Podcasts Q2 2020: Spotify takes an early lead

MIDiA has just published its latest Podcast report, Podcasts Q2 2020: Spotify Takes an Early LeadIn it we present data from MIDiA’s quarterly survey that presents a comprehensive view of podcast user behaviour, who podcast listeners are, how it stacks up against radio and music streaming listening and which platforms listeners are going to for their podcasts. One of the key findings of the 3,000 word report is that Spotify is now firmly established as the most widely used podcast platform. 

Spotify is now the leading destination platform for podcast users. In Q2 2020 42% of podcast listeners used Spotify, 10 points ahead of Apple in second place. This does not necessarily mean that it yet leads in terms of volume of listens, but it is the platform that the largest share of regular podcast listeners visit. Spotify was second in Q4 2019, so it is a rapid ascension for the streaming platform, leaving Apple trailing significantly. Google in third place may surprise some in the podcast sector, as it is renowned for being a small player. However, MIDiA has tweaked the wording of the question repeatedly over the last nine months, making it absolutely clear what we are referring to, and the result is always the same. This suggests either a) a large number of people use the app but have much lower listening patterns than users of other platforms, or b) Android users are somehow less clear on what podcast apps they use than iOS users. We think the latter is unlikely.

Early adopter behaviour shapes the market

Varying levels of podcast usage among users is however very likely as we are at such an early stage of market development (just 14% of consumers listen to podcasts regularly). This means that podcasts are at the ‘critical mass’ phase of adoption, where usage starts to move from early adopters towards the mainstream. As a consequence, heavy-usage early adopters, which Spotify podcast users tend to be, have particularly heavy behaviour and skew the overall numbers. This illustrates the supreme importance of measuring audience behaviour like MIDiA does, rather than relying solely on analytics – which are great for understanding volumes of listens, but less useful for understanding audiences. 

This early adopter skew also means that the content that resonates well with podcast users now will not necessarily be the right content to pull in more mainstream audiences, nor is it likely to be the right content mix for a longer-term strategy.

Podcasts are still small scale for now, but have vast potential

Podcasts are still small scale and far outweighed by radio. In fact, overall audience penetration has not shifted much during the last six months, though volumes of podcast listens have increased. So, existing podcast users are listening to new podcasts, creating new ‘day parts’ in their lockdown behaviours.

Spotify’s podcast strategy is dominating thinking in the podcast space at the moment, and with good reason considering its heavy investment. However, with the ad market softening, and Spotify relying primarily on ads to monetise podcasts, it will be some time before it can recoup its investment. Nevertheless, Spotify is betting big. It sees the opportunity in competing for radio listening to be a much bigger move than music alone. It is betting that podcasts will take radio out of radio, just like Netflix took TV out of TV.

BBC Sounds represents a podcast blueprint for radio broadcasters 

Spotify will not, however, find all radio companies bending to its will. In the UK, the BBC Sounds app illustrates how powerful a strongly integrated app and content strategy can be, with the app the second-most used podcast platform in the UK. Crucially, the vast majority of Sounds users that are also podcast users, use the app for podcasts. This contrast strongly with other broadcaster apps. For example, in the US, only a small minority of NPR’s app users that are podcasts listeners use the app for podcasts.

The experience of BBC Sounds illustrates that broadcasters can be a major force in the future of podcasts, but that they cannot rely solely on the strength of their content and programming. Without the tight technology integration that Spotify employs, broadcasters will find themselves looking more like NPR than they do the BBC.

If you are a radio broadcaster exploring how to innovate your audio and tech strategy to compete in this new marketplace, then get in touch with stephen@midiaresearch.com to see how MIDiA can help.

HomePod Mini: Apple’s pandemic-era product

Apple’s Tuesday product announcement showcased its 5G iPhones, but also included the launch of the new $99 HomePod Mini. Though it might have looked like a supporting act for the launch, its strategic importance should not be underestimated – especially in the context of how Apple competes with Amazon, the company that is arguably becoming Apple’s most important competitor among the Western Tech Majors (Apple, Alphabet, Amazon, Facebook). Amazon is emerging as a global scale hardware competitor, focused on the home rather than on personal devices.

