Monday, June 30, 2014

The problem with piecharts

AM/FM radio accounts for 52.1% of music listening claimed the headline. But how could that be? We're constantly reading about the death of conventional media and the dominance of streaming and cloud services. Not only that, but people are now consuming media on demand, where they want, when they want, and as many times in a row as they want.

How then, could old-fashioned radio still be in the lead?

A closer look at the statistics is called for. So here we go. This is Edison Research's Share of Ear piechart, which is actually more of a lifesaver/mint, really, but that doesn't sound as good. So piechart it is.

Click to enlarge

First of all, Edison Research is reporting audio consumption via radio, not music consumption. Listening to talk radio, sports broadcasts, weather forecasts, and traffic updates are all being lumped into the number. So that's error number one. Not an error made by Edison Research, but an error made in the retelling of the story. Edison states that it's audio they're talking about, while some of the services that picked up the story used 'radio' and 'music' interchangeably, and they're very different things. This kind of slack-uracy happens not infrequently, particularly when statistics are being cited or studies are being quoted.

Also important to consider is what is missing from the pie. Just because it looks like a full circle doesn't mean slices or ingredients aren't missing. Conspicuously absent from this analysis, in order of magnitude:


We've suspected it for years but as of 2012 we have evidence from Nielsen statistics that about 65% of teens are using YouTube as their primary source of music 'listening'. Whether it's one of a bunch of windows open on their screen, or as a video embedded in a Facebook newsfeed, or as a video converted to MP3, or as a selectable playlist in the thumbnail section, the origin of the music 'listening' is YouTube. To not include the video platform, with its 1 billion+ monthly users, as a source of music consumption is a big oversight, and points to the limitations of existing categories and terminology when dealing with the new forms, habits, and behaviors that accompany new technologies.

Ed. Note: August 19th, 2014: YouTube's music streaming service reported. Info & screenshots here.


Yes, YouTube is not only a central repository and destination for video, it also serves the same purpose for music. But that doesn't mean there's not a whole 'nother YouTube for music. Because there is. It's called SoundCloud, and it's the world's second largest music streaming service. Second to Spotify? To Pandora? No. Second to YouTube. The site boasts 250 million users per month and 12 hours of audio uploaded every minute (contrast with YouTube's 100 hours of video uploaded each minute).

The idea behind SoundCloud: anyone can upload any audio they want to, so it quickly became home to DJ's mixes, mashups, hip hop mixtapes, and even cassette mixtapes, converted to digital. Annotating, commenting, sharing, and reposting are built-in features on SoundCloud, so when something gains traction on the site, dissemination can occur at lightning speed. To date there's been no monetization taking place on SoundCloud, so there have been no payments to artists. However, in the last few weeks there have been rumblings about the introduction of a subscription service, in addition to a gradual increase in the number of takedown notices the service has been issuing to uploaders. Like so many digital platforms, issues of legality are initially put aside, and either norms change or the site's policies change, often a result of shareholder pressure. Plus, the cost of a copyright lawsuit, relative to a potentially multi-billion dollar valuation, make flouting the law a reasonable plan. For a while at least.

Vevo, Vimeo, other?

Vevo is sometimes called 'the Hulu of music videos' (have you noticed that everything is the_______ of ______, and half the time we don't really know one _______ from the other?). What this analogy means is that the parties posting the videos have the right to do so. They are the copyright holders. In the case of Hulu, it's the broadcasters. In the case of Vevo it's a consortium of the major music labels, specifically Universal, Sony, and EMI, who do a revenue share with Google (owner of YouTube) on the advertising. But wouldn't Vevo's numbers get counted with YouTube's numbers, you ask? Yes, when its videos are being viewed on YouTube. But Vevo is also available as an app on Apple TV, and that listening/viewing would not be reflected in the YouTube stats.

Same thing goes for Vimeo. It has over 100 million monthly users and in addition to videos that appear on YouTube it is also available as an app for mobile devices (including tablets), where somewhere between 20 and 25% of Vimeo usage occurs. Also missing from the share of ear chart above is online radio stations whose live streams and podcasts can be accessed on desktops and laptops (I know that's how I sometimes listen to music online). And there's also the music we encounter at restaurants, the gym, and in stores that we can now use tools such as Shazam to identify and then share the information. This ability to interact, on the spot, and to announce our discoveries to those in our social network, is unique to digital, networked media, and replaces some of the functions once provided by disc jockeys, journalists, word of mouth, or that know-it-all guy in your group who was an encyclopedia of rockology and only too happy to illuminate everyone. Oh, and because we're talking numbers, Shazam has over 5 billion songs tagged in its database and more than 250 million users.

