Review: Amazon Echo Input is the easiest way to stream media to speakers

This is the Echo I’ve been waiting for.

Throughout my house, I have Amazon Echo Dots connected to stereo systems. In my office, I have a Dot connected to an Onkyo receiver and amp. In my basement, I have one hooked up to a small bookshelf system. Outside on the deck, a Dot serves audio to a small amp that powers outside speakers. There’s more, but the point is made. The Dot is a great device to add voice services to existing speakers. But with its built-in speaker, I’m paying for features I’m not using.

That’s why Amazon made the Echo Input.

The premise is simple: The Input is a Dot without a speaker. It has a mic, two buttons, and most importantly, a 3.5mm output. This output lets the Input serve media to amps and powered speakers — just like I’m doing so with a Dot.

Since the Input doesn’t have a speaker, it’s much smaller. It’s only a half an inch thick. It’s a tiny thing, and I found it does the job as well as a Dot

Plug it in, set it up, and the Input adds voice services to speaker systems. From Bluetooth speakers to bookshelf speakers, it’s a great way to bring the convenance of Alexa to speakers.

The device is basic. To be clear this is not a Hifi device. To me, that’s okay on most speaker systems since I’m just streaming Spotify and NPR. Hopefully Amazon makes good on producing the Input’s HI-Fi cousin, the $199 Echo Link. This device was announced a few months back and does the same job as the Input, but features TOSLINK and coaxial digital audio outputs for connections to a proper DAC. The $299 Echo Link Amp does the same but features a built in amplifier to directly power a set of speakers. The Input is great for smaller speaker, but the Echo Link should provide a higher fidelity experience — and now that Tidal is available on the Echo, there’s a proper source too.

The Echo Link is said to be released on December 13.

For $35 the Echo Link does its job well. However, during the holidays, the Echo Dot is only $29.99 or less and features the same 3.5mm output. Unless size is a concern, I would recommend buying the Dot while it’s on sale just in case you need the speaker at a later time.

China’s Tencent Music raises $1.1 billion in downsized US IPO

Tencent Music, China’s largest streaming company, has raised $1.1 billion in a U.S. IPO after it priced its shares at $13 a piece ahead of a listing on the Nasdaq.

That makes it one of the largest tech listings of the year, but the pricing is at the bottom end of its $13-$15 range indicating that the much-anticipated IPO has felt the effects of an uncertain market. Indeed, the company is said to have paused the listing process, which it started in early October, for a time so choppy are the waters right now — and that’s not even mentioning a shareholder-led lawsuit that was filed last week.

Still, this listing gives TME — Tencent Music Entertainment, a spin-out of Tencent — an impressive $21.3 billion valuation which is just below the $30 billion that Spotify commanded when it went public earlier this year via an unconventional direct listing. TME was valued at $12 billion at the time of Spotify’s listing in Q1 of this year so this is also a big jump. (Meanwhile, Spotify’s present market cap is around $24 billion.)

The company operates a constellation of music streaming services in China which span orthodox Spotify-style streaming as well as karaoke and live-streaming services. Altogether, TME claims 800 million registered users — although there’s likely a little creative accounting or double counting across apps involved since the Chinese government itself says there are 800 million internet users in the entire country.

Notably, though, TME is profitable. The same can’t be said for Spotify and likely Apple Music — although we don’t have financials for the latter. That’s down to the unique business model that the Chinese firm operates, with subscription and virtual goods a major driver for its businesses, while Tencent’s ubiquitous WeChat messaging app helps it reach users and gain virality.

Tidy though the numbers are, its revenues are dwarfed by those of Spotify, which grossed €1.4 billion ($1.59 billion) in sales in its last quarter. For comparison, TME did RMB 8.6 billion ($1.3 billion) in revenue for the first six months of this year.

TME executives are taking that as a sign that there’s ample scope to grow their business, although it seems unlikely that will ever be as global as Spotify. The two companies might yet collaborate in the future though, since they are both mutual shareholders via a share swap deal that concluded one year ago.

You can read more about TME in our deep dive below.

We also wrote about the lessons Western services like Spotify and Apple Music can learn from TME.

Tencent Music sued by investor ahead of $1.2 billion US IPO

China’s largest music streaming service has had a whirlwind year. With 800 million monthly users across multiple apps and a profitable business, Tencent Music Entertainment is gearing up for one of this year’s most anticipated initial public offerings in the US. But the firm has landed in hot water in the months leading up to its first-time shares sale.

