While a free slice every day for a year is nothing to sneeze at, I am most excited about the idea of the private concert series that Upside is running at its Nolita location over the next five weeks. Pizza, beer, and live music on a summer evening is my idea of a great time. I suspect it is yours too.
So if you live in NYC, you might want to join the Upside Pizza Club and get access to these concerts. And a free slice every day for the next year too.
But when a party emerges online that anyone is invited to attend and the 500 person group picks up a punk with a party hat and they all change their social network avatar to this, well that got my attention.
But there is an important difference between fractional/collective ownership of physical and digital goods.
When you purchase a share of a 1985 Air Jordan collection, as I did, you can’t showcase it in your home or office. It is shared ownership with many others. So it goes to a gallery or somewhere it can be shown publicly. That’s fine but somehow less satisfying than having it in your home or office for everyone who comes to visit you to see.
Contrast that to what happened with the punk. Everyone who bought it put it on their Twitter avatar. They collectively displayed it on their own digital property.
The underlying misconception here is to think that in the digital world copies are indistinguishable from originals. In a trivial sense this is true. Let’s say you copy a digital artwork, you will now have exactly the same bit sequence as the original. But in a much more profound sense it is not.
What NFTs do for digital art (images/Punks, videos/Top Shots, music, animations, etc, etc) is they separate the concept of ownership and the display and consumption of them. The ownership is on a public secure ledger. The display and consumption of them is out in the open for everyone to see and hear and more.
That’s not something that is easy to wrap your head around but it is profound.
The streaming music business pools its revenues and pays out based on a mathematical formula. There is no direct connection between a fan and artist. This graphic explains the existing model:
What SoundCloud is offering is that direct connection, explained here.
If you are an artist and you want to get fan powered royalties you can monetize directly on SoundCloud or via SoundCloud’s Repost service which allows you to monetize on SoundCloud and all of the other streaming platforms:
Artists can participate automatically in fan-powered royalties in three ways:
SoundCloud Premier: Premier is our monetization program for Pro Unlimited subscribers. Artists will be notified and prompted to join once they become eligible to monetize. Click here for Premier eligibility requirements.
Repost by SoundCloud: Repost by SoundCloud is for artists who want to reach fans everywhere by distributing their music to every major music service. There are no eligibility requirements to monetize with Repost by SoundCloud. You can subscribe to Repost by SoundCloud here.
Repost Select: While there are no eligibility requirements to monetize with Repost Select, it’s a program open to select Repost by SoundCloud subscribers via application or invitation only. Click here to apply or learn more.
While the pooling model has worked well to scale the streaming industry, it has not worked well for independent and emerging artists. This bit from SoundCloud’s Fan Powered Royalties page explains it well:
With fan-powered royalties, each listener’s subscription or advertising revenue is distributed among the artists they actually listen to, rather than being pooled. This new model benefits independent artists and empowers fans to play a larger role in the success of their favorite artists. It also encourages the growth of local scenes and the rise of new genres.
Fan-powered royalties benefit independent artists whose fanbases are dedicated to listening to their music frequently. So if a fan only listens to an early-stage rapper from Detroit or an emerging singer from France, most or all of their subscription or advertising revenue will go to those exact artists.
SoundCloud has always been about the emerging artists and I am glad to see them leading the industry to a more equitable model for revenue sharing.
Musicians can’t tour right now. That’s a huge part of their earnings. Many are turning to live streaming and I hope that will turn into real money for them. But regardless, everything that supports musicians right now will help.
SoundCloud is investing an additional $10mm in its Repost Select artist services platform to get money into the hands of artists now. They are also making $5mm of Promote On SoundCloud inventory free to artists.
And SoundCloud has made it one-click simple for artists to connect to Kickstarter, Patreon, Bandcamp, and PayPal so their fands can provide direct support.
And last but not least, SoundCloud has relaunched its Repost by SoundCloud offering that makes it simple for its artist community to get plays (and get paid) across all of the major streaming services.
All of this will help the SoundCloud artist community make more money online while their in-person business is offline. And that is a really great thing.
That is our practice. We publish our investment rationale on our blog every time we make an investment. It creates a permanent record of why we made the investment. It is interesting to go back and read them five or ten years later, regardless of whether they worked out or not.
Sofar is a company we have been following for seven years. We have been intrigued by this global community that has been building around the themes of meeting others in the real world, a shared love of music, and intimate spaces (often personal homes).
The Sofar community is large and sprawling.
