Monetizing Mobile Audio

I'm going to the gym in a few minutes. I'll bring my android and stream some music while I'm on the treadmill. Maybe I'll listen to my soundcloud dropbox, or maybe I'll check out the popular tracks on hypem, or maybe I'll listen to some I stream music on my mobile phone all the time. I don't have a single mp3 on my android and I don't have any desire to put any on it.

This is the future. We won't be buying files, moving files, and listening to files. We'll be streaming audio from the cloud onto our connected devices in our homes and offices, and onto our mobile devices at the gym, on the bike, in the car, etc. And I think mobile streaming audio is going to be huge.

How will the mobile audio streaming services make money? Some will charge a subscription. But I believe, like the radio industry for the past 50 years, most will make money by running commercial messages in the stream once or twice an hour.

And yesterday, our portfolio company Targetspot, launched the first mobile audio ad network. Initial mobile streamers include AOL Radio, Yahoo Music, CBS Radio, and

Targetspot built and operates the largest streaming audio advertising network and has been the leader in this market for the past three years. This move into mobile is very exciting to me because it will allow advertisers to reach music and audio listeners when they are out and about. Imagine combining mobile audio advertising with geolocation and time of day targeting.  Imagine hearing a Starbucks audio ad on your morning run alerting you to a discount on expresso drinks at the store a block away?

But most importantly, this mobile audio ad network provides a much needed monetization system for mobile audio apps (and actually any mobile app that wants to run audio spots). I believe Targetspot's mobile audio ad network will allow developers to build and launch innovative new streaming audio apps and make money from them.

If you have a mobile app that streams audio or that you would like to run audio advertising in, please contact the Targetspot team and they will give you the tools to build audio advertising into your mobile app.

#Music#VC & Technology#Web/Tech

Comments (Archived):

  1. Guest2

    Am subscribed to MOG, 10$/month and on demand.. it’s great.

    1. fredwilson

      yup, Rhapsody, MOG,, spotify, etc are the subscription modeland there’s sirius which is now available on mobile which is paid as wellbut i suspect the free ad supported model will ultimately aggregatethe largest audiences

      1. Mark Essel

        If you had to pick one today which would you go with?I subscribe to Pandora to avoid ads, but I’d prefer to be able to pick any music/songs I want. looks like a good deal at $4.99/month compared to Rhapsody and MOGs subscriptions are $9.99/month. I guess it depends on if they have the music I want.

        1. fredwilson

          i picked rhapsody twelve years ago and have never lefti love it

        2. Stephenzeek

          I’ve been lurking here for a while. I listen to Pandora every morning while I work, and I love it. though it is true that you can’t choose the music directly, I like the exposure to new artists. I also stream it on my iPhone, but (relevant to an earlier Fred post) the Pandora app kills the battery in short order. It does work well when combined with a car charger, but that is not exactly a business model. I agree with everyone that this is the future, and I am excited to see how it develops.

  2. Kevin Stecko

    Fred, do you connect your phone to the wifi network on planes? Just wondering since you don’t keep any files on your phone.

    1. fredwilson

      nopei turn my phone off on planes and use my laptopalthough based on the comment thread yesterday, i probably should moveto a tablet on planes

  3. Emi Gal

    And everything will get even better once Spotify launches in the US and you’ll be able to create playlists and sync them with all your devices ;-).

  4. kurtains

    I agree this is the future. Easier, more convenient and better discovery. Unfortunately, the subways force me to put some music on my phone. Maybe by 2020, I can go all cloud.

  5. Wells Baum

    Sure, your listening habits may fit the world of new music discovery.But what about all the existing music on your hard drive or external hard drive?Don’t you want some place to access those files?I think there’s a difference between access to new music and access to your collection. And I’d much rather access my collection, as it’s stuff that fits my tastes.Except, there’s no clear market leader out there that allows you to stream an external hard drive in the cloud. That’s what I’m waiting for….

    1. fredwilson

      I have over a terabyte of mp3s in a music server on our home networkWe never use it anymore. We have rhapsody on sonos and they have everythingI’m thinking about taking that server offline

      1. Charlie Crystle

        Have you compared quality of AIFF or .WAV vs MP3? Or even CD quality vs MP3?

        1. Harry DeMott

          A great question – this really is a “good enough” market. Fred might have a great set up – but if the best speakers you are ever going to own in the future came attached to a Sonos device – I’m not sure the source is going to matter. (Nothing against Sonos – I use it at home and it is fantastic – just making a point. try listening to the same song in your car on an FM broadcast, a CD, and satellite radio. Satellite is absolutely terrible – but 20M people just don’t seem to care (which gets to another point from above – people will pay for subscriptions when they are a trapped audience – as they have been in cars forever. They won’t pay for subscriptions when they have a lot of choices that are free)

        2. fredwilson

          It doesn’t matter. Google “convenience trumps quaility” if you areinterested in my thoughts on this topic

          1. paramendra

            The “good enough” business model.

      2. RichardF

        connect a pogoplug to it then you can stream from it to your heart’s content.

  6. Pēteris Paikens

    I’m not ready to go back to the old variety of content interspersed with ads – I’ll choose any ad-free alternative, thank you very much; or use the wonders of new tech to automagically remove any traces of ads that were in the content.The same will apply to any content that my kids will see – I fully intend for them to grow up in an ad-free world, without the influence of marketing designed to affect easily swayed kids.

    1. fredwilson

      that’s fine and there will be services built for youbut the mainstream market will be ad based

      1. Pēteris Paikens

        I agree, it does seem that the mainstream market will be ad based. People have shown to easily accept it, even in media such as premium, paid-for cable TV channels.However, this is the case where there is some possibility that technology will trump social habits in future – it may well be that automated adblockers disrupt the ‘free but with ads’ model on the web, and the same may happen afterwards for other media. For example, browser plugins that enchance Grooveshark music player UI also happen to remove ads. If it becomes popular enough, that may force Grooveshark to move to some other revenue model.

        1. fredwilson

          Ad blockers have been around for a decade and I see no indication that theyare mainstream

      2. Harry DeMott

        The big question is relevance. I am more than happy to be hit with relevant information to my life or my potential purchases. Finding a way to constantly amaze me with products or services I am likely to use is certainly a killer app. And the web does it better than any other medium. the only thing close I think is well curated magazines – where the advertisements almost feel like editorial content because the two are so tightly intertwined. When I read Bibycling magazine I am very happy to see a crank brothers ad for new eggbeater pedals or a Rapha ad for new cycling gear. But when I watch a football game – I really don’t want to see 99% of the ads – as they are completely irrelevant to me.One free business idea: figure out a way to tie the objects and people you are following in Svpply to a contextual based ad platform – then you get hit with stuff that you have hopefully pre screened as cool and has the benefit of built in social affirmation. Board seat – options please?!Ha.

        1. fredwilson

          They shoukd get you involved. Its a great idea if they get to scale

    2. Keith Hopkin

      You will have to put blindfolds and earplugs on your children and home school them for 18 years. Then when you finally allow them to be exposed to the deviance of mainstream media they will buy Snuggies and come crawling back home. Wait, this sounds like a great reality show idea that could be paid for by Snuggie.As users find clever ways around advertising, advertisers will one-up you. And if you’re not directly affected, well, your friends and family are. The infomercial, product placement, those popup ads that appear on the lower third during a television broadcast.Are you going to suggest what clothing your kids are going to where in high school? No. You are not. Their friends are. And their friends just saw Justin Bieber wearing “brand x” skinny jeans on their new Nintendo 3DS game “JB and The Quest for Totally Phat Brand X Jeans” (Can somebody make this game? I think it will change the world).