Last week, Chinese investor Hanwei Guo accused TME’s co-president of using misinformation, threats and intimidation to compel him to sell his equity stakes in Ocean Music, which eventually became part of TME after Tencent’s QQ Music and China Music Corporation merged in 2016.

Han has filed a motion for discovery in the US seeking information from Deutsche Bank AG, JPMorgan Chase & Co., Bank of America Corp. and other underwriters for TME’s IPO that the investor plans to use in an arbitration underway in China. The investor is requesting TME co-president Guomin Xie Guo and other parties involved to return percentages of his equity stakes in the music vehicle and compensate him for economic losses.

Han claims that he invested an equivalent of $26 million in Ocean Music in 2012 after Xie’s repeated invitation. Xie first touted Ocean Music on the promise that the music company would turn a profit the following year and go public in three years, but he later informed Guo that the business was failing and threatened him to sell his shares, according to a statement from Guo’s legal advisor. The investor eventually sold his shares “under duress.”

The fraud allegation arrived two months after TME reportedly delayed its IPO due to weakening stock markets around the world. The music giant has resumed the process and filled with the US Securities and Exchange Commission on December 3. According to its prospectus, TME plans to raise up to $1.23 billion with a listed price between $13 to $15 per share.

TME is now in a quiet period where federal rules limit what the company can say in public ahead of its IPO, which Bloomberg reported is set to begin taking orders on December 12.

A spun-out subsidiary of Tencent, TME operates three music streaming apps — QQ Music and what the CMC merger brought over, Kuwo Music and Kugou Music. The entertainment group also runs China’s top karaoke app WeSing, on which users can record and upload their work.

Unlike its money-losing western counterparts Spotify, TME is profitable thanks to a flourishing social business. For example, WeSing users can send virtual gifts to reward content creators, from which TME takes a commission. On the other hand, only 3.6 percent of TME’s users are paying subscribers as of the second quarter, part of a result of China’s rampant online piracy issue. The rate is much lower compared to other music services around the world but TME says in the prospectus that it expects revenue from paid subscriptions to increase over time.

Spotify’s 2018 Wrapped feature is now live and ready to take you down memory lane

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As we approach the new year, it’s time to be reminded how many times we all listened to “thank U, next” in 2018. How? With Spotify’s Wrapped, which is now live on the music streaming app.

For the last few years, Spotify has made it very easy to re-experience all the great music and podcasts its users have enjoyed — using Wrapped, its annual feature that gives listeners insights into what they streamed on the platform over the past 12 months.

Spotify will tell you the number of new artists you discovered, your most-played songs and artists, top genres and, of course, help you share these fun facts to Instagram, Twitter and Facebook, giving them some nice free advertising in the process. On top of that, this year Spotify will be sharing some of its listeners Wrapped data in prominent places around the world, like in Times Square or London’s Piccadilly Circus.

Spotify has a special page for artists, too, where they can learn which of their songs were most popular by month, total hours of music streamed by fans and more. Plus, a playlist of 2018’s top hits, which, unfortunately, includes seven Post Malone songs.

Spotify for Xbox One now works with Cortana voice commands

Spotify arrived on the Xbox One back in August 2017 to give gamers the option of streaming their own tunes while in a gaming session. Today, Spotify is upgrading its app with a few key additions, including most notably support for Cortana voice control, along with other personalization features. With Cortana, gamers will be able to speak their music requests instead of using the controller. That means they can command the music — including being able to play, skip and pause songs — without having to leave their current gaming session, Spotify says.

Before, gamers would have to use Spotify Connect via an app on their phone, tablet or laptop to control or change the music while gaming.

For example, you’ll be able to say things like “Hey, Cortana, play my playlist on Spotify,” or “Hey Cortana, play my Discover Weekly on Spotify.”

This upgrade is currently only available in the U.S., however.

The new app is also introducing an updated experience that’s designed to make it easier for Spotify users to access recently played songs, plus your “Made for You” hub, and your music library.

Spotify says the app can help gamers find their favorite background music, too, by taking into account their listening history when making its recommendations for a more personalized experience.

This part of the update is rolling out more broadly, including the U.S., as well as in Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile, Colombia, Czech Republic, Denmark, Finland, France, Germany, Greece, Hong Kong, Hungary, Ireland, Italy, Japan, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Singapore, Slovakia, Spain, Sweden, Switzerland, Taiwan, Turkey and the U.K.

Options like repeat and shuffle are available, too, as are a selection of curated gaming playlists, over on Spotify’s “Gaming Hub” if you get stumped as to what to play.

