Company / division: Industry
Several trade groups representing parties involved in online advertising have sent an open letter to the Coalition for Better Ads (of which they are themselves among the largest members) pushing for faster implementation of self-regulatory moves intended to stave off the threat of browser-based ad blocking. The context here is moves by browser makers – notably Google and Apple – to get tougher on bad ads and cookie-based tracking respectively, both of which threaten the online ad industry. The industry would therefore like to put in place self regulatory measures which have been discussed for some time but not implemented as a way to try to stave off more of this stuff, though the Apple changes have already gone into force and Google’s are likely to do so as well. The online ad industry only has itself to blame for failing to self-regulate sooner and more effectively and thereby maintaining an environment in which such moves by tech companies are deemed necessary. Poor online advertising really serves no-one well in the long term but the industry’s short-termism in allowing it to continue unchecked is now leading to nasty long-term consequences which it is essentially powerless to reverse.
via Marketing Land
The California DMV has approved rules to go into effect next year which will allow companies testing autonomous vehicles on its roads to do so without human drivers or traditional human driving hardware in cars. That’s a change to the existing rules, which had explicitly prohibited such testing and required human drivers. This appears to be at least in part a response to the increasing popularity of Arizona as a testing location for driverless cars due to its looser regulations, something which has presumably irked companies based in California which would rather test their technology closer to home. All of this could eventually be superseded by federal regulation being contemplated, which would override all state-level rules on this topic, but that’s still some way off and it makes sense for states with an existing commitment to allowing such testing to move forward in the meantime. As before, companies will have to register and report details of both their testing and any disengagements (human interventions) and accidents involving their cars.
via The Verge
The US Department of Transportation and National Highway Traffic Safety Administration have released data on fatal motor vehicle crashes during 2016 (a fuller report is available here while the link below is to a summary press release). The total number of fatalities (which includes drivers and passengers in vehicles as well as pedestrians, motorcyclists, and cyclists) was 37,461, up 5.6% after a larger rise in 2015, but following a long decline in overall fatality rates from the 1960s onwards. As in prior years, what the NHTSA describes as “human choices” such as not using seatbelts, driving while drunk, sleepy, or distracted, or speeding, continued to be a major cause. Remarkably, nearly half of in-vehicle fatalities were among people not wearing seatbelts, and nearly a third of fatalities occurred where the driver was under the influence of alcohol.
One of the rallying cries of the autonomous driving movement is always that it should dramatically reduce these fatalities, which are arguably already very low at just over one fatality per 100 million miles. Given the contribution of human choices like alcohol use, speeding, and distraction to the totals, that seems likely to be true if autonomous technology can at least match the performance of human drivers on the fundamentals of driving. On the other hand, given that the vast majority of cars on the road will still be human-driven even once autonomous cars start arriving, things like increased seatbelt use (currently at around 90% of vehicle occupants) would make a much bigger difference in the near term.
The Recording Industry Association of America (RIAA) today issued its report for the industry’s performance in the first half of this year, and it showed a by now familiar trend: stronger growth driven by rapid growth in streaming. That growth far more than offset the decline in both physical and download sales, with physical sales now just 16% of total revenues compared to 31% back in the first half of 2013. More importantly, downloads have dropped from 44% of industry revenue to just 18%, barely ahead of physical sales, while streaming is now 58% of total revenue. As always, though, it’s worth noting that it’s really subscription streaming that’s driving numbers up, with 61% year on year growth in that category and 74% of total streaming revenues, with just 12% coming from ad-based streaming despite the much larger user numbers. The RIAA says there were an average of 30 million paid subscribers in the US in the first six months of the year, up from 20 million in the same period last year. In its report (linked below) there’s the usual griping about that ad-based revenue stream, a stream the industry continues to go along with but moan about at the same time because it knows it can’t really live without it, even though paid streaming is far more lucrative. In the paid streaming department, the US continues to be quite some distance ahead of most of the rest of the world. A recent survey I ran showed that Spotify and Apple Music alone had captured 23% of online adults as customers between them.
via RIAA (PDF)
Analyst firm eMarketer has some new numbers out on cord cutting and the impact it will have on traditional TV ad spending. Specifically, it says that later this year there will be over 22 million cord cutting households in the US, up about 5.5 million from 2016, while TV ad spending growth will slow down meaningfully, though it’s still projecting growth over the next few years. I’m in agreement with the broad trend described by eMarketer around cord-cutting: my own analysis has consistently shown accelerating cord cutting behavior, though at a rather slower rate than eMarketer is projecting – far closer to 2 million in the past year than the over 5 million eMarketer is suggesting by the end of this year. On ad spending, I’m also in agreement that growth will slow, but I think it will turn negative soon (it was already negative for the major TV companies over the past year, according to my own data gathering, thanks in part to last year’s strong election-related spending). I think a decline in the traditional TV ad business is inevitable at this point in the coming years, and the results will begin to be felt as traditional TV companies start to reduce spending to bring costs in line, which in turn will have significant effects on the overall industry.
