Appnation: A Revolution In Mobile Advertising

Back in 2005, a group of executives at upstart social network Facebook came up with a strategy to enter the crowded photo sharing space dominated by Photobucket, Picasa, and FlickR. Instead of designing a better photo viewing experience, Facebook focused on a tool that made it simple for users to identify and “tag” friends in a photo. It was a landmark moment in the movement to create applications in which the value proposition centered on people, not technology. It was the dawn of social applications. Today Facebook reigns as king of photo sharing apps with 250 million photos uploaded to the social network every single day.




















Social Applications are the talk of the town in Silicon Valley and on Wednesday, hundreds of app developers and entrepreneurs converged on the Concourse at the San Francisco Design Center to discuss strategies and tactics in app creation, monetization, and distribution at the leading consumer apps exposition, Appnation III. Appnation III focuses on social and mobile apps across various platforms, including PCs, smartphones, tablets, internet-enabled television and more. The market size for apps is pegged at $20 billion dollars and expected to triple within 5 years. With 44% of all US mobile subscribers now owning smartphones, it’s easy to see why most techies believe the future of online revenue will rely heavily on the app economy.

Apps aren’t just another way to consume content from the Internet. “Your app goes from something you use to something that is a part of who [you] are”, says Doug Purdy, head of developer relations at Facebook. Apps track the music we listen to, the movies we watch, the games we play, the exercise we do, and then they share this personalized data with the people we know. Apps, unlike traditional web media, have added a second layer of communication – where traditional websites sought to communicate with their users, social apps also seek to communicate with their users’ friends, pulling personalized data from social networks to map friends’ activities. Social proof in the battle for consumer attention is a major challenge and the personalized data collected from social apps is a goldmine for advertisers.

Apps are big business. When Google launched its Android operating system, critics were quick to question how a mobile OS fit into Google’s larger product landscape. Today, Android has the largest smartphone market share at 43% (iOS is far behind at 28%) and it’s no coincidence that four of the top five apps on Android are Google apps (Market, Search, Gmail, Maps, and YouTube, with Facebook rounding out the five.) What’s even scarier is how untapped the Apps economy is. Local advertising, for example, is estimated to be a $144 Billion market, if and when advertisers finally figure out how to crack it.

Though mobile advertising is on the rise, its progress has been slowed by a failure to close the loop on user experience. A recent survey of 300 CMOs and their spending habits indicated only 27% of mobile advertisers have optimized mobile websites. In other words, companies shell out big money to attract mobile users to their site only to present a crummy, awkward user experience that drives potential customers away, all the while complaining that they aren’t seeing the conversion rates to make further mobile investment worthwhile. Even without mobile advertising, apps disrupt traditional business models in every major category - Content distribution (Knook), mobile commerce (Ubercab), and mobile productivity (Dropbox) all hint at new and lucrative cross-platform monetization strategies.

So where do tablets fit into the big picture? Advertisers see tablets as a unique canvas capable of beautiful, engaging ad campaigns. They outdo the rich, immersive experiences that print magazines provide, while maintaining the immediacy and intimacy of a website. It’s the best of both worlds.

Tablets provide a “lean back” consumption experience that often takes place in front of a television. The potential here is enormous – click through rates on tablets are highest during peak TV hours and advertising inventory is mostly sold out. TV advertising is expected to end the year at a record $68 billion and tablets may hold the keys to extracting some of that revenue.

Despite rapid progress these last few years, the app economy is in its early stages. Distribution was solved a few years back, but mobile advertising is still in its infancy. There are plenty of problems to be unraveled and some helpful practical advice going around: Build around your users, measure your engagement by collecting as much data as possible, and stay away if you have high blood pressure.

-Andrew Greenstein

Direct Andy Grammer's Music Video On Vevo

Ever wanted to direct a music video? With the help of Interlude and S-Curve, Vevo is giving you the chance with Andy Grammar's new song “Keep Your Head Up”. Go to Vevo.com and check out the video, which let's you direct the flow by selecting, on the fly, which scenes come next.
Hit play and the video starts with Andy walking down an alley singing. After a few seconds, two options appear on the screen and you select whether Andy will bump into some boxes or get dumped by bikers. Choose quickly, because you only have a few seconds. Like the choose-your-own adventure books you used to read, each choice sets off a different story line. One story line includes a cameo by Dwight from the Office. And like a choose-your-own adventure book, you will probably want to see every outcome, watching the video over and over until the song is stuck in your head. They even let you choose whether to end the song a cappella or with the full band.
Like Guitar Hero and Glee, the video for “Keep Your Head Up” is another great example of the increasing crossover between video, music and games in the modern consumer media age. This crossover leads to greater engagement as sight, sound and decision-making processes are all taken over. Greater engagement leads to more ad revenue opportunities.