HomePod Mini is a product for the era of pandemic

The home is becoming the new battleground for the tech majors and Amazon has a comfortable lead with more than 50% of the installed base of smart speakers, significantly ahead of Google and far ahead of Apple which currently sits at less than 10% market share. HomePod Mini is an affordable device that gives Apple the opportunity to quickly expand its role across the homes of iPhone owners, a beachhead for future content and services. HomePod Mini is also very much a pandemic-era product move; with more of us spending more time working and studying from home, we are more inclined to use specialised home devices such as smart speakers, rather than the convenient but not specialised phone. As the HomePod was always a premium, Apple afficionado device, HomePod Mini gives Apple a tool with which it can extend its footprint in the average day of its increasingly home-bound iPhone owners.

An enabler for audio strategy

Though Apple has much bigger ambitions for the home than music alone, music is the use case that is spearheading the product strategy. Apple TV continues to grow in importance for Apple, but as a screen plug-in, it lacks the capabilities of a standalone smart speaker. As Amazon has shown, smart speakers can become the digital hub around which smart home strategies can be built. HomePod Mini may also be the tool for a bolder, joined-up audio strategy for Apple. Alongside Apple Music, Apple continues to back its radio bet Apple Music 1 (previously Beats 1) and of course it is one of the leading destinations for podcasts. Apple can pull these three disparate strands together by creating in-home use cases via HomePod Mini. In this respect, Apple will need to, once again, do all of that and more – as not only has Amazon recently added podcasts to Amazon Music, but it also the home of Audible, an asset both Apple and Spotify lack.

Finally, what Apple did not announce on Tuesday was content bundles for its hardware. An Apple One / iPhone device lifetime bundle feels like an obvious move – competition authorities permitting, perhaps sometime over the coming 12 months. A $3.99 Apple Music Home Pod tier would make sense also.

The device may be mini, but the strategy is anything but.

Quick Take: Apple One – Recession Buster

Apple officially announced its long anticipated all-in-one content bundle: Apple One. $14.99 gets you Apple Music, Arcade, Apple TV+ and 50GB of iCloud storage. A family plan retails at $19.95 and a premier plan includes 1TB storage, News and Apple’s new Fitness+ service. While the announcement was expected (and you may recall that MIDiA called this back in our December 2019 predictions report) it is important nonetheless. 

As we enter a global recession, the subscriptions market is going to be stressed far more than it was during lockdown. With job losses mounting, and many of those among Millennials – the beating heart of streaming subscriptions – increased subscriber churn is going to be a case of ‘how much’ not ‘if’. In MIDiA’s latest recession research report, we revealed that a quarter of music subscribers would cancel if they had to reduce entertainment spend and a quarter of video subscribers would cancel at least one video subscription.

A $15.99 bundle giving you video, music, games and storage will have strong appeal to cost conscious consumers who are loathe to drop their streaming entertainment but need to cut costs. As with Amazon’s Prime bundle, Apple One is well placed to weather the recession. They may not be recession proof – after all, entertainment is a nice-to-have, however good the deal – but they are certainly recession resilient.

Which may explain why music rights holders have been willing to license the bundle which almost certainly included a royalty haircut for them, to accommodate the other components of the bundle. While rights holders will not have been exactly enthusiastic about further royalty deflation (one for artists and songwriters to keep an eye out for when Apple One starts to gain share) they are also keenly aware of the need to ensure they keep as many music consumers on subscriptions as possible. 

One key learning of the impact of lockdown has been that new behaviours learned during a unique moment in time (eg not commuting to an office, doing more video calls) can result in long term behaviour shifts. Lower music rightsholder ARPU may be a price worth paying for shoring up the long term future of the music subscriber base.

Apple to launch subscription bundle – we called it!

In MIDiA’s 2020 Predictions report published in December 2019 we predicted that tech majors would start creating subscription bundles, with Apple leading the fray. Lo and behold, news has just come out that Apple is working on ‘Apple One’ – a multi-genre subscription bundle that will include Apple Music, Apple TV+, Apple Arcade and Apple News+.