  7. kidmercury

    i’m bearish on interruption-based advertising. i favor two approaches:1. paid model (rhapsody, napster, etc)2. “culture” model — whereby radio is viewed as part of the cost of running a culture. i.e. fredradio used to create greater engagement in fredland; greater engagement leads to greater investment in fredbucks and the overall fredland economy. i believe many media businesses may end up down this path as the governance layer develops.the interruption advertising model probably will continue, but i think it will be a smaller market IMHO, and one increasingly limited by hackers who find creative ways to cut the interruptions out.

    1. fredwilson

      that hasn’t played out in all the major media types that have moved toweb and mobileadvertising drawfs all other revenue models on the internet

      1. kidmercury

        i am not sure i disagree with you on that front. for example if authentic programming on fredradio is viewed as an ad for fredland (and thus, for fredbucks), free media that serves as an ad for something else is still the formula. i suppose where we may differ in opinion is how virtual currencies are going to disrupt the ad network model, if at all. i believe it is all about the virtual currency. i believe that the virtual currency model facilitates the blurring of the line between content and advertising, which i think is a key trend.

      2. markslater

        thats the problem fred.surely it eventually must go the way of other monstrous yesteryear verticals who felt that their mode of distribution was “locked in” (see music industry, newspaper industry etc etc) at some point – wont the public collectively decide to “tune out” and tip the scales in so that choice finally resides on their side. Whoever builds for that eventuality will transform how we consumer messages, and how we interact with brands and products.

        1. Dave W Baldwin

          You are right Mark. I may have said that regarding this subject before. As the cloud begins to grow with data for those that want to distribute knowledge, it will be even further facilitation the transport of communication. Paid messages will be even more important for image while the chance for the consumer to connect and order custom from the manufacturer/designer will come to be.

      3. Harry DeMott

        I tend to look at all music services along 4 axes:1. Lean Back – Lean Forward – Do you the listener want to program the music yourself or let someone else do it – or a little of both.2. Tethered – Mobile – these are converging as mobile gets better – but are you in a place based environment with a stable connection or do you have to worry about / utilize a 3G/4G service.3. Social or Personal – Are you listening to your own collection or are you getting a stream of recommendations from others (iPhone to Subscription – Ad Supported – or a hybrid.You are absolutely right – to date – no one has wanted to go the subscription route because music is essentially free on the web. My kids go straight to Vevo when theres a song they want to here – and guess what – it is always there. Google almost any song – and you will find it. Very hard to get Rhapsody to work at $10/month tethered or $15/ month mobile when you have to be your own DJ (get’s old quick unless you really know and love music – and then you are certainly in the minority) when alternatives like Pandora exist which cost you a little bit of attention.

    2. markslater

      wow you and me see eyey to eye Kid! i cant stand interuption advertizing. try watching an NFL game – its appalling.

      1. kidmercury

        non-cable television is the worst. they keep increasing the number of ads.

      2. fredwilson

        I love watching NFL. I go to the bathroom or the kitchen periodically duringads. Or we talk about the ads. Its part of the experience. Ad hatred is outthere but I’m not sure it is mainstream

        1. markslater

          maybe i am impatient. But watchin FLO on progressive or another etrade ad with a baby gets a touch old after the 100th run.go steelers 😉

  8. Morgan Warstler

    Fred, do the math on ads per hour.If (and this is a big if) the webco gets away with 1.2 cents per streamed song. Then we’re talking about .20 cents that has to be recovered.1 or 2 spots per hour isn’t going to cut it.Take a look at the new ad frequency in online TV – we’re talking 12-20 spots per hour.

    1. ShanaC

      If they are highly targeted through using other internet behavior you should get a better roi

      1. Nate Quigley

        and you’ll have happier users too. when the ads help me, I want them.

        1. ShanaC

          no question. I do think trying to find the right metric for measuring audio ads will be difficult (no clickthroughs) compared to other ads on the internet. If someone can hack that really well, shouldn’t be a problem.

          1. Morgan Warstler

            Shana my solution is a browser based tool like locked to bottom of a browser instance…And while it runs, it uses an “adframe” to load advertisers actual websites main of the browser.So that whenever you are fiddling with it, or just hear an audio ad, you know just tabbing over and the site is already loaded. Sites pay very very little for traffic, and we just report back on how often their sites comes into focus.Tell me when you want to start it!

        2. Morgan Warstler

          There’s a great old quote from Paul Harvey about, sometimes the biggest news of the day is that your feet don’t have to stink. Advertising is news. I believe it in my bones.But two radio spots are not going to generate 20 cents per hour EVERY hour all day long.Wishing and hoping is the wrong approach, treating your service like it is worth either being paid for or annoying the user with ads actually INCREASES how the user values the platform.Cognitive dissonance sets it – “I MUST love this thing, to put up with all these ads.”

          1. Nate Quigley

            I love that Paul Harvey quote – great. I’d be perfectly happy to listen to more than 2 ads per hour if they were useful. Hadn’t thought about it until @jfccohen’s comment, but when you put geo on top of personalized ontop of my social graph…Where can I get a cheap good lunch in 2 hours? Then, same advertiser, 10 mins later – 5 of your “friends” ate here yesterday. 10 mins later, here’s what 1 of your friends ordered. Then, 10 mins later, here’s what they said about it. If audio ads sounded like your twitter stream they wouldn’t be ads.TV, for the last 50 years, put 8 mins of advertising on 22 mins of content. Still does. Most people, even those that have DVRs, don’t skip the ads. When they’re helpful and contextual and personalized, no one will.

          2. Parkite

            Most people using a DVR don’t skip the ads????? Source? That is the single biggest reason I have a DVR.

          3. Nate Quigley

            Neilsen report in December. “Most” was probably the wrong adjective…but that’s what I’d remembered from the headlines. The full story from the report is more nuanced. Here’s a quote:”Contrary to fears that DVRs would wipe out the value of commercials because of viewers fast-forwarding through ads, DVRs actually contribute significantly to commercial viewing,” Nielsen said in the report.See full article from DailyFinance:

          4. markslater

            wow – this blows my mind – here is the nielsen report…i can promise you this – i am a master at precisely timing when to resume play during a commercial break. i have also never met someone who does not use their DVR to first record shows and secondly skip adds.i frankly have an extremely hard time believing this.

          5. PhilipSugar

            Who pays nielsen?

          6. markslater

            phil – is there a way to send you a PM? i just read your groupon analysis – very interesting

          7. PhilipSugar

            philipsugar at gmail

          8. fredwilson

            I don’t DVR to skip ads. I prefer to watch live tv. I will DVR if I can’twatch live and don’t want to miss it

          9. fredwilson

            I agree Nate

          10. jfccohen

            Nate, check out when I wrote about this exact concept a little while back on my blog (http://brainconnect.wordpre…”As our lives continue to be even more phone-centric (analysts predict that the smartphone market will grow by more than 50% next year – http://techtoday4u.blogspot…, this “scary” personalization theme will been seen as more and more useful as your world will become increasingly more relevant to you and your own personal social network. Imagine this: you are walking down the street with some friends and have set a trigger on your phone to allow it to text you between 5pm and 8pm when you are within .5mi of a restaurant more than 4 of your Facebook friends like. All of a sudden, your pocket vibrates and alerts you that 3 blocks north and one block east (it can give directions, remember?) is a great new restaurant that 10 of your friends posted positive reviews about and it includes a gift certificate for a free appetizer with the purchase of an entree. Scary? Maybe. Helpful? Absolutely.”

        3. kenberger

          This post harks back to the same discussion from a year or 2 ago. And my stance hasn’t changed:Ad targeting/content technology has to get WAY WAAYY better than it (still) is. If that happens, and I can finally upgrade my feelings on audio ads from “pure hatred/offended” up to “sometimes useful”, then the ad revenue should increase a lot, along w/ my user experience.Until that happens, I won’t touch an ad-based service. And until then, there’s no way that it will stay 1-2 ads per hour– content providers will be forced to sneak more in.

          1. Nate Quigley

            agree that 1-2 ads isn’t enough. also agree that targeting isn’t good enough yet. but when you throw geo and graph and some software at it, why couldn’t it be?