The update will require the latest version of the Spotify app, which can be downloaded from the Microsoft Store, the company notes.

Daily Digest: Technology and tyranny, lying to ourselves, and Spotify’s $1b repurchase

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Harari on technology and tyranny

Yuval Noah Harari, the noted author and historian famed for his work Sapiens, wrote a lengthy piece in The Atlantic entitled “Why Technology Favors Tyranny” that is quite interesting. I don’t want to address the whole piece (today), but I do want to discuss his views that humans are increasingly eliminating their agency in favor of algorithms who make decisions for them.

Harari writes in his last section:

Even if some societies remain ostensibly democratic, the increasing efficiency of algorithms will still shift more and more authority from individual humans to networked machines. We might willingly give up more and more authority over our lives because we will learn from experience to trust the algorithms more than our own feelings, eventually losing our ability to make many decisions for ourselves. Just think of the way that, within a mere two decades, billions of people have come to entrust Google’s search algorithm with one of the most important tasks of all: finding relevant and trustworthy information. As we rely more on Google for answers , our ability to locate information independently diminishes. Already today, “truth” is defined by the top results of a Google search. This process has likewise affected our physical abilities, such as navigating space. People ask Google not just to find information but also to guide them around. Self-driving cars and AI physicians would represent further erosion: While these innovations would put truckers and human doctors out of work, their larger import lies in the continuing transfer of authority and responsibility to machines.

I am not going to lie: I completely dislike this entire viewpoint and direction of thinking about technology. Giving others authority over us is the basis of civilized society, whether that third-party is human or machine. It’s how that authority is executed that determines whether it is pernicious or not.

Harari brings up a number of points here though that I think deserve a critical look. First, there is this belief in an information monolith, that Google is the only lens by which we can see the world. To me, that is a remarkably rose-colored view of printing and publishing up until the internet age, when gatekeepers had the power (and the politics) to block public access to all kinds of information. Banned Books Week is in some ways quaint today in the Amazon Kindle era, but the fight to have books in public libraries was (and sometimes today is) real. Without a copy, no one had access.

That disintegration of gatekeeping is one reason among many why extremism in our politics is intensifying: there is now a much more diverse media landscape, and that landscape doesn’t push people back toward the center anymore, but rather pushes them further to the fringes.

Second, we don’t give up agency when we allow algorithms to submit their judgments on us. Quite the opposite in fact: we are using our agency to give a third-party independent authority. That’s fundamentally our choice. What is the difference between an algorithm making a credit card application decision, and a (human) judge adjudicating a contract dispute? In both cases, we have tendered at least some of our agency to another party to independently make decisions over us because we have collectively decided to make that choice as part of our society.

Third, Google, including Search and Maps, has empowered me to explore the world in ways that I wouldn’t have dreamed before. When I visited Paris the first time in 2006, I didn’t have a smartphone, and calling home was a $1/minute. I saw parts of the city, and wandered, but I was mostly taken in by fear — fear of going to the wrong neighborhood (the massive riots in the banlieues had only happened a few months prior) and fear of completely getting lost and never making it back. Compare that to today, where access to the internet means that I can actually get off the main tourist stretches peddled by guidebooks and explore neighborhoods that I never would have dreamed of doing before. The smartphone doesn’t have to be distracting — it can be an amazing tool to explore the real world.

I bring these different perspectives up because I think the “black box society” as Frank Pasquale calls it by his eponymous book is under unfair attack. Yes, there are problems with algorithms that need addressing, but are they worse or better than human substitutes? When eating times can vastly affect the outcome of a prisoner’s parole decisions, don’t we want algorithms to do at least some of the work for us?

Lying to ourselves

Photo: Getty Images / Siegfried Kaiser / EyeEm

Talking about humans acting badly, I wrote a review over the weekend of Elephant in the Brain, a book about how we use self-deception to ascribe better motives to our actions than our true intentions. As I wrote about the book’s thesis:

Humans care deeply about being perceived as prosocial, but we are also locked into constant competition, over status attainment, careers, and spouses. We want to signal our community spirit, but we also want to selfishly benefit from our work. We solve for this dichotomy by creating rationalizations and excuses to do both simultaneously. We give to charity for the status as well as the altruism, much as we get a college degree to learn, but also to earn a degree which signals to employers that we will be hard workers.

