob” for all us early adopters.

Another piece of the Conan program is a live webcam (that started yesterday — October 20,2010) in the “stairwell of [their] comedy bunker.” You never knows what you’ll get on arrival, but it’s clearly improv in his planned, but random style. As I’m writing this, I’m being serenaded by a 3-piece mariachi band. If only there were margaritas.

They’re doing a wonderful job building buzz, and are demonstrating a much clearer understanding of how to use digital and social media. I’d also wager they are doing it for a fraction of what the Peacock Network spends marketing The Tonight Show.

Conan, Bravo… er… I mean TBS!!!

I look forward to seeing you again on November 8th.

The Robert Lasky Daily

Huffington Post got a lot of press for integrating Twitter a while back… and deservedly because they did a nice job. When I saw it, I wanted that too, but without the development time or expense. Paper.li (still technically in “alpha”) offers a similar service, which I’ve been using regularly for about the last six months.

Basically, it works like this…

  1. You log in and create a profile using your Twitter account
  2. Their behind the scenes algorithm parses through the tweets of the people you follow (and it does a good job… no “I had mac & cheese… yum” nonsense has made the cut yet)
  3. The site then formats a daily webpage that people can subscribe to
  4. Paper.li sends an email to subscribers each day when it’s available as a reminder to make it a part of their daily travels

It’s a great tool that’s a refreshing alternative to the social media white noise that applications like Yoono and Tweetdeck can flood you with (no disrespect, I use them too for different things) and being regularly enhanced.  Personally, I’m hoping they enable the ability to add it as a page directly on my site at some point, but for now it’s just a click away here… The Robert Lasky Daily.