A VC - Latest Comments in Social Media - What Needs To Be In The Cloud?

Re: Social Media - What Needs To Be In The Cloud?

fredwilson — Wed, 24 Jun 2009 17:57:41 -0000

Good points

Re: Social Media - What Needs To Be In The Cloud?

Bruce Warila — Wed, 24 Jun 2009 08:13:38 -0000

It seems as though energy consumption has to be an important part of this debate. Smart metering of energy is going to tell us how to consume less of it, and access to renewable energy to power our own local 'kits' will probably factor into the decision. Otherwise, it seems as though the 'local' option (your own on-demand computing and storage) * 300,000,000 people versus solar charging a smart phone and accessing what you need when you need it, is going to be better for the planet? It will be interesting to see over the next ten years how tax policy, energy costs and energy infrastructure improvements shape this debate.

Re: Social Media - What Needs To Be In The Cloud?

ErikSchwartz — Thu, 28 May 2009 07:23:14 -0000

I think it's wide open. Lots of people are so intellectually invested in the technology idea of streaming (just read the comment threads here) that they're not thinking of different solutions that give the same or better UX with better economics.

Re: Social Media - What Needs To Be In The Cloud?

fredwilson — Thu, 28 May 2009 06:38:59 -0000

And guess who is going to offer service a?

Re: Social Media - What Needs To Be In The Cloud?

ErikSchwartz — Wed, 27 May 2009 10:51:21 -0000

The reason the music industry is so capital inefficient is their data sucks.

The model historically has been throw small advances to a lot of bands to get them to sign their lives to a label. Throw them all against the wall, the ones that seem a bit sticky you market the heck out of. A few of those will succeed and pay for the whole thing. The income from those successful bands needs to amortize all the failures. This process created a lot of jobs at labels.

The reason the bands agreed to this were two fold; first of all $50K seems like a lot of money to a bunch of 19 year olds who work at Mickey-D's and live with their parents. Second, the upfront costs of production and distribution used to be prohibitive. Production and distribution costs are way down. There are no returns and cut outs any more. Do end cap promotions exist anywhere but walmart at this point?

The real problem is the feedback loop to understand success is awful. The only way to find the gems was to polish a lot of pebbles most of which are junk. That is really expensive.

So in the new world. People will pay for music, just not as much as they used to. Bands won't get upfront signing money. If you can programmatically identify the hits then those successes can stand on their own because you are no longer needing to amortize the failures into the mix. What percentage of bands ever earn back their advance?

The recording industry ends up much smaller. The labels in their role as music VC's go away. There job becomes to monetize and curate their archive.

ASCAP, BMI, SESAC and Harry Fox are actually in an interesting place if they play their cards right.

Re: Social Media - What Needs To Be In The Cloud?

ErikSchwartz — Wed, 27 May 2009 09:45:05 -0000

I agree it's not a technical issue. It's about user experience and economics. For instance, 5 years from now you may have the choice between two competing in-car music services.

Both services offer every song in every genre.
Both services scrobble everything.
Both services offer community recommendations and play list sharing from in, and beyond your peer group.
Service A works everywhere. Cross country road trips. Tunnels. The far woods. It never hiccups.
Service B has geographic limitations. If you drive cross country there are long stretches where it does not work at all. If you're in a really crowded area (the LIE) there are also hiccups when there are a lot of other users in your area.
Service B will add new music a day or two before service A.
Service A costs $150 and a monthly charge of $5.
Service B costs $125 and a monthly charge of $30 and a two year contract with a cell carrier.

The consumer doesn't care where the music is stored. They care about UX and price. UX can be identical. Local storage will beat streaming in price.

Re: Social Media - What Needs To Be In The Cloud?

fredwilson — Tue, 26 May 2009 08:23:17 -0000

A library of the commons is what we need. And a business model for those that contribute to it

Re: Social Media - What Needs To Be In The Cloud?

fredwilson — Tue, 26 May 2009 08:23:15 -0000

There are so many great web services for music lovers out there

Re: Social Media - What Needs To Be In The Cloud?

fredwilson — Tue, 26 May 2009 08:22:11 -0000

Ooh. Good line. The new media is not bits, its networks

That's gonna get reblogged when I get to a computer!

Re: Social Media - What Needs To Be In The Cloud?

fredwilson — Tue, 26 May 2009 08:20:16 -0000

I'm working on it. Targetspot is the leading audio ad network for streaming audio and I think there is great potential for monetization and royalties to artists. The radio model can work online. It just needs to be more personal, more relevant, and available on mobile devices

Re: Social Media - What Needs To Be In The Cloud?

hypermark — Tue, 26 May 2009 05:02:38 -0000

In social media, the conversation is endemic to the medium. My expectation is that to the extent that we agree that media of all kinds (music, movies, photos, posts, threads) will continue to be conversational, the underyling media needs to be reliably accessible.