          2. kenberger

            could. should. I haven’t seen it yet.I really hope that Targetspot can crack this and looking fwd to seeing their latest. It’s been a long time since I met w/ them around the time of their formation.

    2. Harry DeMott

      Morgan cumpolusary license fees from Sound exchange is 0.0015 per streamed song – heading up to 0.002 per song in 2015 for web only services – so if you assume 15 songs per hour it is $0.0225 per hour heading to $0.03 per listener hour. For ease of math sake lets assume that streaming costs are the same (they are not BTW: in bulk they are less than this) – so you are talking about getting $0.045 to $0.06 per listener per hour. Take the midpoint and you need 5 cents per listener per hour. Multiply by 1000 to get an effective CPM and it is $50 per thousand listeners per hour.If you are getting a $10 CPM ultimately for highly targeted ads (might be high) you would need 5 ad units per hour – which would basically equate to one stop every 3 songs or so – but in reality it would be a pod of break twice an hour.I think the math here is right.

      1. Morgan Warstler

        Mike Robertson quotes it at 1.2 cents.I’ve heard slightly less from Pandora. They use more than Sound Exchange don’t they?

        1. MartinEdic

          Don’t leave out BMI/ASCAP songwriter royalties levied for every play based on reach. These are not negotiable. The math simply does not work.

          1. fredwilson

            Yes it does. The traditional radio stations are making money already ontheir streams.

        2. Harry DeMott

          Pretty much everyone who can use sound exchange does so. Not sure Robertson has everything correct. I wouldn’t necessarily trust his analysis. I’ve gone back and checked some rates for pure play broadcasters willing to deal with a minimum payment – and the CPM’s I quoted get even lower – so you can make it work – but it is a scale business for sure. AS I mentioned in a comment to Eyal – the industry does not have audited listener data yet (coming in 2011 hopefully) so audio buyers have a hard time participating in the market. Once that data comes out – Targetspot and others should do very well.

      2. Guest

        Harry,That’s a very good way to provide a quick financial basis.The economics are indeed quite simple and compelling.When one considers that in regular radio there’s typically 9 minutes per hour of advertising (…, with typical audio ad units of 10, 15, 30 seconds and dramatically higher CPMs due to deep level of user engagement and relevancy ($10 would be unstating the medium’s value), breaking $50 per hour per thousand listeners in mobile, to use your base of math, would indeed require a fraction of the ad inventory needed in traditional radio.Put differently -Digital audio ads in mobile are more valuable to advertisers and more relevant/engaging to users.Therefore, free applications and services can be provided with less and more relevant ads, delivering more value to both the consumers and to the advertisers.This is the power of technology to create that value added to the market.Eyal GoldwergerCEO, TargetSpot

      3. goldwerger

        Harry,That’s a very good way to provide a quick financial basis.The economics are indeed quite simple and compelling.When one considers that in regular radio there’s typically 9 minutes per hour of advertising (…, with typical audio ad units of 10, 15, 30 seconds and dramatically higher CPMs due to deep level of user engagement and relevancy ($10 would be understating the medium’s value), breaking $50 per hour per thousand listeners in mobile, to use your base of math, would indeed require a fraction of the ad inventory needed in traditional radio.Put differently -Digital audio ads in mobile are more valuable to advertisers and more relevant/engaging to users.Therefore, free applications and services can be provided with less, and more relevant, ads, delivering more value to both the consumers and to the advertisers.This is the power of technology to create that value added to the market.Eyal GoldwergerCEO, TargetSpot

        1. Harry DeMott

          Eyal: Congrats on the financing. Very glad to hear it. You are fundamentally on the right path and your persistence should bear fruit once we can actually get audited listener data from Arbitron or another source. Then we will all be on the same footing as the terrestrial guys – with far better targeting and instantaneous posting. A far better system.

        2. Gordon Bowman

          Great points Eyal.Looking at a traditional radio station’s 1 hour clock we roughly get:10-12 minutes of commercials = 16-18 units2 minutes of station promos = 4 units1-2 minutes of on air promotions (giveaways, call-ins etc)1-2 minutes of jock talkWhere does this leave us for actual music? Just 42 minutes.Users are clearly more receptive to digital audio because of this. They would gladly trade for a service that provides 58+ minutes of real music per hour instead.Combined with the fact that the ads themselves are also more relevant/engaging to users truly gives a win/win for both consumers and advertisers alike.

          1. goldwerger

            Exactly Gordon!

      4. fredwilson

        I think you can do it with less if you mix talk and music. But its between 2and 5 spots per hour

  9. ShanaC

    within this context, i kind of want to figure out the in between of discovery and things i already like. I’m having a hard time finding a service that is simple to use and leads me down a road well balanced between my two needs

  10. Dan Epstein

    Just discovered this week (for those who don’t know it, it’s sort of Pandora meets Grooveshark with a social aspect). Not sure I’ll pay $5 a week, but considering it. Nice interface, good selection of tunes I like.I haven’t seen ads on rdio yet, but they might consider a freemium model like Pandora and Grooveshark use.

    1. Morgan Warstler

      $5 per month!

      1. Dan Epstein

        Good catch! Thanks.

  11. mdudas

    Streaming services will definitely eat radio’s lunch – traditional radio companies like Clear Channel, CBS and others will be the biggest losers as consumption shifts to streaming online, on mobile devices and in cars. The streaming services are simply better than the terrestrial radio services (and are widening the gap every day). The large radio companies have had years to see this shift coming and have done little that the public has noticed to improve their products. Terrestrial music stations are bad (and getting increasingly worse – smaller playlists, more ads), while their simulcast mobile stations are even worse. Digital connections in the car (through tethering to mobile phones) as well as Pandora, etc. pre-installs will lead to continual decline in radio listenership. From a revenue perspective, radio budgets will continue to get cut as the listeners flee to better services and the targeting features available on these services (through networks like TargetSpot and directly from Pandora and others) make radio’s targeting capabilities look ancient. Pandora will continue to be the “go-to” for music-based radio, while new services will continue to emerge to replace other forms of radio (news talk, sports talk, etc).I agree that most streaming music services that launch will go with an ad-supported model. However, most of these will be the “mom and pops” and smaller stations with limited listenership, leading to a fragmented ad-supported market. These are very challenging to aggregate and serve up to advertisers in an attractive package. This will make for a challenging ad sale, but TargetSpot is definitely best-positioned to make this happen given their strong partnerships.However, subscription-based services will continue to capture greater share of the market – and, as they scale and convert more users from free-to-pay, they will be able to lower subscription costs to a “utility” level. Furthermore, there will be less fragmentation in the subscription market – see Netflix in video. What factors lead to subscription making more sense? Access on every device, larger catalogs over time, caching, party playlists, music on-demand, social features (sharing playlists/tastes with others), etc, etc. Thus, the largest share of listening will happen through subscription services, and this is where the largest revenue growth will come from.Spotify’s share of paid is growing in Europe as the mobile and social features become better and better. That will also happen in the US (see Spotify’s US Sony deal announced today). Everyone who walks into my apartment and hears Spotify, sees it’s interface and features and searches around for music leaves with the expression, “How soon can I get this? This is amazing!” The next 2-3 years in streaming audio are going to be a LOT more exciting than the past 5 years 🙂

    1. RichardF

      CBS own LastFM so they are already in the streaming business, how important they consider LastFM at the moment is another matter.

      1. mdudas

        Has improved much/at all since CBS bought them? I’m not a user but would love to hear from folks who are.

        1. RichardF

          not much really, imo. What surprises me is that they don’t offer the option of a Spotify/rdio i.e. stream the tracks that you want. They have a captive listener base.

          1. markslater

            what a waste – that was one of the first companies that both helped me learn about and convince me in the promise of crowdsourcing and UGC. It was a trailblazer, now its stuck in the mud.