It’s a depressing perspective, but one that’s ultimately correct. Why do people wear Stanford or Berkeley sweatshirts if not to signal things about their fitness and career prospects? (Even pride in school is a signal to others that you are part of a particular tribe). One of the biggest challenges of operating in Silicon Valley is simply understanding the specific language of signals that workers there send.

Ultimately, though, I was nonplussed with the book, because I felt that it didn’t end up leading to a broader sense of enlightenment, nor could I see how to change either my behavior or my perception’s of others’ behaviors as a result of the book. That earned a swift rebuke from one of the author’s last night on Twitter:

Okay, but here is the thing: of course we lie to ourselves. Of course we lie to each other. Of course PR people lie to make their clients look good, and try to come off as forthright as possible. The best salesperson is going to be the person that truly believes in the product they are selling, rather than the person who knows its weaknesses and scurries away when they are brought up. This book makes a claim — that I think is reasonable — that self-deception is the key ingredient – we can’t handle the cognitive load of lying all the time, so evolution has adapted us to handle lying with greater facility by not allowing us to realize that we are doing it.

No where is this more obvious than in my previous career as a venture capitalist. Very few founders truly believe in their products and companies. I’m quite serious. You can hear the hesitation in their voices about the story, and you can hear the stress in their throats when they hit a key slide that doesn’t exactly align with the hockey stick they are selling. That’s okay, ultimately, because these companies were young, but if the founder of the company doesn’t truly believe, why should I join the bandwagon?

Confidence is ambiguous — are you confident because the startup truly is good, or is it because you are carefully masking your lack of enthusiasm? That’s what due diligence is all about, but what I do know is that a founder without confidence isn’t going to make it very far. Lying is wrong, but confidence is required — and the line between the two is very, very blurry.

Spotify may repurchase up to $1b in stock

Photo by Spencer Platt/Getty Images

Before the market opened this morning, Spotify announced plans to buy back stock starting in the fourth quarter of 2018. The company has been authorized to repurchase up to $1 billion worth of shares, and up to 10 million shares total. The exact cadence of the buybacks will depend on various market conditions, and will likely occur gradually until the repurchase program’s expiration date in April of 2021.

The announcement comes on the back of Spotify’s quarterly earnings report last week, which led to weakness in the company’s stock price behind concerns over its outlook for subscriber, revenue and ARPU (Average Revenue Per User) growth, despite the company reporting stronger profitability than Wall Street’s expectations.

After its direct-offering IPO in April, Spotify saw its stock price shoot to over $192 a share in August. However, the stock has since lost close to $10 billion in market cap, driven in part by broader weakness in public tech stocks, as well as by fears about subscription pricing pressure and ARPU growth as more of Spotify’s users opt for discounted family or student subscription plans.

Per TechCrunch’s Sarah Perez:

…The company faces heavy competition these days – especially in the key U.S. market from Apple Music, as well as from underdog Amazon Music, which is leveraging Amazon’s base of Prime subscribers to grow. It also has a new challenge in light of the Sirius XM / Pandora deal.

The larger part of Spotify’s business is free users – 109 million monthly actives on the ad-supported tier. But its programmatic ad platform is currently only live in the U.S., U.K., Canada and Australia. That leaves Spotify room to grow ad revenues in the months ahead.

The strategic rationale for Spotify is clear despite early reports painting the announcement as a way to buoy a flailing stock price. With over $1 billion in cash sitting on its balance sheet and the depressed stock price, the company clearly views this as an affordable opportunity to return cash to shareholders at an attractive entry point when the stock is undervalued.

As for Spotify’s longer-term outlook from an investor standpoint, the company’s ARPU growth should not be viewed in isolation. In the past, Spotify has highlighted discounted or specialized subscriptions, like family and student subscriptions, as having a much stickier user base. And the company has seen its retention rates improving, with churn consistently falling since the company’s IPO.

The stock is up around 1.5% on the news on top of a small pre-market boost.

What’s next

  • We are still spending more time on Chinese biotech investments in the United States (Arman previously wrote a deep dive on this a week or two ago).
  • We are exploring the changing culture of Form D filings (startups seem to be increasingly foregoing disclosures of Form Ds on the advice of their lawyers)
  • India tax reform and how startups have taken advantage of it

Reading docket

A long and winding road to new copyright legislation

Back in May, as part of a settlement, Spotify agreed to pay more than $112 million to clean up some copyright problems. Even for a service with millions of users, that had to leave a mark. No one wants to be dragged into court all the time, not even bold, disruptive technology start-ups.