Whether that becomes an iTunes ala carte subscription or something akin to basic cable (i.e., buried in your DSL or cable modem service cost), it seems that this kind of Library of The Commons is inevitable and necessary.

Re: Social Media - What Needs To Be In The Cloud?

Michael Fidler — Tue, 26 May 2009 00:27:28 -0000

Thanks for the response Greg! I'll have to check out lala.com. For now, Blip.Fm, LastFm, and grooveshark.com are doing the job nicely.

Re: Social Media - What Needs To Be In The Cloud?

Michael Fidler — Tue, 26 May 2009 00:25:05 -0000

Re: Social Media - What Needs To Be In The Cloud?

hubrt — Tue, 26 May 2009 00:17:27 -0000

The case for storage:
A couple of years ago, I used to scare music execs at Popkom with this calculation.
- Pretty soonish, a top of the line hard disk will offer you something like half a petabyte (or 500 TB) of storage. - You could preinstall every song ever recorded. And would still have left enough space to record your monthly dose of HD tv (plus any bloated OS update you want or need)

Storage is getting exponentially cheap. And for the next foreseeable future, portable storage is, well, anyway the way to go. I like the last.fm radio app on the iphone (despite the huge gaps in its cloud based repertoire, despite its battery guzzling usage of wireless).
Thing is: network coverage won't be anytime soon near the point where you can convert any given music player into a cloud accessing device. And don't try to subsidize the infrastructure invest by milking music: at their best time, the EBIT of a single carrier like vodafone surpassed the complete turnover of the whole music industry.
And, not to forget: the carbon footprint of permanent cloud access must look insanely scary (compared to local plays).

But still: the case for cloud accessibility is pretty valid, too.
Cutting off the social from media will only hurt media. Because media tends to talk the value of creative talk. But it is defined (and monetized) by its use of the technical representation of creation, the technical medium. The new medium is not bits (been there, done that, has been called CD), but networks (technically and socially, leveraging technology). Non-networkable media will look like pre-Gutenberg books: nice scribblings, no future.

I guess we should be talking hybrid. Play local - point to the cloud. Where you can play, too, of course - but how will I fill up my 500 TB HD?

Re: Social Media - What Needs To Be In The Cloud?

Prokofy — Tue, 26 May 2009 00:06:20 -0000

I look forward to hearing whether this venture is profitable for you down the line, Fred.

I'm not talking about the ratio of attempts at success to actual success. I think you'd agree that this coefficient is wildly different than it was in 1960 or 1980 because of the ease which which you can use Youtube or Myspace or whatever to get attention to your music and find fans. So there's really no comparison. But aside from those jillion wannabees, I mean to focus on those that really are the rough equivalent of someone worthy to be signed by the old-fashioned record label you hate. Such a band could have a million downloads on myspace without a penny in their pot -- and that's wrong. That's not about "some not making it" -- that's about valuation, and the inability of the engineers of the web -- for ideological reasons -- not to deliver micropayment and other schemes to get people paid. I'm totally with Jarod Lanier on this when he says "it is so because we engineered it to be that way" -- and they didn't have to.

You've made an interesting and valid point about "the new radio" as far as giving away content except your metaphor flounders when you consider that radios ran ads to get their radio station paid for, and to get the DJs salaries. And of course there was payola. Now, while there's some blogola, again, there's just no equivalent. Radio was a business model with a payment scheme as it "gave away" music and taping from radio was always inadequate and flimsy. Internet giveaway has no business plan! Call it "the new promotion" if you will and feel triumphalist that evil record companies and the RIAA boo hiss are all undermined by freebies but...who is really getting paid? Across the board? To make the entire industry thrive? It's all just kind of busking, really.

I noticed YouTube now puts up a VISA interface in front of your video to get you to pay, and on mash-ups, picks out one of the artists for you to go buy the song. I wonder if that works. I hope it does.

The web has to get people paid, other wide it is an engine of destruction of value. In fact, it already is that, and only handfuls of people are profiting from services that are free to users.

You're one of them.

I'm not.

Re: Social Media - What Needs To Be In The Cloud?

fredwilson — Mon, 25 May 2009 16:38:11 -0000

We did the same things and have experienced the same behavior as a result

Re: Social Media - What Needs To Be In The Cloud?