US Drone Market Continues to Grow Rapidly (Aug 24, 2017)
The article linked below discusses several recent studies conducted by the Insurance Institute for Highway Safety and other bodies, which provide substantial evidence that advanced driver assistance systems (ADAS) like lane departure warnings and blind spot detection are preventing crashes and saving lives. This is notable because autonomous driving technology is widely expected to reduce crashes significantly, but is likely years away, while traditional car manufactures have been working for years on ADAS technology, and that’s already having a positive impact. That’s great validation for the strategy of most vehicle manufactures working in parallel on improving and broadening ADAS while simultaneously working on autonomy, because it suggests the former efforts are providing real benefit today, while autonomy is still years away. It’s also going to be very helpful for those trying to get regulatory approval for autonomous systems to be able to point to these results as evidence of the broader claims. Crucially, however, ADAS augments the driver’s own skills and awareness rather than replacing the driver, whereas intermediate autonomous technologies introduce scenarios in which drivers either can or may be tempted to pay less attention to the driving task, which can actually create new risks. The key in developing autonomous technology will be to implement methods to keep drivers attentive so that they act appropriately even as the tech in the car increasingly takes over.
Some Online Publishers Increase Revenue by Reducing Ads (Jul 13, 2017)
The Wall Street Journal has a nice bit of reporting here on several websites which are reducing the number and toning down the nature of ads, and seeing positive results in terms of ad revenue as a result. Reading the article, it’s hard to avoid asking “You mean you dramatically improved the user experience and more people spent more time on your site?” The changes being described here seem so obvious that it’s easy to forget that the received wisdom in online advertising (as in TV advertising, arguably) has been that the best way to generate more ad revenue is to show more ads and make them harder to ignore, at the expense of the user experience. The backlash against advertising online (manifested in both use of ad blockers and refusing to visit sites with obnoxious ads) and on TV (manifested through ad-skipping DVRs and the rise of ad-free properties like Netflix, Hulu, and HBO) is now finally forcing a reckoning among those that have swallowed that line of thinking. And the results should surprise no-one: prioritizing anything over the user experience is always going to worsen the experience and therefore usage, while prioritizing the user experience will improve it and usage, and in the process may well improve revenues too. This isn’t a panacea for online display ads, many of which will be blocked anyway even if not obnoxious, and whose value compared to native and search ads continues to erode, but it’s better than continuing down the road most online publishers have been on. The solution for TV advertising, on the other hand, isn’t nearly so simple, given the broader declines in viewership.
A study from MediaRadar, reported here by Adweek, suggests that the number of advertisers buying programmatic ads dropped by 12% year on year, while the number spending on native ads rose 74% year on year. The latter is very much in line with a longer-term trend towards native advertising, which looks more like the content in or between which it is embedded, but the former is more newsworthy. The most likely reason appears to be the worries over automatically-placed ads showing up next to undesirable content on YouTube and through Google’s AdSense earlier this year. I said at the time the YouTube boycott began that, although the backlash was publicly aimed at Google’s properties, it was likely to affect programmatic buying generally as brands became more concerned about a lack of control over which content their ads would show up next to, and this is a bit of evidence that confirms that hunch. The two formats discussed here – native and programmatic – needn’t, of course, be mutually exclusive, and as an example Google’s recently introduced mobile ad formats could potentially be bought programmatically while being designed to appear as native ads on various sites. But programmatic buying itself, while Google has explicitly called out as one of a small number of major factors driving its ad performance in recent quarters, looks to be heading for a bit of a setback as at least some brands re-evaluate whether to use it.