On October 11th, the President signed the Hatch-Goodlatte Music Modernization Act (the “Act”, or “MMA”). The MMA goes back, legislatively, to at least 2013, when Chairman Goodlatte (R-VA) announced that, as Chairman of the House Judiciary Committee, he planned to conduct a “comprehensive” review of issues in US copyright law. Ranking Member Jerry Nadler (D-NY) was also deeply involved in this process, as were Senators Hatch (R-UT) Leahy (D-VT), and Wyden (D-OR). But this legislation didn’t fall from the sky; far from it.

After many hearings, several “roadshow” panels around the country, and a couple of elections, in early 2018 Goodlatte announced his intent to move forward on addressing several looming issues in music copyright before his planned retirement from Congress at the end of his current term (January 2019).  With that deadline in place, the push was on, and through the spring and summer, the House Judiciary Committee and their colleagues in the Senate worked to complete the text of the legislation and move it through to process. By late September, the House and Senate versions had been reconciled and the bill moved to the President’s desk.

What’s all this about streaming?

As enacted, the Act instantiates several changes to music copyright in the US, especially as regards streaming music services. What does “streaming” refer to in this context? Basically, it occurs when a provider makes music available to listeners, over the internet, without creating a downloadable or storable copy: “Streaming differs from downloads in that no copy of the music is saved to your hard drive.”

“It’s all about the Benjamins.”

One part, by far the largest change in terms of money, provides that a new royalty regime be created for digital streaming of musical works, e.g. by services like Spotify and Apple Music. Pre-1972 recordings — and the creators involved in making them (including, for the first time, for audio engineers, studio mixers and record producers) — are also brought under this royalty umbrella.

These are significant, generally beneficial results for a piece of legislation. But to make this revenue bounty fully effective, a to-be-created licensing entity will have to be set up with the ability to first collect, and then distribute, the money. Think “ASCAP/BMI for streaming.” This new non-profit will be the first such “collective licensing” copyright organization set up in the US in quite some time.

Collective Licensing: It’s not “Money for Nothing”, right?

What do we mean by “collective licensing” in this context, and how will this new organization be created and organized to engage in it? Collective licensing is primarily an economically efficient mechanism for (A) gathering up monies due for certain uses of works under copyright– in this case, digital streaming of musical recordings, and (B) distributing the royalty checks back to the rights-holding parties ( e.g. recording artists, their estates in some cases, and record labels).  Generally speaking, in collective licensing:

 “…rights holders collect money that would otherwise be in tiny little bits that they could not afford to collect, and in that way they are able to protect their copyright rights. On the flip side, substantial users of lots of other people’s copyrighted materials are prepared to pay for it, as long as the transaction costs are not extreme.”

—Fred Haber, VP and Corporate Counsel, Copyright Clearance Center

The Act envisions the new organization as setting up and implementing a new, extensive —and, publicly accessible —database of musical works and the rights attached to them. Nothing quite like this is currently available, although resources like SONY’s Gracenote suggest a good start along those lines. After it is set up and the initial database has a sufficient number of records, the new collective licensing agency will then get down to the business of offering licenses:

“…a blanket statutory license administered by a nonprofit mechanical licensing collective. This collective will collect and distribute royalties, work to identify songs and their owners for payment, and maintain a comprehensive, publicly accessible database for music ownership information.”

— Regan A. Smith, General Counsel and Associate Register of Copyrights

(AP Photo) The Liverpool beat group The Beatles, with John Lennon, Paul McCartney, George Harrison and Ringo Starr, take it easy resting their feet on a table, during a break in rehearsals for the Royal variety show at the Prince of Wales Theater, London, England, November 4, 1963. (AP Photo)

You “Can’t Buy Me Love”, so who is all this going to benefit?

In theory, the listening public should be the primary beneficiary. More music available through digital streaming services means more exposure —and potentially more money —for recording artists. For students of music, the new database of recorded works and licenses will serve to clarify who is (or was) responsible for what. Another public benefit will be fewer actions on digital streaming issues clogging up the courts.

There’s an interesting wrinkle in the Act providing for the otherwise authorized use of “orphaned” musical works such that these can now be played in library or archival (i.e. non-profit) contexts. “Orphan works” are those which may still protected under copyright, but for which the legitimate rights holders are unknown, and, sometimes, undiscoverable. This is the first implementation of orphan works authorization in US copyright law.  Cultural services – like Open Culture – can look forward to being able to stream more musical works without incurring risk or hindrance (provided that the proper forms are filled out) and this implies that some great music is now more likely to find new audiences and thereby be preserved for posterity. Even the Electronic Frontier Foundation (EFF), generally no great fan of new copyright legislation, finds something to like in the Act.