This is what we said back in December:

“Expect Apple to experiment with paid bundles. Adding TV+ to its student Apple Music package is another test case and may soon see Arcade folded in also. With a global recession looming, Apple and Amazon will be well placed to grow market share.

We called it!

So why is Apple doing this, and why now?

With smartphone sales slowing, Apple needs another growth driver to maintain revenue growth. It is making this move now because, one, it needs the transition to start soon, and two, it is looking to profit from the recession. Standalone digital subscriptions are contract-free and so are vulnerable to cancellation. Additionally, they skew towards Millennials – the segment most likely to be hit hardest by any workforce reductions. Consumers who find themselves having to tighten their belts will not want to simply ditch their digital entertainment, however – it has become too important to them. So, a multi-subscription, value-for-money bundle will become particularly appealing during a recession. Apple is thus hoping to pick up price-sensitive subscribers during the economic downturn.

Apple also has an ace up its sleeve: device bundles. As we wrote in December:

“Currently, Apple’s mix of premium, standalone subscriptions are educating its user base that they have a clear monetary value. Apple will start to bundle these together with devices in order to maintain revenue growth in its otherwise slowing device sales segments. The initial bundling of Apple TV+ for free for one year may help acquire market share but it also lays the ground for a more comprehensive and structured bundling strategy. By tying subscriptions into long-term, need-to-have relationships – i.e. phones and shipping – […] tech majors could gain at the expense of standalone subscriptions.

Bundling used to be the sole domain of Telco’s but the tech majors are looking to get in on the act. Apple can use Apple One to increase device prices, e.g. pay $200 more to get an iPhone with a lifetime of unlimited music, video, games and extra cloud storage. By doing so it both increases device revenue (and after all, Apple is still a device company and is measured that way by investors) and taps into an entirely different purchase decision cycle. Devices are need-to-have and if you are in the market for a high-end device, adding on 15% for unlimited content is a much easier sell than trying to sell the subscription standalone.

In doing all of this, Apple is of course taking a leaf out of Amazon’s book. Amazon has built the core of its streaming businesses around the Prime bundle. In doing so, it has the additional benefit of creating a recession-proof bundle (everyone still needs to buy stuff) – one which is proving its worth already, if it’s incredibly successful Q2 is anything to go by. As we enter the recession, standalone subscriptions like Spotify and Netflix are vulnerable to increased churn. Apple and Amazon will be waiting to pick up the pieces.

Why Spotify needs Russia

Spotify’s delayed Russia launch finally happened this week. While it did not drive a stock price growth like the Josh Rogan deal did (the stock closed just 1 cent higher than the previous day’s close) it will actually prove much more important in the medium term.

Podcasts are Spotify’s long-term bet, the moon shot that keeps investors excited and that points to a future where Spotify is better able to plot its own destiny without being constrained by record labels. But that future destination does not mean anything if Spotify is unable to maintain strong growth in its core business in the interim. Which is where Russia comes in.

Spotify has an Apple-like problem but chose a very non-Apple solution

Global streaming revenue growth was 22% in 2019 and growth will slow significantly in the COVID-19 impacted 2020. Growth rates however were already slowing due to the maturation of developed western markets, while subscriber numbers were growing faster than revenues, pushing down ARPU. Spotify has the same challenge as Apple.

Apple is the market leader in smartphones but does not own the majority of the market and the overall smartphone market is slowing, which means that iPhone sales have slowed. Apple could have decided to go ‘down market’ and created cheaper devices for less affluent consumers and emerging markets. It decided not to, and instead to start pushing its top-end devices even higher up the market with higher price points. Spotify has taken the opposite approach. Rather than increase prices in high-value markets, it is prioritising lower ARPU emerging markets. Spotify has done so because a) it does not have a diversified product like Apple so is less able to risk slowing sales, and b) its product is not sufficiently differentiated from other streaming services to prevent churn if prices went up.

Betting big on emerging markets

Instead of focusing on maximising revenue growth among existing subscribers, Spotify is rolling the dice on subscriber growth. It keeps telling investors to measure it on growth and market share, and that is exactly the game Spotify has chosen to play. Which is where Russia comes in.