Nigel Walsh — Mon, 25 May 2009 15:33:11 -0000

michael - Im with you. I donated all my CD's to Charity and sold all my DVD's bar a few about 3 months ago. We moved house 2 years ago and all our music is digital and pumped around the house with Sonos. I actually found now we are digital, I watch less real TV and more stuff as I want - and usually in big chunks, nothing for days/weeks then 3 episodes of 24 or Lost ...

Re: Social Media - What Needs To Be In The Cloud?

fredwilson — Mon, 25 May 2009 15:24:10 -0000

There's always going to be ten times as many artists (maybe a hundred or a thousand artists) who didn't make it for every one who did. That's going to be the case regardless of the distribution technology and the business models.

Giving music away on the net to stimulate demand is the new radio. Artists weren't paid by terrestrial radio and had a compulsory license

As terrestrial radio declines, free internet streams are simply replacing it. That's the new promotion

My friend's record label is not proof, but it is an example

Re: Social Media - What Needs To Be In The Cloud?

fredwilson — Mon, 25 May 2009 15:15:07 -0000

Good point about p2p. But you can't get instant play in p2p

Re: Social Media - What Needs To Be In The Cloud?

Prokofy — Mon, 25 May 2009 14:22:18 -0000

Well, did you get a return on your investment yet, Fred?

I'm glad your friend's record label works. But that's not a model for every musician, and there are zillions of them. Did your friend's four artists give away all their music and then also try to tell on i-tunes on top of that? Well, why not sell on i-Tunes *more* then? Selling on i-Tunes is a good thing, as you're acknowledging, but then why the millions of free downloads on MySpace first? Andrew Keen has simply found four *other* artists that *didn't* make it work this way -- anecdotes are not the way to have this discussion, however, because it's not scientific.

For example, Magnatune was touted by Wired and other Web 2.0 gurus as being the way to go. Well, how are they doing? Why do we never hear about them any more? They have everybody give away their music, and then broker licenses for those companies that want to buy a jingle for an ad or a sound track for a movie. But what a system, eh? It counts on capitalists being able to hang around forever to sustain your socialism, when you're constantly downgrading the value -- to zero. Why even pay for a licensed jingle when soon you can get that for free too? And what kind of cut does this Magnatune have to chomp out of your profits to sustain itself to do brokering? And so on.

No one has proved that endless liberalization of content and giving away everything for free really works as a viable business model except for a few that...often have angel investors in the wings with an ideology that giving away things for free works -- or who make their money giving lectures about how giving away things for free works at Web 2.0 conferences.

To really work, this concept has to work for LOTS more people.

I don't feel the need to bash record companies that everyone feels simply because I have a longer memory, I guess, as I know that they sustained artists for decades, and whatever the belief in their rapaciousness, probably we could not have had the music culture we have today without them. Like building national roads and parks.

Luddites are not people who were against technology just for the sake of being backward and unprogressive; they were against technology that cost them *their living*, and which enabled *other people* to take their living away from them and impoverish them.

Re: Social Media - What Needs To Be In The Cloud?

bankownedbyamerica1 — Mon, 25 May 2009 12:08:48 -0000

When I was counseling an acquaintance who had just been laid off, I said, "one has to have a back up plan." She poignantly said, "that job was my back up plan." I don't mean to be flippant here but competition is now rampant in America, whether for jobs or even for a comfortable retirement. That is what the bankster scandal was all about, see an opportunity (streets paved in gold) take it. No matter what! As we have

interesting ...Facebook worth $40 billion? Twitter Worth $15 billion?

Re: Social Media - What Needs To Be In The Cloud?

fredwilson — Mon, 25 May 2009 10:35:17 -0000

I don't think its a technical issue, I think its a behavior and business model issue

Re: Social Media - What Needs To Be In The Cloud?

ErikSchwartz — Mon, 25 May 2009 09:03:57 -0000

So you are already pretty much doing what I propose. Multiple copies of large cloned local storage.

Now what is on your disks is largely different than what's on my disks. But as the disks get larger and larger the differences become less and less as the libraries have more and more common points. At the limit where the size of the disk exceeds the size of all recorded music, the libraries become the complete recorded oeuvre of mankind (yours and mine and everyone elses) become identical.

That's the dream, and we're only a few years from its technical feasibility.

Re: Social Media - What Needs To Be In The Cloud?

fredwilson — Mon, 25 May 2009 08:32:25 -0000

i used to use spotify when it was in private beta. i stopped because it didn't have all the music i wanted to listen to in it. i guess it does now because i'm hearing a lot of people talking it up now.

Re: Social Media - What Needs To Be In The Cloud?

fredwilson — Mon, 25 May 2009 08:30:55 -0000

exactly. this is the point i was trying to make