For starters, most people watch the video (and thus the ads) several times. Because they are focusing on the video and expecting to take an action, they are more likely to read ads that pop up. But imagine if you can use a similar technology to integrate ads into the video. What if I could click on Andy's T-shirt and buy it, or enter the online store of a poster he walks by?
Tracking the choices of consumers is valuable information for film makers and video sites who can see what works best, what compels a user to pick one option over another, and whether there is a correlation between position of choice on screen and choice made. We can figure out, for example, that ads placed on the right side of a screen will get the most attention.

The interactive music video is a collaboration between technology company Interlude, record label S-Curve, and music video distribution hub Vevo. Interlude, an Israeli company founded by popular musician Yoni Block, develops the platform that enables video makers to add this extra layer of engagement. There are other companies that offer a similar technology, but Interlude is unique in that if offers an interactive experience that is seamless: the content doesn't pause as it waits for you to make your decision. S-Curve is a record label founded by former Columbia Records president Steve Greenburg. A small company focused heavily on innovation, S-Curve discovers and fosters new music-related technologies then uses them with their artists. They often take an equity stake in the technology companies to help them crack into a crowded music industry.

Interactive videos are certainly enjoyable, but detractors argue it's not cost effective. First look technology never is. The model needs to be proven, then the market responds with more companies eager to capitalize on higher revenue margins, which should lead to cheaper production costs. Still, big bands who can afford to should look more closely into interactive videos, like Arcade Fire did when creating their Google-assisted HTML-5 music video experience The Wilderness Downtown.
In case you're wondering which official video will be released to other content channels like television and Metacafe, Vevo is tracking which “routes” made through the video are the most popular and plan to release this version as “Official”.

Dalton Caldwell of imeem vs. David Hyman of MOG on the Viability of Music Startups

Everyone wants a music startup. After all, somebody needs to fix the industry, it's hard to discover new music and we're all experts in our own way. Plus, it just makes you seem cool. But are music startups viable businesses in today's turbulent music industry?

Dalton Caldwell, founder/ex-CEO of imeem, says no. Digital music, he argues, is nearly impossible to monetize in any number of formats: Tools for artists don't work because artists have no money to spend; Selling music is tough because you're competing directly against iTunes, Amazon and soon Google; ad-supported music doesn't generate enough revenue to meet monthly minimum licensing payments; subscription-services take enormous amounts of upfront investments and time to develop the necessary licensing agreements.

David Hyman, CEO of premium music service MOG sees things differently and points to success stories like Winamp, Pandora, and Guitar Hero to prove music products sell in a variety of formats. Hyman agrees that providing music content is a small-margin business, but the market is massive and music consumption is at an all time high. He describes how MOG has evolved from a site providing tools to music bloggers, to a music network providing ad sale resources, to its current subscription music service. The implication that Hyman is making is that success in the constantly changing music industry requires adaptability.

Imeem only ever tried to be an ad-supported music service. Caldwell himself admits that attracting traffic is easy when you offer free premium music to consumers. Imeem's 21 million monthly unique visitors in 2008 said nothing of its viability as a business. Even with a $24 million annual run rate, imeem could not keep up with the monthly minimum licensing fees and they failed to adapt their business model until it was too late. Dalton is aware of this and says he was in the process of implementing a new strategy to offer broadly available, legal APIs for others to build upon when the company was forced into a fire sale of its assets late last year.

MOG, on the other hand, didn't rely on music content to build a viable business and has only recently, and carefully, entered the subscription music business. MOG started by providing tools to music bloggers. This morphed into the fastest growing music network, providing ad sale resources to over 1,300 blogs and music sites, reaching over 35M monthly uniques. Only after years of digital music experience and a revenue cushion from ad sales, did MOG make the leap to digital music distribution.