Emerging markets are where the subscriber growth lies: Asia Pacific, Latin America and Rest of World combined will drive 71% of global music subscriber growth between 2019 and 2027. Spotify is already committed to this strategy and is already seeing results. In its Q1 2020 earnings, Latin America and Rest of World were the workhorses of Spotify’s growth during the quarter, accounting for 73% of all new subscribers; one year previously the share was just 30%.

But emerging markets take time to convert, users need to get familiar with the service via ad supported and extended trials before slowly converting to paid, though always at lower rates than in developed markets due to lower spending power. So, Spotify needs to keep expanding the user acquisition funnel which means launching in populous new markets such as Russia.

Russia’s contribution to the global picture is what matters for Spotify

The question many are asking is, has Spotify left it too late for Russia? There is no doubt that 2019 was a big year for streaming in Russia, with revenues growing at 79% to reach $249 million in retail terms, which makes it a sizeable, but not (yet) a large market. By way of comparison, Brazil’s streaming revenues are comfortably more than double that. As of Q1 2020 there were 7.4 million subscribers with Vkontakte and Yandex commanding a combined market share of 80%, so Spotify is entering an established market with well-established indigenous players.

This is not Spotify’s modus operandi and the last time it took this approach was India, which is yet to deliver results. So Russia is unlikely to be a runaway success for Spotify, but it is entirely reasonable for it to expect to pick up three million subscribers there over the next three years, which in turn will help sustain Spotify’s global subscriber growth. This is not about winning in Russia but instead winning globally. Or put another way, Spotify needs Russia more than Russia needs Spotify.

Just what is Tencent’s Endgame?

tencent logoTencent’s combined $200 million investment in WMG follows on the heels of its $3.6 billion joint investment in Universal Music. It is hardly Tencent’s first investments in music, having spent $6.2 billion on music investments since 2016. But music is just one part of a much larger, supremely bold and undoubtedly disruptive strategy that is making the Chinese company an entertainment business powerhouse in the East and West alike.

Tencent is a product of the Chinese economic system

Tencent being a Chinese company is not incidental – it is pivotal. The Chinese economy does not operate like Western economies. Rather than following free market principles, it is a controlled economy in which everything – in one way or another – ultimately comes back to the state. In China, the economy is an extension of the state. The state takes an active role in the running of successful Chinese companies, sometimes very openly, sometimes in less direct ways, such as ensuring party nominees end up in management positions.

Chinese companies are used to working closely with the state – in its most positive light – as a business partner. When a company’s objectives align with those of the state, an individual company may gain preferential treatment at the direct expense of competitors. This is exactly the opposite way in which state involvement happens in the West (or is at least supposed to) – i.e. regulation. Tencent has benefited well from this approach, not least in music.

Tencent Music is the leading music service provider in China (78% market share in Q1 2020) and is also the exclusive sub-licensor of Universal, Sony and Warner in China. This means that Tencent’s streaming competitors have to license the Western majors’ music directly from it. Tencent clearly has a market incentive to ensure terms are less favourable than it receives itself. Netease’s CEO call the set up ‘unfair’ and regulatory authorities are at the least going through the motions of investigating. But the fact this set up could ever exist illustrates just how different the Chinese regulatory worldview is.

Investing in reach and influence

Why this all matters, is that when Tencent views overseas markets it does so with a very different worldview than most Western companies. Taking investments in two of the world’s three biggest record labels might feel uncomfortable from a Western free-market perspective, but to Tencent it just makes good business sense to have influence over as much of the market as it can get. What better way to help ensure you get good deals in the marketplace? Such as, for instance, exclusive sub-licensing into China.

Music is not Tencent’s main priority. For example, its combined $6.2 billion spent on music investments is less than the $8.6 billion that Tencent spent on acquiring 84% of gaming company Supercell in 2016). Nonetheless, music – along with games, video, messaging and live streaming – is one of the central strands of Tencent’s entertainment portfolio strategy.

Just as Apple, Amazon and Alphabet are building digital entertainment portfolios designed to compete in the ‘attention economy’, so is Tencent. In fact, it is fair to say that Tencent is prepping itself as a direct competitor to those companies. But while each of the Western tech majors compete in familiar (Western) ways, Tencent is taking a more Chinese approach.