        2. fredwilson

          Hasn’t changed much. Which is a good thing in my book. I love it

  12. jfccohen

    Fred,I couldn’t agree with you more…I’m glad to see our conversation at RadioInk carried over into this post. As I said then, and affirm with you now, the idea of geotargeted, personalized mobile ads are not that far off and can be HUGE. From an advertising perspective, this would be a welcomed addition from advertisers (who benefit from a more immediate impact on the consumer) and the listener (who benefits from a helpful interruption, which Mark Pincus noted is the future of successful advertising).This would be well adopted by retailers, who desperately seek a solid mobile advertising opportunity.Bigger is how to use geo-location on a variety of mobile consumption habits (video, audio, check-ins, etc.). Then, different advertisers can choose the consumption vehicle which best matches their product and target consumer. The key here is developing the trafficking company who can advise advertisers on the best way to reach their target depending on type of consumption.

  13. scottythebody

    Streaming sucks for people who travel.Here in Europe, one must pay roaming data when one crosses pretty much any border. This results in seriously prohibitive perMB charges that will keep streaming from being my main source of music for a long time to come. The last time I went to Canada, I paid €400 in roaming and that was being *very* careful. The amount of bandwidth I used wouldn’t have streamed me an entire album.The carriers aren’t motivated to help because they collect at both ends. So, for example, it’s very difficult to find a pre-paid data roaming plan anywhere. I hope that changes (and it is) because that is a good stopgap measure. I can buy pre-paid SIMS and pop them in my phone.Until I can get a reasonable worldwide or even Europe-wide roaming plan, I can’t move to a streaming service.

    1. fredwilson

      yupi get nailed every time i travel in europei am slowly but surely building up a collection of prepaid mobile simsin each market

      1. Magnus Wikegård

        I see a business model there. Preorder SIM cards delivered to your home. Short lifetime of the business but at least a couple of years. One could sell refills also but that requires a lot of integrations.

        1. coldbrew

          You are talking about lots of BD deals, but almost zero technology. If you have those skills and connections, that’s awesome. Please hurry; I can send you lots of biz.

      2. Neil Braithwaite

        As far as streaming audio… How about a custom list of your “fave” tunes created specifically for you as you “like” the song currently streaming. It may take a while to have the service compile your “fave” list, but after a while, if you are a regular listener, you would have quite a big song list. Having an access code to your “fave” data base would be really cool. And if they want to pop an ad in the mix – OK by me. And how about creating “fave” lists for specific activities – like: exercise, relaxation, shopping, working, etc. Customization would take this to the next level – as well as set up a great opportunity for targeted advertising. After all, a diverse list of activities would say a lot about the individual consumer.

        1. fredwilson

          That’s called loved tracks radio. Along with my libraryradio and neighbor radio they are three of my favorite streams onthe web

          1. Neil Braithwaite

            All these great innovative sites that I only hear about through friends, etc. Where is the “sitebook” that I can go to and find them myself?

    2. Julien

      Spotify has an awesome “offline” mode. I use that all the time : we think a few playlists and you get to listen to them while on the road. It doesn’t change anything to the experience (same software…etc), but it’s not streaming anymore. Only caveat : you have to have a “premium” account and to sync (connect to the web) at least once every 3/4 weeks.

      1. scottythebody

        Yes. And I’d love to use it. Unfortunately, for all the noise it generates, Spotify isn’t available in most of Europe.

    1. Dave Pinsen

      Interesting, thanks. I’m going to check them out and see how much it would cost to advertise an iPhone app via their service.

    2. markslater

      old CMGi company charlie! (or same name at least)

  14. Julien

    I’m not convinced the ads will be enough to support that. Specially in the day and age of digital, where it’s easy(ier) to build software that skips them. I hope premium is the way to go, but I’m not convinced it will be enough for these services as there will still be users who don’t want to pay for the music.I hope they will have to find another business model. It could be affiliation on swag and concerts, it could be selling extra services to artists and bands (like who listens to what…). It could also be to allow “businesses” to use services like this : rigth now I don’t think it’s legal for a shop to publicly broadcast music to their users without (at least) paying a fee to the music industry….

  15. baba12

    You talk of mobile Audio.In 2006 I did a strategy engagement with Sprint Communications at the highest levels of their company and board.The advice at the end of the day to them was 1. Get rid of Nextel ( bankers screwed them big time)2.Stop selling phones ( they had & still do like others over 60 different models of phones) 3.Deploy WiMax ( they were still tentative had a investment in Clearwire but not sure)4.Become the network carrier and build a platform for applications to be run on their network.If they had done that they would have been the platform for app developers and they could have provided wireless broadband and had a revenue sharing model with app developers deploying on the network.Motorola which is coming out with the Atrix was in the doldrums and were willing to design a product ( A phone with a 1GhZ processor which was still being developed, 64Gb flash memory, running linux with access to cloud services for your basic Office applications) that could provide the platform that would be able to be your basic cloud based computer working on a reliable network.You would have had the ability to get your video content at home or at your beach house and have one bill to pay.The device would dock at home connect to your TV and you could stream content. NBC Universal before hulu was willing to make a deal with Sprint, but that went no where.Alas they did none of it, paid me a good fee but that was that. They were/are afraid to cannibalize their revenue stream like everyone else and so they can’t see the future clearly.When you talk of mobile streaming one thing has to be delivered i.e. quality of service. As of now none of the carriers have really great service, it is six or half a dozen of the other your pick.But if not now but within 5 years someone will buck the trend and become a pure play carrier and build the platform for vendors to sell services and share in the revenue.When a carrier realizes that they are a carrier and not a phone seller then they will get to provide a better quality of service.So an ad supported wireless broadband content service will happen but as long as you have the big carriers cock blocking and being penny wise and pound foolish you will see this thing come out in peace meal

    1. Dave W Baldwin

      Amazing, isn’t it?

  16. MartinEdic

    I don’t see it. imagine the logistics of the Starbucks offer you mention. How does the Starbucks store know about the offer just made by the geo-targeting ad software? They are busy and have to put that offer into their workflow. Some guy with a phone walks in and says he gets half off? Suppose he uses his phone to pay and the offer is automatically calculated. What if I’m in line behind him and I pay twice as much?Honestly, this begs a bigger question: monetization of free services is hard. Facebook is worth billions because it knows who we are and the targeting ability is mind-boggling. Twitter not so much. Free radio? I will not listen if there are ads. How else do they make it work? They have to pay ASCAP and BMI royalties every time they play one of those ‘free’ songs. This is not negotiable. That doesn’t even take into consideration record companies.And BTW, what is the BMI/ASCAP cost of Somebody has to pay the writers…

    1. markslater

      its easy.i text “looking for coffee”starbux has one of two choices1. they go live in which case a barista receives a text and is authorized to respond to the text with a simple coupon (manager establishes what it is that morning) 2. they are too busy at which point they proxy the coupon for the next 4 hours so that the consumer – when he searches gets the coupon.redemption is the easiest part.mark

      1. RichardF

        it’s even easier than that – with the Starbucks iphone app, which can be used to pay now, the offer is redeemed through the app and the barista doesn’t even have to get involved.

        1. markslater


      2. ShanaC

        For small shops, forget it. (it is a time suck)Plus is the discount worth it when you want to create loyalty

        1. markslater

          i dont agree – there is no stipulation on “discount” the small shops can use the tool FOR loyalty.

    2. fredwilson

      Give twitter as much time as Facebook had

  17. markslater

    why do we have to continue to accept that people are OK with unwanted commercials. Why should i be subjected to a message from a vendor that i have no interest in hearing about? its nuts.Have you tried watching an NFL game recently?I dont want ads, i dont want unwanted bombardment of crappy messages, i dont want a coupon sent to me because i happen to be somewhere.I despise the old advertising model – i want control of my life and what i see, where i see it and from whom.If i declare to my world that i want something – then tell me – i asked to be told. no problem (see FS and linking a checkin to a notification – i dont check in i dont get notified)Madison avenue convinced us many years ago that its ok to get in our face with rubbish because back then……..we could not stop it. – with technology today – now we can.why arent people innovating entirely new ways for consumers to connect with brands? why are these companies just taking a new technology and laying on top yesterdays ways of doing things?