BuzzAngle, a company which tracks the North American music industry, has released a first-half 2017 report, with lots of numbers on music consumption patterns in the US over the past six months, and Variety here has a summary of some of the key findings. One of the most striking numbers to me is that subscription streams accounted for nearly 80% of total streaming audio plays in the first half, with ad-based streaming only driving 21% of listens. That was slightly surprising to me, because the number of ad-based streaming music users is much higher than the number of paid subscribers, so I went back and checked some earlier data from BuzzAngle in this year-end 2016 report. It appears that this balance began to shift dramatically starting in the middle of 2015, which is not coincidentally when Apple Music launched. Importantly, BuzzAngle treats streaming video plays of music (e.g. music videos on YouTube) as a separate category, so the split mentioned above only accounts for pure audio streaming such as Spotify’s free and paid tiers and their equivalents. But it’s still striking that the balance has gone from roughly 50/50 between subscription and free audio streaming at the beginning of 2015 to 80/20 in Q2 of this year. And in Q2, subscription audio streaming actually eclipsed combined ad-based audio and video streams for the first time, so it’s now the largest category even when video plays are included. It’s worth remembering that this is US data, and the US has shifted dramatically from being a streaming laggard to being a leader over the last few years, so this certainly isn’t reflective of global behavior. But it is worth noting that subscription music streaming not only provides the vast majority of revenue and profits in the US, but now also a majority of actual plays as well.
This article dropped on Friday evening as I was logging off for the week, so I’m only getting to it now. But this article was something of a bombshell, detailing not just the scale of harassment, assault, and other misbehavior by men against women in venture capital, but also naming specific names including some who hadn’t been accused previously. There really seems to have been a tipping point in the last few weeks on this topic, where far more women are now willing to speak out about their bad experiences and name their abusers and harassers. That, in turn, has suddenly exposed many man within venture capital and their past bad actions. This was a much needed change, and although the venture capital world and companies like Uber remain single small pockets in which the real state of things is finally being revealed, I can easily see this movement spreading and penetrating much of the rest of the tech industry. Justice Brandeis’ famous quote about sunlight (publicity) being the best disinfectant seems apt here: the more of these cases come to light, the more some of the perpetrators (like Justin Caldbeck and Dave McClure) will be moved out of roles or dumped by their employers altogether. None of this represents an overnight change, but it does feel like things are finally moving in the right direction, and those who have been protected out of a combination of fear on the part of would-be accusers and collusion on the part of colleagues are finally being exposed to some real consequences. There’s clearly a long way still to go, but breaking the wall of silence feels like a big step forward. Increasing diversity still feels like one of the most obvious ways to prevent this issue in future – at many companies, the overwhelming gender dominance of men is clearly a big part of the cultural problem, even though women seem to have protected some of those accused as well, either covering up bad behavior or dealing with it too quietly (as in the case of 500 Startups). Update: on Monday, per Axios, Dave McClure was asked to resign completely from 500 Startups, and did so, a step which should arguably have taken rather sooner.
IDC Forecasts Strong Growth for AR and VR Headsets, with VR and Commercial AR Biggest (Jun 19, 2017)
This is a great counterpart to the FuboTV piece I posted earlier, because it illustrates the state of the current over-the-top streaming TV landscape. The survey quoted here from IBB Consulting suggests that nearly half of US broadband customers have at least one streaming TV service, with over half of those in turn subscribing to several. Moreover, nearly two thirds of those subscribing to these over-the-top services also still subscribe to traditional TV. That paints a picture in which subscription VOD (SVOD) services are both complements and substitutes to traditional pay TV, and even then largely fail to meet all of consumers’ needs for video. This is still a very fragmented marketplace, in which even the best providers are only partially meeting people’s needs. That creates both a near-term opportunity for someone to do better at meeting those needs, but also a long-term threat of consolidation as consumers balk at having to pay for and manage multiple subscriptions and long for someone to bring it all together. Given all the assets and relationships held by the major legacy pay TV companies, they’ve certainly in a strong position to aggregate some of this fragmentation on the part of consumers, while platform companies like Apple and Amazon are also positioning themselves in different ways as subscription aggregators, presenting another possible way forward. Regardless, as today’s FuboTV fundraising news suggests, there’s lots of activity still to come here.
Weekly Narrative Video – Maturing Smartphone Market (Jun 3, 2017)
This week’s Narrative Video is on the Maturing Smartphone Market narrative, which has been in the news a couple of different ways this week, with the announcement of Andy Rubin’s Essential Phone, and IDC’s updated smartphone forecasts. The reality is that the smartphone market is maturing in a couple of important ways: both in terms of mature market penetration, which is reaching the top part of the S-curve, and in terms of technology, which is now at the point that smartphones are very good and innovation is becoming more incremental than dramatic. The video talks through these and other trends, and subscribers can see it on the narrative page.