YouTube has licensed nine of its original shows and movies, which were until now exclusive to its Red subscription service, to a third party in order to generate additional licensing revenue. Two of the great advantages of producing original content are exclusivity and licensing rights, though the two are often somewhat mutually exclusive, but YouTube appears to be playing both sides here, keeping the shows as exclusives for a period of time before broadening availability to develop a content licensing revenue stream too. That’s not a strategy I would ever see most of the other companies developing original content employ in such a windowing approach, but it likely suits YouTube reasonably well given its smaller subscription footprint and the increasing presence of aggregators and others who want to show YouTube content to fans on other platforms like traditional TV, somewhat ironically. But this will also allow YouTube to monetize its content in other geographies where the Red service hasn’t launched, whereas Netflix is now very focused on its near-global presence.
Microsoft has today announced that it’s killing off its own streaming music service, Groove Music, and will be partnering with Spotify instead as the latter builds an app for Windows 10 and the Xbox One. This isn’t a huge surprise – Microsoft’s various incarnations of music streaming services have never done as well as its base of Windows users should have enabled them to – but it’s an admission of how completely Microsoft has failed when it comes to consumer content services, where it’s basically a non-player. That, in turn, is indicative of Microsoft’s continued challenges as a consumer ecosystem, especially relative to Amazon, Apple, Facebook, and Google, which dominate much of consumer time and content consumption. Microsoft’s consumer presence is largely limited to its de facto standard status as a maker of paid productivity software and increasingly free standalone productivity apps on mobile platforms, alongside its search and gaming platforms. None of that engenders much positive loyalty to Microsoft from consumers, and it generates very little revenue for the company on the consumer side. And yet it continues to try to straddle the consumer and enterprise worlds in a way few have ever managed to do successfully. Giving up in music is a logical and sensible step, but it’s certainly not going to get Microsoft any closer to cracking the consumer market. Meanwhile, it’s yet another channel – albeit likely not a big one – for Spotify to sign up more streaming music subscribers.
via The Verge
The two halves of this story have been bouncing around for a while now, but it seems they’re finally official. We’ve been hearing for some time about plans to end Google’s “First Click Free” policy, which gave newspapers the option of making their paywalls porous to search users or forgoing traffic from search, and its replacement is now being announced. It stops punishing publishers for not offering free access to articles, while giving publishers more granular control over how many free news items users of Google search get before they hit the paywall. At the same time, Google is talking (again) about plans to help news organizations drive subscriptions. As I’ve said repeatedly, both Facebook and Google are viewed with distrust by the news industry, but the former has at least been visibly acknowledging the tension and seeking to do something about it, while Google has been slower to act. It’s good to see it finally making changes now, although the subscription tools won’t debut until next year are are still not being spelled out in detail.
via New York Times
The Street reports that Facebook’s soon-to-be-launched subscription offering for news publishers won’t have some key newspapers on board at launch, notably the New York Times, The Wall Street Journal, and The Financial Times. It will, though, apparently have the Tronc and Hearst Newspaper Groups, the Economist, and the Washington Post as launch partners. The former group, notably the Times and Journal (and parent company News Corp) have been among the most skeptical about all of Facebook’s news initiatives, and among the most distinctive brands in news, so it’s not a huge surprise that they won’t be on board, but it’s still a bit of a blow. I’d argue, though, that Facebook doesn’t need broad support from newspapers for this program in the same way as an aggregation app like Apple News does, simply because articles from those publishers will still be shared and in some cases posted on Facebook and in some cases carry Facebook ads, they just won’t be monetized through subscriptions. Since Facebook won’t be taking a cut anyway, that doesn’t actually matter all that much.
The Financial Times reports that Google is working on an AI-based tool that will help publishers identify possible subscribers for their newspapers. This is a somewhat fleshed-out version of a report from a month ago on Bloomberg, which had fewer details but said Google was testing a number of different approaches. As a reminder, the context here is the tension between news organizations and both Google and Facebook over business models, the increasing power of the internet companies, and the challenges of selling online subscriptions and building brands when search and social serve as channels for so much news consumption. As I’ve said before, Facebook began taking this tension seriously some time ago and pouring oil on troubled waters, but it seems to have taken Google longer to come around, and it’s still mostly at the testing stage in its efforts. Putting AI to work in the service of solving the problem is a classic Google move, but it remains to be seen how effective that will actually be. Certainly, the publishers quoted by the FT seem heartened but not yet won over by Google’s new approach.
via Financial Times
This article is a bit of an oddity – the Wall Street Journal reporting on the Wall Street Journal – but the news itself is important: Google is relaxing the policy that currently penalizes sites like the Journal which no longer allow Google searchers to view an article linked from search results for free. Since the Journal instituted that change, it’s seen traffic from Google (which in turn is likely a big chunk of total traffic) drop enormously, because sites that don’t participate in Google’s “first click free” program are penalized in search results. This is yet another sign of a softening at Google towards news organizations, which have been increasingly critical of its (and Facebook’s) power over them, though Google still seems to be months if not a year behind Facebook in coming around and making serious concessions.