In the land of copyright wonks, and in another line of infringement suits, this resolution of the copyright status of musical recordings released before 1972 seems, in my opinion, fair and workable. In order to accomplish that, the Act also had to address the matter of the duration of these new copyright protections, which is always (post-1998) a touchy subject:

  • For recordings first published before 1923, the additional time period ends on December 31, 2021.
  • For recordings created between 1923-1946, the additional time period is 5 years after the general 95-year term.
  • For recordings created between 1947-1956, the additional time period is 15 years after the general 95-year term.
  • For works first published between 1957-February 15, 1972 the additional time period ends on February 15, 2067.

(Source: US Copyright Office)

 (Photo by Theo Wargo/Getty Images for Live Nation)

Money (That’s What I Want – and lots and lots of listeners, too.)

For the digital music services themselves, this statutory or ‘blanket’ license arrangement should mean fewer infringement actions being brought; this might even help their prospects for investment and encourage  new and more innovative services to come into the mix.

“And, in The End…”

This new legislation, now the law of the land, extends the history of American copyright law in new and substantial ways. Its actual implementation is only now beginning. Although five years might seem like a lifetime in popular culture, in politics it amounts to several eons. And let’s not lose sight of the fact that the industry got over its perceived short-term self-interests enough, this time, to agree to support something that Congress could pass. That’s rare enough to take note of and applaud.

This law lacks perfection, as all laws do. The licensing regime it envisions will not satisfy everyone, but every constituent, every stakeholder, got something. From the perspective of right now, chances seem good that, a few years from now, the achievement of the Hatch-Goodlatte Music Modernization Act will be viewed as a net positive for creators of music, for the distributors of music, for scholars, fans of ‘open culture’, and for the listening public. In copyright, you can’t do better than that.

Teamable, the Tinder for hiring, raises $5M and acquires Simppler

Teamable, a provider of hiring software that leverages employees’ social networks, has brought in $5 million from new investor Foundation Capital and existing backers True Ventures and SaaStr Fund.

The startup also announced its acquisition of Simppler‘s referral recommendation engine and matchmaking recruiting software. Teamable’s co-founder and chief executive officer Laura Bilazarian declined to disclose the terms of the deal but said none of the $5 million investment was used to finance the transaction.

According to Crunchbase, Simppler had raised $3.2 million in equity funding from Foundation Capital, Greylock, Vertex Ventures and others. The company, which is akin to Teamable, creates a referral platform using existing employee networks; it was founded by Vipul Sharma in 2013. Sharma previously ran machine learning at Eventbrite and, according to his LinkedIn profile, he’s been an engineering director at Indeed for the past year.

Sharma and the Simppler team will not be joining Teamable .

Using Gmail, Facebook, GitHub and other social media platforms, Teamable aggregates its employees’ contacts to connect recruiters with a more focused set of potential candidates. Companies using Teamable, including Spotify and Lyft, then facilitate a warm introduction between a candidate and the employee in their network. The startup says its social recruiting algorithms lead to more efficient and diverse hiring practices.

“I don’t think candidates love the way recruiting is done,” Bilazarian told TechCrunch. “They are throwing applications over a wall and not hearing back. And I don’t think companies love the way recruiting is done because people are just making guesses based off a job description and they aren’t getting the right applicants.”

“Instead of few people at a company spamming the entire world, you have people who really understand the company reaching out to you,” she added. “Teamable is very precise. It’s reach out to five people to get a hire versus reach out to 200 just to get one response.”

The Foundation-led investment brings Teamable’s total equity funding to date to $10 million, including last year’s $5 million Series A. Bilazarian says the 50-person company is cash flow positive with 200 customers. With offices in San Francisco and Yerevan, Armenia, Teamable will use the capital to expand its team and recruiting platform.

SoundCloud finally lets more musicians monetize four years later

SoundCloud moves painfully slow for a tech company, and no one feels that pain more than musicians who are popular on the site but don’t get paid. 10 years since SoundCloud first launched, and four years since it opened an invite-only program allowing just the very biggest artists to earn a cut of the ad and premium subscription revenue generated by their listeners, SoundCloud is rolling out monetization.

Now, musicians 18 and up who pay SoundCloud $8 to $16 per month for hosting, get over 5000 streams per month, and only publish original music with no copyright strikes against them can join the SoundCloud Premier program. They’ll get paid a revenue share directly each month that SoundCloud claims “meets or beats any other streaming service”. However, the company failed to respond to TechCrunch’s inquiries about how much artists would earn per 1000 ad-supported or premium subscription listener streams, or how many streams would earn them a dollar.