If you don’t like the rules of the game, play a different game

Tencent’s entertainment investment strategy can be synthesised as follows:

  • Take (predominately) minority stakes in companies to get the benefit of influence without having to shoulder the burden of ownership
  • Invest end-to-end across the supply chain, from rights through to distribution
  • Systematically invest in direct competitors so that they are all each other’s enemies but are all Tencent’s friend

This strategy has given Tencent access to and / or control of:

  • Audience (e.g. QQ, WeChat, Weibo, Snapchat (12%), Kakao (14%), AMC Cinemas – via its stake in Wanda Group),
  • Distribution (e.g. Tencent Music, Tencent Video, Tencent Games, Joox, Spotify (10%), Gaana, KuGou, Kuwo, QQ Music, Tencent Video, Tencent Games, Epic Games (40%)
  • Rights (e.g. UMG (<10%), WMG (1.6%), Skydance (5%–10%), Supercell (84%), Glumobile (15%), Activision Blizzard (5%), Ubisoft (5%), Tencent Pictures)

The Western tech majors have built similar ecosystems, acquiring the audience and distribution parts of the supply chain (e.g. iOS, YouTube, Instagram, Twitch, Apple Music) but only rarely getting into rights (e.g. Apple TV+ originals) and never systematically investing in competing rights holders.

The Western tech majors may have often tetchy relationships with rights holders but their strategic focus (for now at least) is to be partners for rights holders. Tencent’s strategy is one of command and control: vertical supply chain integration secured through the sort of behind-closed-doors influence that billions of dollars’ worth of equity stakes get you.

Tencent may be the future of digital entertainment

Tencent is building the foundations of being one of – perhaps even the – global digital entertainment powerhouse. By taking stakes in two of the Western major labels, Tencent broke the unspoken gentleman’s agreement that streaming services and rights holders would remain independent of each other in order to ensure the market remains open and competitive. Now the Western tech majors have to choose whether to continue playing the old game or to get a seat at the table of the new game. Back in 2018 MIDiA predicted that over the coming decade Apple, Amazon or Spotify would buy a major record label. Maybe that prediction is not quite so outlandish anymore.

Why Music Streaming Could Really Do with a Disney+

The music and video streaming markets have long been best understood by their differences rather than similarities, but the flurry of video subscription announcements in recent months have upped the ante even further. New services from the likes of Disney, Warner Bros, Apple and AMC Cinemas point to an explosion in consumer choice. These are bold moves considering how mature the video subscription business is, as well as Netflix’s leadership role in the space. Nevertheless, Netflix is going to have to seriously up its game to avoid being squeezed. The contrast with the music streaming market is depressingly stark.

Diverging paths

The diverging paths of the music and video subscription markets tell us much about the impact of rights fragmentation on innovation. In music, three major rights holder groups control the majority of rights and thus can control the rate at which innovation happens. As a consequence, we have a streaming market in which each leading service has the same catalogue, the same pricing and the same device support. If this was the automotive market, it would be equivalent of saying everyone has to buy a Lexus, but you get to choose the colour paint. Compare this to video, where global rights are fragmented across dozens of networks. This means that TV rights holders have not been able to dictate (i.e. slow) the rate of innovation, resulting in dozens of different niche services, a plethora of price points and an unprecedented apogee in TV content.

Now, Apple and major rights holders Disney and Warner Bros have deemed the streaming video market to be ready for prime time and are diving in with their own big streaming plays. Video audiences are going to have a volume of high budget, exclusive content delivered at a scale and trajectory not seen before. There has never been a better time to be a TV fan nor indeed a TV show maker.

The music streaming market could really do with a similar rocket up its proverbial behind right now. The ‘innovation’ that is taking place is narrow in scope and limited in ambition. Adding podcast content to playlists, integrating with smart speakers and introducing HD audio all are important – but they are tweaking the model, not reimagining it. Streaming music needs an external change agent to shake it from its lethargy.