So, when we consider all of these unaccounted sources together, what do we see? A few things. We have share of ear and share of eye sometimes conflating into one. Just as the activity formerly known as 'watching TV' is now done on a variety of devices for a variety of durations with a variety of genres that are not 30 or 60 minute programs, so too does 'listening to radio' no longer offer an accurate description of the activity of music consumption. We still have passive consumption, in which radio or music lives in the background. But we now also have active consumption (e.g. assembling playlists, uploading mixes, posting and sharing links). And, as our media habits become more complex and varied we have continuous partial attention, a relative of, but not the same as multitasking.

To help provide a sense of the landscape of digital entertainment that we used to call 'radio' or 'TV' (but increasingly these terms are restrictive at worst and misleading at best) I have pulled together some numbers and notes on the more popular online audio and video platforms. Note that not every one is included in this analysis. It's a highly fragmented market, with upstarts emerging from anywhere and everywhere, so a year from now you may well ask why 'Service X' was not included here (e.g. Beats Audio, recently acquired by Apple currently has just a few hundred thousand subscribers, but who knows, they could well be major players -- or not -- a year or two from now. Stranger things have happened).

Something interesting to think about while looking at these numbers is the speed with which the services that are native to digital got to tens and hundreds of millions of users (and over a billion, in the case of YouTube), while the organizations with an analog legacy or arm of the business have been much slower to gain traction.

July 1st newsflash: Since this post was written, Google has made another play in the online music market with the acquisition of Songza (not included in the table above, as the listener base is ~4-5 million per month. That may now change).

This post was compiled while viewing Katy Perry's Part of Me, on Netflix. (Is that audio, video, app, or multitasking?).

 By the way, if I've left anything glaring (or even trivial but interesting) out of the tally and the assumptions, do let me know in the comments section. I thank you.

Related Posts: 

Podcasting: Art, Craft, or Reaching the Niches
Music Hack Day

Saturday, June 21, 2014

Reintermediation Watch: The tale of YouTube and the Multi-channel Networks

Access, on its own, used to be power. But when everyone has access, as is currently the case with media forms, where does the power go? This is an ongoing theme of this blog and today we'll look at the see-saw that has disintermediation perched on one end and reintermediation at the other.

So, what are these polysyllabic opposing forces of which you speak? Fear not, they're really just a couple of hundred dollar phrases to describe the removal of intermediaries, or middlemen, from processes that traditionally bring the producers or manufacturers of goods and services in contact with audiences and/or customers. That's part one, the disintermediation. It then may be followed by part two, the replacement of these systems, but in different forms. Disintermediation has become a hallmark of the digital era in which we live as many things have become liberated from cases, boxes, and warehouses, and can flow freely as digitalia in the connected networks that make up our communications environment.

But it's not really a scenario in which there are no middlemen. People are still using online platforms, under the control of others, with terms set by others, to get their wares out there; so direct-to-consumer (D2C) or direct-to-fan (D2F) as a way of describing a business is somewhat overstated. But, to not see the reduced power of intermediaries in these scenarios is to miss a big part of the shift.

I once heard a major music label executive use the phrase ‘the physics of the web’ to describe how the labels had to learn, the hard way, not to get in the way of fan activity online, but to let it flourish, as ultimately it was going to happen anyway, and often it would confer other benefits on the artist. In the past 8 or so years online we’ve seen huge amounts of disintermediation take place, and my interest has been in the mapping it in relation to the creative industries.

In the early days of this blog I posted about the counter force of reintermediation online, with a look at some of the changes taking place in the way musicians can now operate. Such reintermediation is the response of a disintermediated and therefore highly fragmented marketplace to a whole a new set of problems to deal with, like a glut of products and services, which is the excess we get when the intermediaries or gatekeepers are not necessary to get into the system. And the smaller players, with limited to no marketing budgets, are now competing with the big players that can have big budgets, sales teams, strategic plans, and all the other advantages that go with being aligned with a corporate entity.

Continuing with this look at reintermediation today we look at a trio of events that have transpired over the past eight weeks or so, that demonstrate the extent to which reintermediation has not just taken hold, but has caught the attention of some of the largest power brokers in the mainstream media landscape. The site of all the activity is on YouTube, where companies called MCNs, or multi-channel networks, have recently become the beneficiaries of deals worth hundreds of millions, and in the orbit of a billion dollars.