Beyond payouts, Premier members can post new tracks instantly without having to wait to be discoverable or monetizable, they’ll get real-time feedback from fans, and extra discovery opportunities from SoundCloud. The company hopes monetization will lure more creators to join the 20 million on the platform, get them to promote their presence to drive listens, and imbue the site with exclusive artist-uploaded content that attracts listeners.

It’s been a year since SoundCloud raised an $170 million emergency funding round to save itself from going under after it was forced to lay off 40 percent of its staff. That deal arranged by Kerry Trainor saw him become CEO and the previous co-founder and CEO Alex Ljung step aside. With underground rap that had percolated on SoundCloud for years suddenly reaching the mainstream, the startup seemed to have momentum.

The problem is the slow speed of progress at SoundCloud has allowed competitors with monetization baked in to catch up to its formerly unique offering. YouTube Music’s launch in June 2018 combined premium major label catalogues with user uploaded tracks in a cohesive streaming service. And last month, Spotify began allowing indie artists to upload their music directly to the platform. Meanwhile, licensing distribution services like Dubset are making it legal for big streaming apps to host remixes and DJ sets. Together, these make more of the rarities, live versions, and hour-long club gigs that used to only be on SoundCloud available elsewhere.

The delays seem in part related to the fact that SoundCloud wants to be Spotify as well as SoundCloud. It’s refused to back down from its late entry into the premium streaming market with its $9.99 per month SoundCloud Go+ subscription. As I previously recommended, “to fix SoundCloud, it must become the anti-Spotify” by ruthlessly focusing on its differentiated offering in artist-uploaded music. Instead, another year has passed with only a light revamping of SoundCloud’s homescreen and some more personalized playlists to show for it.

SoundCloud proudly announced it had reached $100 million in revenue in 2017, and exceeded its financial and user growth targets. But filings reveal it lost over $90 million in 2016 and it was previously projected to not become profitable until 2020. That begs the question of whether SoundCloud will have to raise again, or might once again open itself to acquisitions. With Apple, Google, Amazon, and Spotify all in fierce competition for the future of streaming, any of them might be willing to pay up for music that fans can’t easily find elsewhere.

What Spotify can learn from Tencent Music

On Tuesday, Tencent Music Entertainment filed for an IPO in the US that is expected to value it in the $25-30 billion range, on par with Spotify’s IPO in April. The filing highlights just how different its social interaction and digital goods business is from the subscription models of leading music streaming services in Western countries.

That divergence suggests an opportunity for Spotify or one of its rivals to gain a competitive advantage.

Tencent Music is no small player: As the music arm of Chinese digital media giant Tencent, its four apps have several hundred million monthly active users, $1.3 billion in revenue for the first half of 2018, and roughly 75 percent market share in China’s rapidly growing music streaming market. Unlike Spotify and Apple Music, however, almost none of its users pay for the service, and those who do are mostly not paying in the form of a streaming subscription.

Its SEC filing shows that 70 percent of revenue is from the 4.2 percent of its overall users who pay to give virtual gifts to other users (and music stars) who sing karaoke or live stream a concert and/or who paid for access to premium tools for karaoke; the other 30 percent is the combination of streaming subscriptions, music downloads, and ad revenue.

At its heart, Tencent Music is an interactive media company. Its business isn’t merely providing music, it’s getting people to engage around music. Given its parent company Tencent has become the leading force in global gaming—with control of League of Legends maker Riot Games and Clash of Clans maker Supercell, plus a 40 percent stake in Fortnite creator Epic Games, and role as the top mobile games publisher in China—its team is well-versed in the dynamics of in-game purchasing.

At first glance, the fact that Tencent Music has a lower subscriber rate than its Western rivals (3.6 percent of users paying for a subscription or digital downloads vs. 46 percent paying for a premium subscription on Spotify) is shocking given it has the key ingredient they each crave: exclusive content. Whereas subscription video streaming services like Netflix, Hulu, and Amazon Prime Video have anchored themselves in exclusive ownership of must-see shows in order to attract subscribers, the music streaming platforms suffer from commodity content. Spotify, Apple Music, Amazon Music, YouTube Music, Pandora, iHeartRadio, Deezer… they all have the same core library of music licensed from the major labels. There’s no reason for any consumer to pay for more than one music streaming subscription in the way they do for video streaming services.