Do first, ask forgiveness later

The nearest we have to that change agent right now is TikTok. TikTok has achieved what it has by not playing by the rules. It has followed that long-standing tech company approach of doing first and asking forgiveness later. Sure, it is now locked in some difficult conversations with rightsholders – but it is negotiating from a position of strength, with many millions of active users. TikTok brought a set of features to market that rightsholders simply would not have licensed in the same way if it had gone the traditional route of bringing a business plan, pleading for some rights, signing away minimum guarantees (MGs) and then taking the neutered proposition to market.

I recall advising a music messaging app client who was just getting going to do the right thing. I hooked him up with some of the best music lawyers, made connections at labels, and basically helped him play by the rules. Two years later he still hadn’t managed to get a deal in place with any rightsholders – though he had racked up serious legal fees in the process. Meanwhile, Flipagram had pushed on ahead without licensing deals, secured millions of users and tens of millions of dollars of investment and only then started negotiating deals – and the labels welcomed it with open arms. To this day, this is my single biggest professional regret: advising this person who was betting his life savings to play by the rules. He lost. The ‘cheats’ won.

We need insurgents with disruptive innovation

The moral of this story is that in the consumer music services space, innovation happens best and fastest when rights holders do not dictate terms. This is not necessarily a criticism. Rights holders need to protect their assets and their commercial value in the marketplace. They inherently skew towards sustaining innovations, i.e. incremental changes that sustain existing products. New tech companies looking to build market share, however, favour disruptive innovations that create new markets. Asking an incumbent to aggressively back disruptive innovation is a bit like asking someone to set fire to their own house. But most often it is the disruptive change that really drives markets forward.

Streaming subscription growth will slow before too long, and as a channel for building artist-fan relationships they are pretty much a dead end. There is no Plan B. Back in 1999 there was only one format; it was growing well, but there was no successor. Looks a lot like now.

Take Five (the big five stories and data you need to know) October 14th 2019

Take5 (1)Fortnite black hole: In what may be the most audacious global games marketing stunt ever, Epic Games killed off Fortnite in Sunday’s end-of-season event, which one million people viewed live on Twitch. The game got sucked into a black hole, with Epic deleting 12,000 Fortnite tweets and all information on its website. Has Fortnite really gone for good? Did Elon Musk delete it? The likelihood is it will be back for chapter two sometime this week.

CDbaby, independent artist boom: Independent artist distributor CDbaby is now collecting $1million a day in revenue for its 750,000 independent artists. Earlier this year, ambitious publishing group Downtown acquired CDbaby’sparent AVL meaning the publisher is also now a top player in the independent artists space. Publishers are reversing into recordings.

Analytics curve ball:Little Big League baseball team Minnesota Twins isusing analytics to revamp its pitching staff, including figuring out which players should be throwing what types of balls. Sports has long been ahead of the performance analytics curve. Lots of lessons for media companies here.

Netflix Italy deal: Netflix has agreed a co-production deal with Italian media giant Mediaset. Under the deal the two companies will co finance seven movies that first will be distributed globally by Netflix then broadcast free-to-air in Italy one year later. Netflix needs to deepen its international content but can’t afford to do it by itself anymore.

Spotify/Apple – regulation storm brewing: It is a case of when, not if, tech majors (Apple, Alphabet, Amazon, Facebook) are going to be regulated. The effect could be like when the EU compelled Microsoft to unbundle Windows Media Player in the 2000s, instigating its long-term decline. Spotify’s complaint against Apple is building momentum with US law makers and could be the first step.

Take Five (the big five stories and data you need to know) – September 16th 2019

Spotify – small step, big step: Spotify has announced that it is acquiring musician marketplace company Soundbetter. Back in July, Spotify halted its artist direct offering. Some quarters viewed that as the end of Spotify’s disruptive label-competitor strategy. We thought differently, and this acquisition confirms it. Being a next-gen label means being so much more than what labels used to do. Spotify is building it from the ground up, starting with artist collaboration.

Apple, half-bundle: While launching new hardware, Apple announced it will be bundling a year of Apple TV+ with new device sales.This feels like it is more about Apple not feeling that it has enough value to expect standalone subscribers yet, and that it expects to be in a stronger place 12-18 months from now. Nevertheless, Apple’s future is bundling. Two to three years from now, expect an all-in-one bundle of everything Apple has to offer, fully integrated into its devices. That’s how to drive up device average revenue per user (ARPU) in a saturated market with slowing replacement cycles.