The scale of the Sofar community, to us, is an example of “unspoken” value that Sofar has created for over one million people in 430 cities across 65 countries including London, Paris, New York, Sydney, Bangalore, Buenos Aires, Cape Town, and Seoul. In fact, more people will attend a Sofar in 2019 than will attend Bonnaroo, Glastonbury, and Coachella combined (also, 13 Sofar artists are playing at Coachella this year).
I just took a look at Sofar to see what events are happening in NYC in the coming weeks:
You can see the Sofars in the coming weeks near you by going here.
Sofar reminds me of our investment in Meetup, which we made twelve years ago. As Scott Heiferman, the founder of Meetup likes to say “use the internet to get off the internet.”
Sofar adds the element of music, performance, and intimate spaces. Andy describes all of this as the “Sofar container”:
Each Sofar has a few known constraints that make the show feel familiar: it will be in a unique space where you wouldn’t expect to see live music, an MC with a loose script will encourage you to get to know your neighbors, three performers will each play three to four songs, the address will only be revealed a day before the show, and the show will end early, by around 10:30 pm. This is what we call “the Sofar container”. The natural outcomes of the container are less tangible; for example, you will hear great music, you will feel safe and comfortable, you might make a new friend or you can attend solo, you won’t be judged. By bringing people together and creating spaces where music matters, Sofar broadens access to well-being – a core part of our investment thesis. The beauty of creating a simple container, with known constraints, is that what goes into the container is dynamic. You don’t know who the artists are, who you’ll be sitting next to or what the venue will be like, but we believe that the essence of Sofar lies in trusting the container.
We just packed up an Airbnb that we have been living in for three months in Los Angeles and are heading back east.
This is a photo of my carry on luggage as I was packing it this morning.
That is an AppleTV and a Sonos Connect in between my “shaving kit” and my sneakers.
I brought these two devices out west and connected the AppleTV to the one TV in the Airbnb and I connected the Sonos to the receiver that powered the in ceiling speakers in the main living space in the house.
Even if the Airbnb had come with an AppleTV and a Sonos device, I would have swapped out theirs for ours for the length of our stay because these two devices have all of our services pre-confgured on them and we are logged into all of the services.
That is where the big difference is for me and the reason it is worth schlepping these devices cross country and back. The devices aren’t crazy expensive. The AppleTV is around $150 and the Sonos Connect is around $300. But setting these devices up, connecting them to all of the various services we subscribe to, and logging into each and every one can be an hour or more of work each time you do it.
All I had to do was power them up, connect to wifi, and connect to the TV and/or the receiver, and we were good to go.
It’s kind of magic to have all of your services right there on the device, organized how you like them, and ready to go.
I have friends who do the AppleTV move in hotels when they travel for business. I haven’t gone that far but I might leave the AppleTV in my carry on luggage along with my shaving kit and try that on my next business trip. Plugging in an HDMI cable into a TV is pretty straightforward in most cases.
What this means is TV and music is now highly portable. You can bring your TV and music with you when you travel and connect into the existing infrastructure in your hotel or Airbnb.
If these devices get small enough or cheap enough (or both), or if our smartphones can replicate all of the functionality of these devices, then the hospitality industry can focus on the “dumb” infrastructure and the guests can bring the smart devices.
The mobile app stores, in particular, have always seemed to me to be a constraint on innovation vs a contributor to it.
Spotify has a huge user base and brings in billions of dollars of revenues every year but it has a challenging business model. Let’s say that 70cents of every dollar they bring in goes to labels and artists. That seems fair given that the artists are the ones producing the content we listen to on Spotify. But if they also have to share 30cents of every dollar with Apple, that really does not leave them much money to build and maintain their software, market to new users, pay for servers and bandwidth, and more.
You might say “well that’s what they signed up for” and you would be right except that their number one competitor is Apple. So their number one competitor does not pay the 30% app store fee, meaning that they have a competitive advantage.
We see this with our portfolio companies a fair bit too. Apple has complete control over what gets into their app stores and what does not. And the process can be arbitrary and frustrating. But that is how it works and our portfolio companies are reluctant to make any noises publicly for fear of making their situation with Apple even worse.
I am not a fan of Warren’s idea of breaking up companies like Apple.
I like my partner Albert’s ideas better which he expressed in a tweet last week:
A better set of policies to restore competition in the digital age would be (1) consumer right to API access (2) consumer right to side load apps (3) restored ability for small companies to go public / sensible regulation of crypto currencies. https://t.co/4bOFTnZ5NK
If it was the law of the land that any company could side load any application onto the iPhone or any iOS device, including third party app stores, we would have a much more competitive market with a lot more innovation, and Spotify would not have to go to the European Commission to deal with this nonsense.