In China, however, Tencent Music has exclusive rights to the most popular Western music from the major labels. The natural strategy to leverage this asset would be to charge a subscription to access it. But the reality is that piracy is still enough of a challenge in China that access to that music isn’t truly “exclusive.” Plus while incomes are rising, there’s extraordinary variance in what price point the population can afford for a music subscription. As a result, Tencent Music can’t rely on a subscription for exclusive content; it sublicenses that content to other Chinese music services as an additional revenue stream instead.

“Online music services in China have experienced intense competition with limited ability to differentiate by content due to the widespread piracy.” Tencent Music, SEC Form F-1

This puts it in a position like that of the Western music streaming services—fighting to differentiate and build a moat against competitors—but unlike them it has successfully done so. By integrating live streams and social functionality as core to the user experience, it’s gaining exclusive content in another form (user-generated content) and the network effects of a social media platform.

Some elements of this are distinct to Tencent’s core market—the broader popularity of karaoke, for instance—but the strategy of gaining competitive advantage through interactive and live content is one Spotify and its rivals would be wise to pursue more aggressively. It is unlikely that the major record labels will agree to any meaningful degree of exclusivity for one of the big streaming services here, and so these platforms need to make unique experiences core to their offering.

Online social activities like singing with friends or singing a karaoke duet with a favorite musician do in fact have a solid base of participants around the world: San Francisco-based startup Smule (backed by Shasta Ventures and Tencent itself) has 50 million monthly active users on its apps for that very purpose. There is a large minority of people who care a lot about singing songs as a social experience, both with friends and strangers.

Spotify and Apple Music have experimented with video, messaging, and social streams (of what friends are listening to). But these have been bonus features and none of them were so integrated into the core product offering as to create serious switching costs that would stop a user from jumping to the other.

The ability to give tips or buy digital goods makes it easier to monetize a platform’s most engaged and enthusiastic users. This is the business model of the mobile gaming sector: A minority percentage of users get emotionally invested enough to pay real money for digital goods that enhance their experience, currency to tip other members of the community, or access to additional gameplay.

As the leading music platform, it is surprising that Spotify hasn’t created a pathway for superfans of music to engage deeper with artists or each other. Spotify makes referrals to buy concert tickets or merchandise —a very traditional sense of what the music fan wants—but hasn’t deepened the online music experience for the segment of its user base that would happily pay more for music-related experiences online (whether in the form of tipping, digital goods, special digital access to live shows, etc.) or for deeper exposure to the process (and people) behind their favorite songs.

Tencent Music has an advantage in creating social music experiences because it is part of the same company that owns the country’s leading social apps and is integrated into them. It has been able to build off the social graph of WeChat and QQ rather than building a siloed social network for music. Even Spotify’s main corporate rivals, Apple Music and Amazon Music, aren’t attached to leading social platforms. (Another competitor, YouTube Music, is tied to YouTube but the video service’s social features are secondary aspects of the product compared to the primary role of social interaction on Facebook, Instagram, and WhatsApp).

Spotify could build out more interactive products itself or could buy social-music startups like Smule, but Tencent Music’s success also suggests the benefits of a deal that’s sometimes speculated about by VCs and music industry observers: a Facebook acquisition of Spotify. As one, the leading social media company and the leading music streaming company could build out more valuable video live streaming, group music sharing, karaoke, and other social interactions around music that tap Facebook’s 2 billion users to use Spotify as their default streaming service and lock existing Spotify subscribers into the service that integrates with their go-to social apps.

Deeper social functionality doesn’t seem to be the path Spotify is prioritizing, though. It has removed several social features over the years and is anchoring itself in professional content distribution (rather than user-generated content creation), becoming the new pipes for professional musicians to put their songs out to the world (and likely aiming to disrupt the role of labels and publishers more than they will publicly admit). To that point, the company’s acquisitions—of startups like Loudr, Mediachain, and Soundtrap—have focused on content analytics, content recommendation, royalty tracking, and tools for professional creators.

This is the same race its more deep-pocketed competitors are running, however, and it doesn’t lock consumers into the platform like the network effects of a social app or the exclusivity of a mobile game do. It recently began opening its platform for musicians to add their songs directly—something Tencent Music has allowed for years—but this seems less like a move to a YouTube or SoundCloud-style user-generated content platform and more like a chess move in the game of eventually displacing labels. Ultimately, though, building out more social interaction around music will be critical to it in escaping the race with Apple Music and the rest by achieving more defensibility.