    1. RichardF

      for some reason I’m unable to like a comment Mark. So just wanted to say completely agree

      1. Matt A. Myers

        Some strange Disqus happening here too..

        1. RichardF

          I’ve had intermittent problems with the like button for over a month (reported it twice now)

        2. Mark Essel

          same here

    2. Aaron Klein

      If you want control, you have to pay.If you don’t want to pay, you don’t get the control.Fortunately, a lot of the innovation being developed around this will bring that divide together and make you feel like you have control. 🙂

      1. Nate Quigley

        +1 (same issue as RichardF)nothing’s free

        1. Aaron Klein

          You’re either the customer or the product! 🙂

      2. Matt A. Myers

        Or if you want control, and don’t want to pay (or can’t afford to but don’t want to be persuaded by ads) then you can just take the free – and the tech-savvy can add the controls for themselves and their friends with whatever ad-removing technology that comes to be.I agree too, that people do like some ads as long as they’re more relevant than not.What’s it worth to Starbucks to remind one of its regular customers (who has a interest tag set for Starbucks) of a discount on expresso drinks? Obviously mobile radio ads allows cost to advertiser to come down quite dramatically because of the targeting.

        1. Aaron Klein

          To be honest, it just surprises me that people can’t tune out ads they aren’t interested in.I don’t find it that difficult.

          1. Mark Essel

            Taken to the extreme, there are many visual and auditory experiences I’d prefer not to have to tune out.My mind’s hardwired to look for interesting stuff, so I pay attention in areas that provide me high quality/interesting material. When ads enter the picture they are a tax on my attention, reduce the source quality and when I’m able, I pay to have ads removed. I don’t use tools like ad-blocker because I understand web business models, and hope they move towards allowing customers the option to pay for products vs. “free” ad supported content/services.

          2. Aaron Klein

            I hear you. I find it pretty effortless – but I’m not sure why.I do tend to find a lot of ads interesting, just because as a marketing guy, I feel like I’m learning something new with every ad I see – a new approach, a new angle, etc.

          3. Mark Essel

            ha that explains it, you get utility out of observing ads 😀

          4. Matt A. Myers

            So instead put yourself in the shoes of someone who has weight issues, whether from never being in an environment where healthy food was available or where exercise wasn’t routine, or a myriad of possible things — and then throw food ads and commercials at them when they’re in a relaxed or passive state (and more influenceable), or weight loss and diet ads to remind them of what is perceived as society as something unattractive (and when in a more influenceable state make them potentially feel shittier right to the core).

          5. Aaron Klein

            Six years ago, I was 30 pounds overweight because of poor eating choices and a lack of exercise.I didn’t blame the ads. I made those choices.Making good choices and exercising regularly turned out to be the way to take that weight off. I’m somehow doubtful a class action lawsuit or new regulation would have given me the same result.

          6. Matt A. Myers

            Nor should you blame the ads. And you’re correct that a class action lawsuit or new regulation would have had much effect, but there are ways. And they will come, in time. 🙂

          7. Matt A. Myers

            There are many different kinds of people, some who can easily filter out what they want, and others who take in everything and have to filter it. There are some people who are more easily distracted or persuaded, affected by, their environment – and they know that perhaps hearing a pizza ad at 9pm will make them eat pizza late night which is unhealthy for them. In the same way, some people don’t watch CSI because it causes them stress and disturbs them.

          8. Aaron Klein

            I hear what you’re saying but I think that perhaps rather than blaming the ad, those folks should figure out the very important characteristic of self-discipline and not eat the pizza. :)Guns don’t kill people and spoons don’t make people fat.As one of our Presidents said, “It is time to restore the American precept that each individual is accountable for his actions.”

          9. Matt A. Myers

            I think you’re overreaching that statement of accountability simply as an off-hand gesture that people are solely to blame for their sickness, etc..It could also be applied to the people running companies, who make decisions that say kill innocent people, or cause them harm.Marketing is psychology, and business knows it well – but they’re not accountable, the people making those decisions aren’t made accountable, mind you they’re starting to be in the bigger cases, but those situations should have never been able to exist to begin with.And you can’t exclude or dismiss a section of person because they’re more easily affected and influenced by advertising. Assume it’s 10% is a lot of people and 10% of unhealthy people with bad habits affects everyone, so taking care of them and being aware of their needs is in the best interest of society as a whole. If you were one of those people easily influenced by others, you’d want to have the same control to stay sane / healthy, and to not be persuaded / convinced into doing behaviours you knew (have learned) were bad for you. This is especially people that haven’t found balance or self-awareness needed, or are currently fragile for whatever reason.

          10. Aaron Klein

            I don’t even know where to start.Businesses have a responsibility to tell the truth, do what they say they will do, and compete fairly. Those three things – and only those three things – should be “regulated” by the government.That ensures a functioning economy and a level playing field.How is an economy supposed to function under the comment you just wrote? Shall we cart the CEO of McDonald’s off to jail because my uncle had no self-control and died of a Big Mac-induced heart attack?Forgive me if I’m not understanding what you mean by accountability.

          11. Matt A. Myers

            No, you can’t put any blame on a single institution or person in that sense, as it’s society that’s not structured currently for people to be healthy (for everyone to be healthy; if you have enough money, you can be healthy). You do have to make note of where the issues are however in order to help. I’m fine that McDonald’s exists, I’m just not fine that a person getting McDonald’s might not be able to afford other healthy food or a gym membership or be able to go to yoga classes – the counterbalance doesn’t exist currently. Cheap food exists, cheap effective health doesn’t.(Proper use of effective / affective and effect / affect will forever be an annoyance….)Also, there isn’t a level playing field. Wheat and beef, etc. is subsidized and the money goes to large farming operations. This doesn’t allow local, maybe organic, farmers to compete – yet there’s still demand for it even with lessened cost because of less transported distance. Why? Because it tastes better, and it has less chemicals, etc. and a lot of people are sensitive to those things.

        2. markslater

          simple answer – if they relied on “interest tags” they’d lose their shirts. Why cant i say ” i am looking for coffee” and have those in my area (starbucks or tarbucks (jimmy for the english out there) can then entice me in. simple.but dont think its ok to send me anything if i have not asked.

    3. Dave Pinsen

      People don’t want advertising and at the same time they don’t want to pay for content. Something has to give.NFL games are a different animal though. The surfeit of commercials is driven in part by the structure of the game. Watching any World Cup soccer last year would have highlighted that: soccer is structured to maintain flow and minimize timeouts. For example, even an obviously illegitimate goal didn’t get reviewed during the tournament. In the NFL, coaches get a minimum of two instant replay challenges, and then there can be additional booth reviews in the final two minutes of each half. Each replay challenge is another game break that can be filled by commercials.

      1. Matt A. Myers

        People do want to pay for content they like. iTunes took off because beforehand there was no easy way to buy single songs, quickly and easily. Apple created a platform that allowed for it and did a good job marketing it. They made it so instead of buying an album for $20+ for 1 or 2 songs you liked, you can just buy the 1 or 2 songs for $0.99 a pop.People pay when things are fair.

        1. Dave Pinsen

          That’s a good point about iTunes. Not sure your last statement is true in most cases though.

          1. Matt A. Myers

            Good point, I should have stated the last statement differently.People prefer to pay when things are more fair than not – but if there’s no other option they will pay but will still look for alternatives (like pirating music / not paying for it).

          2. ShanaC

            Operating music is still huge. We’ve discussed here before that there are bands that encourage it in order to sell secondary services.