As to Caldwell's other points, I have to disagree. Artists don't have money to pay for artist tools? Protools has shown that artists will pay steep prices if they believe it will help them realize their dreams of “making it”. Tunecore has done very well charging users $20 to put their music on iTunes - $20 for the sense of accomplishment that your music is selling on the shelves next to Arcade Fire and Broken Bells. As to quarterly margins being impossible to meet, MOG says they have realistic quarterly margins that they have consistently hit. And although subscription services have yet to prove profitable in the long term, Hyman points out that the nature of subscription services is changing and they can now be incorporated and tied into established billing relationships like phone bills, car payments and cable television.

The music industry is tough, but there are plenty of passionate entrepreneurs and artists who have made their careers out of it. Perhaps if you had asked Caldwell a few years ago about the viability of music startups, when imeem had a $24 million yearly revenue run rate and had just acquired SNOCAP, he might have had a different answer.

The Fresh, Untapped Potential of The Southsiders

I love stumbling across great live music, especially in a foreign country. At the George Payne Irish Bar in Barcelona, I was thoroughly entertained with the popular sound of Rebekah Lavelle and David Schamroth from The Southsiders. The vocal/guitar duo delighted the crowd with a myriad of neatly exercised covers. David proved to be more than competent on the guitar, anchoring a library of well known melodies with steady rhythmic undertones, but Rebekah stole the show with her precise and fluid voice, and a passion that burned bright in the limelight.


Though loaded with talent and charismatic on stage, the young duo have yet to develop the business of their music. They write original music, but stick to covers on stage to meet bar scene demand. They have a MySpace page, but not much interaction with their fan base and almost no active social media strategy. But they have the tools to succeed and with the right management and a good distribution plan, this promising duo should be able to convert an evening passion into a modest secondary income, and possibly more.

I caught up with them backstage for an impromptu interview, which is hard to make out over the clutter of a very packed bar. I've included the transcript of our conversation below the video.




Where are you from?

David: I'm from Belgium, Brussels.

Rebekah: I'm from Dublin.

How long have you been playing together?

Rebekah: 6 months, since April.

How did you guys meet?

Rebekah: Believe it or not we stumbled across each other at work. He was looking for a singer and I was looking for a guitarist, and here we are.

You guys played one of my favorite songs of all time tonight, High and Dry by Radiohead. Is there a special reason for that or was that just filler?

Rebekah: It's a great song and Radiohead is a great band. We generate all of our songs together based on [feedback] from people, and that is a personal favorite.

David: Same here. I play piano as well and it's one of my favorites to play.

What's your schedule like? How often do you play?

Rebekah: 2-3 times per week. We work full time in Marketing, but on the weekends and on Thursdays as well, in different bars.

David: We're going to start playing weddings as well.

So you guys work full time?

David: Well maybe one day we'll get lucky and quit our jobs to do music full time.

Rebekah, When did you start singing?

Rebekah: It must have been when I was nine. I was in theater and various music groups, so I was doing an awful lot of singing. I had done some of my own recordings because my uncle has an editing studio, so he allowed me to go in and record a lot of my songs. Then I was in Australia 2 years before this and I sang in a rock band. I moved to Barcelona nearly a year ago and wanted to do more.

David: I started playing the piano when I was 6 and then I started to play guitar in a Beatles cover band.

What are you guys doing in Barcelona?

Rebekah: Who wouldn't want to be in Barcelona! We had an office in Dublin, but our head office is in Barcelona and I had the option to stay in Dublin or move to Barcelona. It seemed like a great opportunity.

David: We've got the beach, women, it's a great city.

Do you ever sing in Spanish?

David: We'll be singing in Spanish later tonight.

Do you play original songs?

David: We have a couple. When we play in bars they request cover songs, but we're thinking of dropping a couple of originals in there.

Do you write music together or is it one or the other?

Rebekah: I've been writing a lot of the music, but we plan to [write together]. We've only been together for a short period.

Do you sell your music on iTunes or Amazon?

David: Not yet, but maybe with your help we will.

Do you guys have a fan base where your fans can congregate and learn where you will play next?

Rebekah: The MySpace page is the best place right now, but its only been online for a few weeks. Before that we would just give the name of the band and they check the pub website to see where we are at the time, or they add us on Facebook as their friends.

Who are your biggest influences?

David: I love the Beatles, Radiohead, the Police, a little bit of Jack Johnson.

Rebekah: The oldies, 80's rock music, Led Zeppelin, David Bowie, and at the moment I love Lady Gaga, though she is a bit extreme.

If you could open for any band, who would it be?

