We are up at the crack of dawn today, heading to SXSWi in Austin. Although we’re only going to report on SXSW Interactive this year, you can still get ready for all the SXSW festivities by listening to NPR’s SXSW Music playlist. Also check out the Austin Chronicle’s coverage of everything going on, including a live videoconference with Edward Snowden.
We’re about to board our crazy-early flight to Austin from SFO, where it’s already swarming with a ton of Valley Hipsters loaded up on caffeine with their Timbuk2 messenger bags in tow… Look for more reporting right here from SXSW in Austin through Monday!
Been to Starbucks lately? Maybe you dropped in for a quick work session — what with the free Wi-Fi and warm $4 lattes? You snagged a tiny, wooden chair, propped open your Mac, waited a few minutes for the spinning rainbow to get you online, only to realize how maddeningly slow it is. But, what the heck, you thought. You’re just gonna blast off a few emails, and maybe take a call or two before you hit the road. But first, you gotta bend and stretch to find that ever-elusive outlet… only to see the rotund nerd on the faux-leather couch next to you has already sucked up all the power, with about 4 devices double-jacked in the plugs. OK, you think… well, this Mac’s battery is good for about 45 min.
And there’s the call, your smartphone almost vibrating itself off the little, round table. You quickly reach over your laptop lid to snag the phone, almost toppling the hot latte. Whew, you think. That woulda been a nitemare, spilling coffee all over your expensive, blingy gadgets. You swipe to take the call right as the barista starts grinding the 4 pounds of beans he needs for the long line of people standing elbow to elbow, extending out the door, letting the cold air and traffic noise in. And that heavyset guy next to you? His power-sapping devices start jangling with meeting alerts. He grabs his phone and dials in as well. Conference call. And he’s not the quiet type. He’s bloviating into that phone about the upcoming sales conference as you try and hear your caller — the low-talker VP on the other end — your boss’s boss — as he near-whispers to you something about something you need to do, right as the barista ramps up the grinding blades.
Yeah, we’ve all been there. Working in coffee shops. But guess what? You hate this? You travel a lot? Cause THIS is your life on the plane now that the FAA is relaxing rules around devices at 40,000 feet. There is NO MORE black hole away from being “always connected”. If the airlines allow your fellow passengers to take calls, conduct meetings, and run their businesses on the plane, you’ll have no respite from the loud-talker salesperson, the weepy mistress crying about her lousy life as the “other woman”, the whining geek too afraid of not being the only one with the good idea, and the seatmate hogging not only the armrest, but the very peaceful air you used to be able to relax into. All we can do is pray the airlines will have the sanity to make some rules about the new etiquette that will be so sorely needed as we torpedo into the future with our gadgets turned on, gate to gate!
Facebook has acquired WhatsApp for a total value of $19 BILLION. Wow. That’s more than the GDP of Argentina, folks. The $19 billion is split up into three parts:
– $4 billion in cash
– $12 billion in Facebook shares
– $3 billion in restricted stock units for WhatsApp employees, to be distributed over four years
Um, divide that last one by 50. Yeah, WhatsApp has 50 employees. So there are a lot of millionaires today!
WhatsApp currently has 450 million users, with around 1 million new users per day. 70% are active on a daily basis. WhatsApp’s message volume is supposedly close to the entire global volume of SMS messages. Facebook is essentially paying about $42 per user.
I’ve been using WhatsApp for almost a year now (as I get close to my $1 bill being due), but it’s really NOT about US users. It’s more valuable to Facebook because of its global users. Most US smartphone consumers are now used to unlimited texting on their plans… this isn’t the norm outside the US, however, which explains the widespread global adoption of WhatsApp. In fact, WhatsApp is the norm for SMS users outside the US. And the app sure beats the plain-jane functionality of most default SMS apps provided by the phone manufacturers and network carriers.
Facebook is playing defense here. They perceive WhatsApp as a cannibal. We all know it’s better to hunt than be hunted. After failing to snap up SnapChat for a paltry $3 billion, they must’ve felt like an aggressive act was needed. There’s more detail about the reaosns behind Facebook’s strategy here.
While trying to feverishly watch season 2 of House of Cards, I’ve noticed a few spinning rainbows via my AppleTV. What’s up? I tend to blame my Internet connection, but in reality it seems like there’s some nefarious “auto slowdown” occurring. It seems like Netflix is having a conflict with Verizon and other broadband providers over how much content should be carried without additional fees. Netflix complains that they’ve encountered a 14% slowdown in average speeds. The Wall Street Journal is reporting on the conflict between the two titans, but they’re telling us that Google, Microsoft, and Facebook, have already begun paying broadband providers for smoother access to their networks, which leaves Netflix kind of flapping in the wind complaining about tiered access.
The war around the idea of “net neutrality” is heating up as consumers move away from traditional TV and focus more on “binge watching” and a la carte watching via Netflix, Hulu, Google Play, iTunes and other streaming and/or subscription services. Just last month, a court ruled in favor of Verizon’s suit to block the Federal Communications Commission’s net neutrality rules, which has spurred chaos among the providers and content creators as more people consume more high-definition video. To add fire to the furnace, Netflix is more than likely very interested in the upcoming federal review of Comcast’s acquisition of Time Warner Cable, and may push for new requirements on traffic-swapping deals. As we move forward into the unknown waters of “tiered Internet access” it’s going to be more and more about who pays what: the content creators and/or their customers.
It seems like streaming services are all the rage lately. Beats just released their app (known mostly for headphones, the company bought MOG, and re-branded it) which gives you unlimited downloads and access across 10 devices for $14.99 a month. Spotify has now removed the limit to the number of songs subscribers on the free plan can access each month, as well. So the services are upping the ante by trying feverishly to differentiate themselves. Beats is adding a human element by bringing curators to the service instead of a computer algorithm to help you discover songs/artists you like. Spotify is stressing its social utilities and focusing on playlists based on your mood.
To carve out market share, the streaming services have offered subscriptions at a ridiculously low price: $9.99 a month on average, or even better discounts if you buy a year’s worth in advance. The paradigm shift for the general public has been moving from “owning” songs to “renting” them. While the streaming services seem to be taking hold, there’s new research that shows they can never be profitable. According to the report, the number of streaming users will balloon to 1.7 billion by 2017, up from 767 million in 2013. Paid subscribers will leap to 125 million, up from 36 million currently. It seems like the labels are the culprits: taking 70% of the profits for themselves in royalties. On top of that, the freemium model that Spotify has adopted is convincing consumers that music is a commodity, and not really worth paying for. And, of course, there’s the controversy with what the artists are actually being paid.
As the services evolve, they’re going to have to figure out a revenue model that allows for scalability. And consumers, at some point, are going to have to pay up.