          3. fredwilson

            Something like 75pcnt of all files in iTunes were not bought from itunes

          4. Dave Pinsen

            Do you mean that only 25% of the files in iTunes get sold, or am I misunderstanding?

          5. fredwilson

            Pirated or ripped from CDs

          6. Louis Rukeyser


          7. fredwilson

            i read it somewherecan’t remember where though

    4. baba12

      “why arent people innovating entirely new ways for consumers to connect with brands? why are these companies just taking a new technology and laying on top yesterdays ways of doing things?”You are asking for too much. Rarely do any of the larger companies in any sector make any changes. The only way they change is when someone comes and starts eating their lunch. Whether started nefariously or otherwise, no established business entity or leaders in a sector never really change, they just make minimal tweaks to sustain their position.For what you are asking you need people who think differently and entities like USV to be willing to take a gamble and go up against the status quo, but also be willing to not sell out to them cuz then you are back to square one.

      1. markslater

        i agree 100%

      2. Dave W Baldwin

        That is what is coming. The bigger play ad will be important to project image and/or introduce new product/company. At the same time the smaller outfit will be in direct contact with the consumer. Moving over to that side will be wild since the big corps will spend like crazy to silence the smaller. BUT, remember in the end, the young lady who can get the exact look she wants, tailored to her size will be happy. It won’t make a difference if that dress maker is a mile or 500 miles away.

    5. Keith Hopkin

      Are you telling me that you are angry when you see an ad for Snuggie?Maybe it’s not the advertisements or even the relevance of the ads that need to improve but the actual content of these ads. I want to be entertained and sometimes I don’t even care if I will never buy the product.Don Draper, what do you have for me?

      1. markslater

        i am angry with the notion that i am forced to watch or hear ANY ad. the fact that i have to is a pre-cursor to whether i like the content.

    6. Morgan Warstler

      Mark, I want this to be true, but the deal is more complicated than it looks.The content owner is trading for your attention. And they know own an opportunity to try and capture your attention.So far so good, the true meaning of personalized ads is actually that some people’s (the top two deciles) attention is worth far more to advertisers – than everyone else’s attention put together.So when adtech guys talk about “maximizing the value” or eyeballs – what they are really saying is:Rich people should have to pay more to get their attention back. Which is a really interesting “progressive” form of capitalism.Fred wants to watch X, the content owner knows Fred is Fred Wilson – they say, “I got Fred Wilson here!” and suddenly they are being offered $2 per :30 seconds of Fred’s time.Now Fred wants to watch this damn show, sans ads, but his time is worth $12 to the content owner – so Fred either pays up, or gets sold.This may seem not quite right, but the alternative is making poor people pay far too much for their content (the same price Fred would pay).

    7. Guest

      Interesting. I think we’ll eventually see ads that are more customized to the individual. I was on Hulu a few months ago when I was introduced to the “Ad Tailor” system. I feel they could simplify it even further by letting me select the categories I’m most interested in, which would really cut down on the products which I’ll never buy (cosmetics, for example).If I’m in the market for a notebook, I’d love to see ads regarding notebooks… not lipstick. This is why AdWords works so well IMO.

  18. Aaron Klein

    This post made me think about how I’m simultaneously living a backward and futuristic life.My home is in the rural Sierra foothills, about a 15 minute drive away from things like DSL or cable broadband.My entire house runs on Verizon 3G.Today, I wouldn’t give up my library of files for the world.

    1. baba12

      You are not alone and there is not much you can do about it. Even when 4G services are rolled out places like where you live are not covered.Also right now the cost for the service is still very steep for all but 3-5% of the population.

      1. Aaron Klein

        I pay $70 per month for very unreliable broadband.It’s speedier than any other option when it works – but that’s a very relative statement.

        1. baba12

          $840 a year for crappy service. I wonder if you ever think what would happen to you if you paid $69 a month cuz the service was crappy, you will get your credit score go down etc etc… Unfortunately a whole generation of Americans have become spineless gutless and lost the ability to resist.You alone can’t boycott you need a critical mass to do that and that we dont ever have anymore.So you are stuck with the crappy service, and I feel your pain. I cut my cable services 10 years back. I have a DSL line and that costs me $30 less $10 discount $20 a month that I split with my neighbors so I pay $5 a month for my service. Your statement states it is speedier than any other option when it works, how sad is that like we have to accept crap.

          1. Aaron Klein

            Well, it is my choice to live in a rural area. It’s more affordable to live here and I was able to afford more property for my kids as a result. So I don’t think I have much standing to “resist.” :)In two or three years, for a variety of reasons, I’ll probably move down into the small city that has DSL and that will be one of the key factors driving that.

          2. coldbrew

            Slightly O/T:I’m not sure what your rural internet setup is, but when I’m in the hills of CO I stay at a cabin and I’m often on 3G. I use a cradlepoint router (it can handle PCexpress and USB) and kyocera data card with an external antenna port. I added a directional antenna + amp setup for ~$230 (you might not need an amp, which is ~80% of the cost) and went from 1 bar to full bars. You might want to look into it if you intend to stay where you are and can no longer tolerate poor connectivity.You can also run ziproxy ( over a VPN on a machine or instance that is better connected (with a comprehensive host file), but it takes some slight tweaking out of the box and not great for low-latency applications (however, fine for IRC). Given that Verizon charges $10/ GB and AWS charges $0.25, it isn’t difficult to prove the ROI even if you don’t use a box at your office. I probably save ~40% of my bandwidth due to use of a proxy (it’s a no-brainer if you use a box at your office with bandwidth you already pay for).

          3. Aaron Klein

            thanks for the tips!

    2. Dave W Baldwin

      We have 900 acres in NE Missouri. It is funny being there with the phone via AT&T. There is a one square foot spot outside of the back door where you actually have reception.Here in SE Missouri, my dad’s place is just outside of town and you have to go out to the fence to get reception.

      1. Aaron Klein

        This sounds like my inlaws’ 50-acre ranch here in California. I can lean my BlackBerry against one specific window for AT&T signal.

  19. Basis

    Fred,As an avid Spotify subscription customer, I could not agree with you more that the future is streaming. As you know content encryption, subscription billing, and credit cards did not exist when radio developed, leaving advertising as the sole means of monetisation. As a result, that historical example is less relevant: listening to ads in the midst of a workout is something that most consumers will pay a few dollars per month to avoid.The days of the $20 album have passed, as has now the days of the 99 cent single.Basis

    1. Harry DeMott

      I’d be interested to know if you are a free customer or a paying customer. Looking forward to seeing the service int he U.S. but to date – it has been a no go thanks to a lack of label deals.

    2. fredwilson

      We will see. I doubt you are right. There are a lot of cheapskates in theworld

  20. Steve Poland

    Hypem is broke on Android- anthony is fixing. But their zeitgeist of top 2010 songs works… 5 mixes of the top songs and they are AWESOME. They work because they are soundcloud hosted. But yeah, been listening to them while in shower and thinkin past few days this is the future.

  21. Mike Hart

    One major problem I have with mobile streaming at the moment is network coverage. The carriers have a long way to go in this area. There is nothing worse that being dropped in a middle of a riff by Jimmy Page.

    1. Harry DeMott

      Hopefully that will change when streaming revenue becomes a larger % of the music companies bottom line. They will then be willing to engage in a discussion regarding caching. Ultimately, I figure we will have a variety of music cached on our systems based on our desires – along with a store of advertising that can play alongside it.

  22. James Cho

    Can Targetspot target by Geo Location? It would be cool to walk in a store/company with your earphones on and have Ads play about the store or location you’re in.Or, driving with earphones on, and ads for coffee/rest stops coming up in 5-10 miles.Cheers,James

    1. baba12

      It can be done, has not been implemented yet I am guessing.The NYC Subway system was given a proposal for running their advertising on subway using LCD panels paid for by private enterprise with local advertising based on location of subway near the stations.Cost of the project including the installation of the LCD panels, some sensor switches in the tunnels and the software to run the ad network was going to be $72 MM spread over 3 years. MTA would not accept the proposal as we did not have the blessings of major politicians and bossesIt was a win win situation but we could not proceed anywhere beyond a few meetings.