David: We'd love to open for Kings of Leon.

Check out Rebekah and David from the Southsiders at http://www.myspace.com/thesouthsidersrock

Atomic Tom Puts on a Surprise Iphone Performance

A couple of guys performing their song with iPhones on the subway. I love this for so many reasons. What better way to achieve an intimate experience with your audience then to sit next to them and brighten a dull part of their days. The video captures the sentiment and I can't help but "toss some coins into the guitar case" and buy their single, which they smartly link to in the video. At a time when music networks like MySpace are making music discovery their primary strategy, these guys forgo the middle man and bring the discovery directly to the audience. Playing the song on their iPhones is both memorable and practical - much easier to carry around phones than guitars and drums. There is a viral marketing component (which succeeded in part to TechCrunch's coverage). They may even get themselves featured in an Apple commercial. If the band Atomic Tom 'makes it', they may look back to this day as the turning point.

"Thru You" and "Playing for Change" Demonstrate Online Music Collaboration...Without the Platform.

A lot of people have emailed me about the two videos below with genuine concern about the competition they pose to Bojam.  While both are examples of online music collaboration, they don't compete, they inspire.  That is because the creators of "Playing for Change" and "I'm New", Mark Johnson and Kutiman, respectively, have done the "Bojam thing", but they've done it without the platform.  They've done it by gathering audio and video clips and compiling them into music videos. Bojam is the platform that allows you to do that and record, all from your home computer.

But what's different about these two videos?  Let's start with "Playing for Change".

Playing for Change - Stand By Me

       

Playing for Change is a documentary of film maker Mark Johnson going around the world to capture various musicians multi-track recording different parts to "Stand By Me".  The final cut  includes all of the musicians.  There are a couple key points to note here: (1) When recording multi-track music, location and time don't matter.  You simply listen to what has already been recorded and record your part on top of that; (2) Music has no language barrier.  Whether you speak Russian or Spanish, you can understand a drum beat or the sound of a guitar; (3) Cover songs make recording easier.  Musicians playing together for the first time usually play covers because everybody knows the notes and how to start and stop.  Covers quickly engage the musician and the audience and also tend to have a nostalgia effect.

Bojam lets anybody do what Johnson does in "Playing for Change" - go around the world and find musicians to  record different parts to the same song, then mix them together into a single fluid mix.  Better yet, they can do it without ever buying a plane ticket.

Kutiman - I'm New

 

Kutiman, on the other hand, created his mix without the musicians being aware that they were part of a collaborative product.  By collecting, editing and remixing YouTube videos of musicians playing independent songs, he demonstrates the power of transformation.  With simple remixing tools, a single user can mix and match various recordings to create a new and sometimes radically different version.  The Bojam user needs to be able to accomplish both of the tasks in these videos, remote multitrack recording AND remixing.  

These works also show the importance of video.  Had you listened to an MP3 of these songs, you probably would not understand what was going on.  The video shows you real people, creating music ALONE, while at the same time collaborating with the global community.  While the music demonstrates the finished product, the video tells the story.

About Me

Hi. My name is Andrew and this is my blog. How did I get here?

I was born in Chicago and moved to the SF bay area when I was 6, just days before the Loma Prieta earthquake. For me, California was an acquired taste. When I was 12 I started playing the drums and though I've taken a few years off here and there, it is absolutely my favorite thing to do. My first band, Throwback Blue, started in high school and carried into college.

I studied journalism at UC Irvine, lived in Newport Beach and played the drums under a freeway overpass, the only place I could find that didn't come with complaints. After a brief stint at the LA Times, I decided my best shot at making an impact in the music industry was to go to law school, learn contracts and become an entertainment lawyer.

At UCLA I studied entertainment and media law and formed a band, the Dough, with 3 of my classmates. Then in January of 2008, I flew up to Palo Alto on the advice of my brother Erick to meet with Eyal Hertzog, founder of Metacafe. Eyal had been looking into mass collaboration in short form video. Being a musician himself, it occurred to Eyal that the model that worked so well with text (wikipedia) and software (open source) was best suited to music. After all, music is by its very nature a collaborative art form! On June 4, 2008 Erick, Eyal and I started Bojam, the world's first web-based recording studio. A month later Veeru Mehta, formerly a senior architect at Hewlett Packard, joined Bojam as CTO and founder. And just 9 months after that, I started my first blog.