Yes, the big bucks are increasingly paying attention to YouTube, and here’s why. Because the ‘heterogeneous mess’, as a colleague has called the site, both benefits and suffers from too much of everything. It’s a great thing in theory but in practice is not navigable. If you don’t know where to start on YouTube, you’ll never get started. If you do have a starting point ….on your way to that place known as the rabbit hole, where time stops, and the next thing you know you’ve been clicking around on your iPad on a work or school night and it’s 2 a.m.
The MCN’s are an antidote to the chaos.

Are the MCN's a perfect solution to the problem of content coming at us in all forms, from all sides, all of the time? No. But working better than YouTube’s original channel experiment of 2012-2013,, which saw close to $300 million, all told, doled out to both big name and small name content people, in an attempt to create more of a TV like viewing experience on the video platform.

So, you're wondering, what function do the MCNs perform? Wasn't the whole point of platforms like YouTube to remove the intermediaries, to make it possible for individuals to just post whatever the heck they wanted, for people to be able to view whatever the heck they wanted, as much as they wanted, and to be able to pass videos along, without the interference of any third parties? Well, yes. Kind of. Nice theory, but the bottleneck created by too many videos and not enough ways to differentiate them, either by creator or theme, left a void, or some would say created an opportunity.

Enter the MCNs, which are essentially the online video world's version of a ‘roll up’. The concept comes from the world of investment and refers to efficiencies and advantages that become available when several small component parts are consolidated– in this case YouTube channels, some of which can be as basic as a 1-person show. The MCNs have salespeople and strategists that, if they do their jobs correctly, get better ad rates for the YouTubers, better distribution, and better promotion than they could obtain on their own. On the advertising side of the equation there is less risk for the brands buying the ads, because instead of getting placement in a run of raw, unfiltered YouTubery, they get inventory with a proven audience and an appeal to a specific demographic. Think, e.g., beauty bloggers and cosmetics companies, teenage boy comedy and skater fashions, food bloggers and grocery stores, or mega brands like Kraft.

At the recent MIP television conference, held annually in Cannes, an speaker representing one of the MCNs explained it best. We used to think in terms of audience. We now think in terms of fanbases. And fanbases are what the MCNs traffic in, in a way that that initiatives that begin at the corporate level and try to ‘reach out to street level’ cannot. We’ve seen it tried dozens of times and we’ve seen it fail almost as many. So where is the corporate media money now going? Large chunks of it are going to the MCNs. In mid April, in a deal valued at $900 million, Disney acquired MCN Maker Studios, home to such YouTube channels as PewDiePie, Epic Rap Battles of History, and Philip deFranco, representing millions of views per day and several billion views at the aggregate level.

A few weeks later Viacom, parent company of MTV and Comedy Central, acquired a non-controlling stake in Defy Media. Defy is a multi-platform media company (with both online and offline properties) that focuses on content for 13-34 year olds. Their YouTube MCN is home to such channels as: comedy duo Smosh, pratfall and prank site, and celebrity news channel Clevver TV. The basic stats on those channels, to the end of June 2014 are:

Consider these figures in light of a recent report on the Top 500 non-entertainment brands on YouTube, that means channels operated by companies whose primary business is not entertainment. On average their YouTube channels have 82,000 subscribers, and that's up from 37,000 a year earlier. A huge jump, but their numbers pale into comparison to thousands of YouTubers, many working as 1 person shows. If the brands can't get the numbers on their own their next best strategy is to piggyback where the views actually are happening.
And because things happens in threes -- or at least that's when we start really paying attention to them -- this past week the news broke that Time Warner is in negotiations with Vice, the bad boy media company profiled in this recent blog post. If the deal goes through Vice will be valued in excess of $2 billion. Rupert Murdoch, of News Corp. and 21st Century Fox fame, acquired a 5% stake in Vice back in the summer of 2013, and for those need to be reminded, he purchased MySpace for $580 million in 2005 (when Facebook was unknown save for a select group of college campuses) and we all know what happened there.Will this latest round of re-intermediation end up like MySpace, where the corporate cash infusion and mindset allegedly sank the ship, or will it lead to evidence that media properties developed outside of the conventional systems of power and influence can get a seat at the table, and do so by entering through the side door. We watch and we wait.

Extra credit section: Not everyone is of the opinion that disintermediation is a good thing for the creative industries. For more on this topic see this article on the downside of disintermediation by intellectual property lawyer Terry Hart.

And from March 2015 a look at the inner workings of MCN's here.

Related Posts: 
Platform Capitalism, or why your parents don't understand the Internet
YouTube: When the going gets weird, the big get bigger
The festival of the stars of YouTube
YouTubers in 2015: The appeal of the Annoying Orange