      1. Rurik Bradbury

        The MTA failed to make progress due to idiotic political machinations? Tell me it ain’t so!

        1. baba12

          It was the case back between 2002 and 2007. We tried every different way possible but couldn’t do it cuz we did not have the necessary door openers. If we had gotten a MTA officer on our board etc it would have happened. It still can happen we just don’t have the ability to rope those folks nor wish to do so. But if anyone wants to run with it, we have all the ingredients to roll it out.

    2. fredwilson

      Yes they can. I believe they can hypertarget on mobile but I would checkwith the company to be sure

      1. Sebastian Wain

        It would be interesting to hear your opinion about hyperlocality and their challenges. I found the “If Google can’t get local merchants to self serve, you probably can’t either” article interesting as a discussion base.

  23. Keenan

    I agree with you on streaming, but there is a bottleneck that has to be solved before it becomes mainstream. It’s reliable connectivity.I have this topic in my blog drafts, as I think it’s a BIG deal.More and more of what I do is in the cloud. But, just as I think I don’t need my files, or my desktop I get slapped in the face by the unreliable, spotty, complex broadband networks.I love Last.FM and Pandora, but I can’t use them when I ski, because of poor network coverage on the hill. I HAVE to listen to my I-Tunes files or I’d have no music. (same for when I fly, what do you do for music when you fly and their is no WiFi?)Cloud services are moving quickly. They are moving much faster than the network. Until we have a ubiquitous network that is reliable, or isn’t cumbersome to join and doesn’t force me to switch as I move around, cloud will have trouble jumping the chasm.Convenience is too important to have to deal with a non-ubiquitous network that isn’t reliable.

    1. Morgan Warstler

      Years ago there was a “lock box” radio station out of portland, that dumped a GB of encrypted music onto your PC, and then streamed radio out of it.

    2. sbmiller5

      I agree and brought up the same point. Unrelated, please stop listening to music when you ski, unless you’re hiking or on the lift, it is really unsafe. If you’re inbounds, hearing is a hugely important sense for understanding where others are, if your out of bounds or in the trees, being able to hear an avalanche or someone stuck in a tree well or elsewhere yelling for help is critical.

    3. fredwilson


  24. perfy

    I couldn’t disagree with you more on ads. When you are running on the treadmill you want to hear an ad for Wal-Mart?

    1. fredwilson

      If that ad is paying for 30 mins of listening pleasure, hell yes

      1. Hrishi Mittal

        That sounds more like rationalisation. When an ad interrupts anything I’m doing, I don’t ever think to myself “Oh thank you corporation, if it weren’t for you, how would I get such pleasure in my life?!”. Just because it makes economic sense, it doesn’t mean it’s not annoying.The one thing which I feel would make me love ads is if they were entertaining as well. If ads were funny, people would love them. Why don’t advertisers get that?

  25. PhilipSugar

    I think the overall issue is the value of the content, or maybe more important the value of the delivered content.As the cost of delivery plummets the amount people are willing to pay either by subscription or interruption is drastically decreasing.Also the issue is when somebody is consuming a service whether it be email, photosharing, facebook, or music, if they are consuming it for their benefit, it might be very valuable to them, but it is hard to monetize because they are not consuming it with the intent to make a transaction, like Google or Groupon where you are looking for something.I agree better targeting theoretically helps both relevance and value. The challenge with doing it locally is that you have to deal with local small businesses. As I’ve said before they are very hard to monetize because they rely on being local to support their small business. Therefore you have to reach them individually and figure out a way to have them sign the back of a check not the front of a check. That is a huge point.As a final aside, if I were Starbucks I would demand $20 each time somebody used me as an example to deliver a local coupon. They might double their revenue. Near as I can tell they never do coupons because they one time they did it was a disaster, and why would you want anybody concentrating on how much their half latte, upside down with a shot drink costs. Hell, might as well send them to Dunkin Donuts.

    1. Rurik Bradbury

      The cost of delivery is not falling — and certainly not drastically — for professional music and video content. The RIAA, MPAA, ASCAP and friends are not big on price-cutting.

      1. PhilipSugar

        That is content, not delivery.For me to get you a song less than 20 years ago, you could either drive to store and buy a CD, or I could take my CD make a tape and Fedex it to you. Either way, $20 for delivery, no way around it.Today. I can email you the song for free. We’re not talking about what the RIAA thinks I should pay for content.You are telling me delivery going down from $20 to zero isn’t drastic?On the radio side. Again delivery, not content. You need to buy a license for a radio station versus setting up a streaming site for free???? $millions versus free????

        1. Rurik Bradbury

          That is correct but it has never been delivery which drives prices in music/video: it has always been rightsholders.Many tech types have been naïve about this — they rightly see an opportunity to revolutionize a business. However, just because friction is lower, it does not mean that the rightsholders want to be ‘revolutionized’.

          1. PhilipSugar

            Agree, but IMHO the issue is that if you have ubiquitous free delivery, it is hard to keep the genie (content) in the bottle.When delivery was expensive it protected your content. It was damn hard to make fake records, or somehow copy a newspaper or book. The expensive delivery vehicle protected the content cost. The content was always a fixed cost. I.e. the marginal cost after 1 unit was zero. Deliveries marginal cost was not zero, it was high.Somebody who was willing to undercut your price on content couldn’t make a drastic difference because they had to pay for delivery.Now somebody that wants to give away content can strip your business to nothing because of zero delivery cost. I.e. Craigslist.

    2. Pete

      “As a final aside, if I were Starbucks I would demand $20 each time somebody used me as an example to deliver a local coupon. They might double their revenue.”That, is hilarious.

    3. fredwilson

      True. But its an easy example that people get

      1. PhilipSugar

        Not busting you, but there are real examples.We have a client that signed up over a million people out of a 7 year cohort in three days over Black Friday, physically at cash registers. In less than a year they had over 10M of the people in that 14 to 21 year old cohort signed up which is one out of three.They did both a coupon and birthday promotion and had over 50% redemption for those promotions, which means people must really have cared.

  26. Dale Allyn

    I read threads like this with interest, and largely agree with the “weighted averages” of content within the comments. But I also find it interesting that they almost always assume that all users have these huge pipes of internet access to facilitate certain models. For example, loading an advertiser’s website in an “adframe” will be cool… if one has plenty of bandwidth for smooth operation of the full experience.We’re developing an application which is targeted at internet users around the world, and during development we run into inconsistencies in user experience because part of our team is on fast to very fast connections (5 to 22 Mb/s). Five megabits per second is far more common now, but for our purposes I maintain a DSL connection of 1.3 Mb/s to monitor page loads, and then check on half that speed from time to time. Infrastructure is improving, but some advertising “solutions” are really creaming user experience in some cases due to high demands on bandwidth. A little compassion for the user is in order in my opinion.EDIT to add: I see that Aaron Klein touched on this in a comment above also. I hadn’t refreshed yet while composing the comment (and multi-tasking elsewhere).

  27. Andrew Choi

    I agree partially. But the problem I see as a fan of music and a person representing the 20’s, streaming does not allow the listener to pick and choose the songs they wish.A computer or person choosing the music just isn’t good enough.It makes me think that this is the reason why people still spend time downloading the mp3s they like and choose.

    1. CJ

      Totally, there is a time where I want to listen to someone else’s playlist and another time when I want to hear my own. I have my current library of MP3s on my phone and couldn’t imagine it otherwise.

    2. fredwilson

      That’s not entirely true. Go to and enter an artist and song intothe search field

    3. daryn

      I think you’re talking about “radio”, not “streaming”.That is true with Pandora or or Sirius XM or KEXP or WKRP.That isn’t at all true with a variety of streaming services (rhapsody, napster, rdio, hypem) where you can search for exactly what artist, track, or often even album that you want to listen to. The only difference is that the media is in the cloud, not on your device.