Apple, SKU skew: Lots of announcements from Apple – including Arcade. The very fact that there were so many (e.g. three iPhones) points to one of Apple’s most important post-Jobs transformations: fragmentation. In the 2000s Apple had a far more concise product line-up than its traditional Consumer Electronic (CE) competitors. Now it has dozens of products and services and looks every bit the traditional CE company. Gone are the days of the simplicity of one iPhone, replaced by a suite of segmented, highly-targeted product SKUs (Stock Keeping Units). Clarity of single purpose is a luxury no longer afforded.

 

Peak tech, sort of: The title of Vox’s peak tech piece turned out to be much more promising than the piece itself(which focuses on what terms companies are using to describe themselves). But there is a bigger story here: we have now reached a stage where a) tech is a meaningless concept – everything is tech, and b) there is the realisation that companies that use tech to maintain networks of services and customers (Uber, WeWork etc.) are highly vulnerable with little in the way of actual assets. If the tech bubble bursts, investors will need somewhere else to put their money.

Space lift – yes, space lift: Years ago, sci-fi author Arthur C Clarke wrote of a tower that would act as an elevator for spacecraft to launch directly from the edge of the Earth’s atmosphere, thus saving the huge thrust energy required to leave the earth’s orbit. It turns out that no known materials would support such a vast structure. Now two astronomers have proposed an alternative – a 225,00 mile long,pencil-thin, zip wire hanging down from the surface of the moon…you couldn’t make it up.

 

Take Five (the big five stories and data you need to know) August 23rd 2019

Taylor Swift, pre-sale love: Taylor Swift tends not to adhere to prevailing industry trends. As a millennial artist with a strong Gen Z following, streaming should rightly be the core of her recordings career. Having started her career very young in the album era, however, she and her fans still love album sales. So, on the eve of her first UMG album ‘Lover’, she has hit one million pre-sales– which is kind of spectacular in the post-album era. Add this to BTS helping push South Korean sales into growth, and we have an emerging trend: pop acts mobilising young fanbases on a global scale to buy albums as a gesture of fandom. 

Apple TV+, on its way: Apple confirmed plans to launch its video subscription service by November, part of a drive to reach $50 billion in service sales by 2020. Services represent 21% of Apple’s revenue and it is making a big deal of transitioning to being a services business. A cynic might argue that of course Apple would say this when iPhone sales are dipping below 50% revenue. While wearables are booming, there is no iPhone successor on the horizon, so services need to drive mid-term growth.

Korn, brutal mosh pit: Nu-metal veterans Korn have announced they are doing virtual gigs in MMO games AdventureQuest 3D and AQWorlds. The band have had characters made of them and they promise a ‘brutal mosh pit’ and an ‘unforgettably brutal, monster-filled virtual rock concert’ – as well as the opportunity to take selfies backstage with the band. Making in-game concerts work is no easy task (look at how long it has been since Marshmello’s Fortnite ‘gig’). But the potential is clear, and they will get easier to do.

Google, privacy fightback: Since the Cambridge Analytica scandal, privacy has risen in the agenda. Companies that don’t rely on advertising (Apple in particular) have been able to leverage this to position privacy as a product. Google can’t afford to be a passive observer, as advertising is 83% of its revenue ($33 billion last quarter). Its Chrome team has thus proposed a ‘privacy sandbox’, which aims to deliver accurate targeting for advertisers without compromising user privacy. Blocking cookies can reduce publishers’ ad revenue by half, so Google needs a privacy-friendly version of targeting, fast.

PAOK, licensing brinkmanship: Greek Super League football club PAOK will stream its first match of the season on itsown OTT platform because it hasn’t yet got a licensing deal with national broadcaster ERT. Sports licensing is in an unusual place right now. On the one hand, traditional broadcasters are seeing audiences decline while having to spend more on drama to compete with Netflix (so less to spend on sports), while on the other new streaming players are increasing their spend. Expect more speed bumps like this along the way.