Google is Working on Subscription Tools for News Publishers (Aug 18, 2017)
Time Warner’s Turner unit, which acquired English-language US rights to the European club soccer tournaments from UEFA earlier this year, has announced that it will be launching a new steaming service next year to carry the games. A subset of the games will also be broadcast through its linear channels, but it sounds like this service will be the only way to get the full set. This is a great example of the kind of approach big TV companies should be taking with online streaming services, where we’ve seen two broad strategies be successful: recreating a linear / pay TV offering in the digital world, or creating something entirely new (Turner here is doing the latter). This should provide a very direct way to recoup the $180 million Turner is allegedly spending on three year’s rights for the soccer tournaments, while also allowing it to experiment with streaming models for sports. It sounds like it’s interested in adding other sports over time, though not the basketball content that’s already a big deal on its linear networks, and I worry that could be a distraction or dilution for what will otherwise be a very clear value proposition.
NBCU to Shut Down Seeso Comedy Subscription Service (Aug 9, 2017)
Microsoft has today announced a leasing and upgrade program for its Surface line, offering a 24-month payment plan for the devices, and an option to trade in for a new device after 18 months rather than paying it off over the full 24 months. The program is called Surface Plus and there’s also a version for business customers, though it seems like a missed opportunity not to call it Surface as a Service… We’ve obviously seen the installment and leasing models become the default for smartphones on US carriers over the past few years, and there are already examples of hardware vendors getting into the game directly, notably Apple’s iPhone Upgrade Program. So this is both a familiar model and a smart move for Microsoft, which recently began to offer bundled Windows and Office subscriptions to business customers and can now offer a single bundle of Surface hardware and those two software packages for businesses. But it’s also a great way to lower the barriers to entry for what are fairly pricey machines for the most part, as Microsoft has stayed firmly above the fray with its Surface line, in contrast to the much lower overall average selling prices of Windows PCs. The Surface Pro starts at $799 (or $33.29 per month over 24 months), while most of the models are over $1000. Reducing that to $40-60 per month for many models should make it much more affordable and predictable as a cost for both individuals and businesses. We’re going to see lots more of this, with hardware vendors packaging up access to one or more devices on a subscription basis with additional subscriptions to software, content, or other services layered on top.
Pandora’s Premium Subscription Growth Slows in Q2 (Jul 31, 2017)
Spotify Has 60 Million Paid Subscribers (Jul 31, 2017)
The Financial Times reports that Spotify has hit the 60 million paid subscriber milestone, a fact that has now been confirmed by the company’s press site, where it also says it has 140 million active users in total, suggesting 80 million free users. It had previously reported 50 million paid users in early March of this year, suggesting it took just under 5 months to add a million subscribers, while Apple Music added around half that over the same period. It’s been fascinating to watch Spotify’s growth accelerate in the aftermath of Apple’s launch of its competing service, as streaming takes off as the dominant form of music consumption and paid subscriptions generate the vast majority of streaming revenue. That’s indicative of Spotify’s success in both establishing itself as the de facto standard in the market and creating social features that help win new subscribers, and also at signing partnerships with wireless carriers and others who help promote discounted subscriptions. As Spotify’s financial results for last year show, its average revenue per paid subscriber has been dropping rapidly, something I suspect has continued this year. But it’s the paid business that’s profitable on a segment basis, while free streaming loses money, which is why I suggested in a piece for Variety last week that it ditch the free tier. I’m only partially serious about that – the free tier remains by far Spotify’s best marketing tool, but it also remains a point of contention with the music labels, among which Warner is the remaining holdout in signing a new long-term deal.
via Financial Times
Facebook Confirms News Subscriptions Coming in October (Jul 19, 2017)
Campbell Brown, the former news anchor Facebook appointed as head of News Partnerships in January, has finally confirmed what’s been rumored for some time now, namely that Facebook is readying a subscription product for newspapers. It sounds like it will adopt the familiar though not universal approach of allowing readers to access ten articles before having to pay for a subscription to a given publication, though it’s not clear that the ten articles will include those readers read separately in their browsers, so that will be a key point for papers to nail down before signing up. Another will be payments and how those will work, since Facebook still doesn’t have credit card details from the vast majority of its users. Since some publications don’t allow any free articles before the paywall kicks in, this won’t be a perfect or universal solution, but on paper should neutralize one of the big criticisms of Facebook’s gobbling up of news consumption. However, given that this has been in the works for some time, and the largest publications will be aware of that, the recent PR push by the News Media Alliance against both Facebook and Google suggests that it certainly won’t assuage all their concerns. Update: also today, Facebook announced analytics for Instant Articles with support from Nielsen, to allow publishers to compare results from their IA and web-based versions. The lack of comparable analytics has been another bugbear for the news organizations using IA, so this should check another box in resolving those concerns, at least on paper.