  28. hansHager

    software + networks are going to radically transform the gym. can’t wait for the treadmill with an immersive wrap around screen (maybe some touch parts for controls) so you can jog into an exotic landscape, it’ll sync to the music, give you little updates and motivation, track your progress over time.ironic that I still can’t find the perfect headphones ? every pair i get are miserable, so if anyone has suggestions …

  29. Dave W Baldwin

    There are a lot of great comments with this post! We are in a time where the speed of connection is being improved, though we could be doing more ($$$$). Hopefully the funds promised will be delivered soon and expansions can take place.The business of marketing is going to change big time over the next 3-7 yrs. The key is a new revenue model that is affordable to the greater population and encourages business owners to take advantage of the GPS. Enhanced AI is going to play a big factor in this changeover where people are going to become notified of what is in their niche/location both at home and abroad.Congratulations Targetspot and it seems time to really get to work!

  30. Sebastian Wain

    The opportunity is huge. It’s interesting to learn from Google Radio Ads mistakes, although it was in a time without 3g/4g networks and targeted at “old” radios.But I am waiting for the audio browser… with good quality reading like AT&T Natural Voices:… . It’s related with previous discussions about “save it for reading later”. May be the problem now is how to render the important information as voice and recognize voice commands.

  31. sbmiller5

    First, as someone who doesn’t live in NYC and spends a lot of time outside of cell coverage, i have a hard time seeing the value of streaming, without some sort of streaming download (ie: download 4 hours of streaming radio) whether or not ads are included.Second, you say you see a lot of people making money from mobile music streaming, but current internet streamers (pandora, rhapsody, etc) are having a difficult time making the economics work with music labels…how will mobile change that?

    1. fredwilson

      I believe Pandora is nicely profitable. They have an ad model

  32. techdom

    The question is who wants to pay for crappy service and listen to commercials? streaming media sounds good till you get annoyed.

  33. Doug Kersten

    I think streaming combined with downloadable mp3s is the future. Just streaming does not allow you to easily chunk the data. Chunking the audio (data) lets you do all kinds of cool things. This is tough with music though because of the entrenched parties. That being said, I agree there is a huge business in streaming content to mobile devices. I don’t think that means there is no business on the back-end for the chunks that make up the stream though.

  34. Ric

    “This is the future. We won’t be buying files, moving files, and listening to files.” Not so much Fred. Just let the self righteous greed of the labels push up licensing like content creators are trying to do with video and Netflix and you will see that streaming is doomed to become a ubiquitous standard.Im not interested in being dictated to by middle men anymore.Ever.

  35. Roland Haddad

    I think that streaming music is a great choice provided we give user more control on whether to receive or not to receive ads. Let a user turn off ads when jogging or when streaming music for a private party. The same person might choose to listen to ads in the afternoon. Optionality in receiving the ads will drive more loyalty from all types of clients. Besides, a good percentage of people who dont like ads might change their opinion at times…out of boredom, curiosity, word of mouth, you name itAnother point on Fred’s comment: IMO, people still like MP3s. If times were to change and we all moved to streaming audio, it will take time for the mass population to accept that, to put in the basement their portable hard disks that contain music they compiled over years…to them, mp3 libraries are more like a property, like an old CD box

  36. paramendra

    I like the ad model better than the subscription model, way better. …. And to think I was just working on a post about mobile, to be called, 2011-2015: A Mobile Stretch. …. Mind meld, mind meld.

  37. paramendra

    Ad supported mobile, streamed music to ad supported wireless broadband to “free” smartphones floating in that wireless broadband, how big a leap? That’s a blog post for me.

  38. Siriusbonusthreat

    What are you’re thoughts on the potential impact of net neutrality on this space?

    1. fredwilson

      I think the new rules are helpful for wireline. Mobile is a wildcard

  39. Donald Roll

    Spotify has done very well with this model in Europe. Last time I looked they had over 10 million users for their free streams with advertising after every 5 or 6 songs

  40. David Smuts

    True Fred- Bandwidth however will be an issue as it is already today.However there may be a solution! Canadian Satellites in space providing new and faster and cheaper bandwidth- see today’s BBC article

  41. alex benik

    I have 130GB of music at home and like you, love my Sonos for getting around my house. Have you found a good way to stream from your home collection to you mobile, without jumping though tons of hoops?

    1. fredwilson

      nopepogoplug was mentioned in this comment thread as a possible solution

      1. Lyecies

        SugarSync works well for this situationl. I can stream my entire iTunes music collection via my iOS and Android devices (or Blackberry, Symbian, Windows) not to mention via any pc browser. Of course no ads and just the music you want without figuring out how to choose which part of your 130gb collection to put on the device.I admit I’m biased :-)Laura YeciesCEO SugarSync

  42. George A.


  43. George A.

    I agree on thin client, we will soon be freed from iTunes and its oppressive regime.pardon me, but I recall this exact same announcement out of Target Spot 18 months ago…what is different?

  44. Sean Saulsbury

    I launched a couple of audio-only podcasts last year ( and if anyone’s interested) and have observed this behavior among my listeners.A very large portion of people listen on their mobile devices and just stream the content. Based on my logs, it’s close to 40%, the rest mostly download through iTunes. I imagine this will continue to shift in mobile the devices’ favor. Such an ad network sounds like a great opportunity.This also underscores the need for podcast producers to create mobile friendly sites that can be played in mobile browser, which should be the top priority for anyone producing shows on the ‘net today.

  45. css

    I think the problem with streaming all your music, is that you have to have a mobile connection to do so, and some people don’t want to have to be connected to listen to music. With music on your ipod, you don’t need a mobile connection.I will say though, if I was using streaming music on a mobile device, I would have no problem hearing one or two short commercials an hour if that made the service cheaper.

  46. Yule Heibel

    Sorry if this was already referenced (searched on keywords here and didn’t see it), but you might want to listen to Jim Lucchese’s presentation at Berkman Center:Jim Lucchese on Application Developers and the Future of Music…From the blurb:QUOTEIn a few short years, app developers have already changed music’s role in our lives with new solutions for music discovery and recommendation, blog and news aggregators, music games, location-based listening, interactive remix apps, social music sharing, and countless other new music experiences. However, most music application developers are locked out of the commercial music industry, unable to navigate the licensing maze, or to hire one of a few very well-connected deal makers necessary to launch a licensed service comprised of the same popular music available to larger players. Jim Lucchese — CEO of Echo Nest and a former music lawyer — discusses the specific needs and vast potential of the growing music app development community, citing examples of new and innovative music applications, illuminating the licensing challenges holding back innovation in music, and offering a new way forward: the use of open developer APIs to forge a stronger digital music industry.UNQUOTEI listened to the audio at the gym (on my mobile device!), but the link I provided has a video version. Really interesting stuff, about looking to the games/ gaming for inspiration, and about the problems of copyright and monetization.

  47. Professor Griff

    3G wasn’t designed for always on streaming so there’s a big infrastructure problem. Data billing plans are also not set up for this. Kids are the ones who listen to a lot of music. Most cannot afford to cough up a euro per day to listen to their music cut out when they walk under a bridge (and starbucks ads.) Finally, the labels still have arbitrary and onerous licensing terms. If they like you, they will charge you so that you make only enough money to stay alive. If they do not like you, they will bill you out of existence.Apologies for being negative but I wasted 8 years of my life in the online music space. The only advice I have for people in the space is sell the company to the biggest sucker as quickly as you can.

    1. fredwilson

      for 15 years since the dawn of the commercial internet, i have avoidedonline music for many of the reasons you citei’ve just started to dip my toes in the water as i think now is thetime when everyone knows this sector is a loserwhich means it may just about to be a winner