Thursday, March 28, 2013

Business Matters: Spotify, Deezer Inactive Accounts Are Just Part of Doing Business

When you hand out free accounts to a digital service -- especially in the age of Facebook Connect -- you're likely to find most people just aren't that into you. That's what Spotify and Deezer have found, notes music industry analyst Mark Mulligan. Whether or not it's a problem -- and how to fix the problem -- is open for discussion. 
Inactive accounts represented 70% of Spotify's registered accounts at the end of 2011 and 73% of Deezer's registered accounts this year. The important point here, writes Mulligan, is that "streaming services as a whole have a problem with churn." The term churn means loss of customers. Churn is expensive to companies because it is always more expensive to gain a new customer than to keep an existing customer. 
But worrying about an unconverted, inactive group of registered users breaks with the logic of the Internet. Inactive users are just a part of doing business online. Getting people to register is just the first step. Not everyone will become a frequent visitor or paying customer. As Mulligan later noted in an update to the blog post -- after an exchange on Twitter with Spotify CEO Daniel Ek -- "this is a problem that affects all businesses that have a free tier that requires registration." 
Inactive accounts are a part of doing business for many online services. For instance, a 2012 study found 70% of Facebook pages are inactive. Last year Semiocast found that 73% of Twitter accounts are inactive.
Retention is difficult elsewhere. A recent study by Flurry shows a third of apps were able to retain 37% or more users over a subsequent 30-day period. Email lists have a similar problem with inactivity. Various estimates put the average email list's inactive addresses at 65% to 70% of the entire email list in a given year. 
All this inactivity by a large number of users brings to mind the 80/20 rule that says 20% of customers account for 80% of a company's sales. (It is said to hold true in other areas. For example, 20% of computer bugs cause 80% of crashes.) The other 80% of customers spend less and buy less often than the super-active 20%. Some are first-time customers who will never return. Others could be infrequent customers who buy once every year or two. 
The 80/20 rule is also known as the Pareto principle. People in the music business may recognize the name "Pareto" from the book "The Long Tail," whose familiar graph is that of a Pareto distribution. We see something resembling the Pareto principle in Internet radio. Pandora says only 4% of its users are likely to be affected by the mobile listening caps it recently installed. That is to say, just 4 out of 100 active users listen to Pandora more than 40 hours per month. The Pareto principle also applies in the amount of time people will put into creating, editing and viewing Internet content. It's called the 1% ruleor the 90-9-1 rule. This rule says that only 1% of people on the Internet will create content, 9% will edit content and the other 90% will view the content without contributing. All over the Internet, relatively small groups of people are accounting for large groups of activity.
Mulligan believes subscription services can reduce their level of inactivity and manage churn by making music more social. The solution -- it would be an market-wide solution, so don't hold your breath -- would be to make the playlists portable and universal so they can be played on any service. The idea is that the sharing of playlists, and thus participation in subscription services, will increase just as use of mobile phones adoption increased once customers were able to call and text people on other networks. Universal playlists may help adoption and reduce inactive accounts on the margins, but only to the extent people discover music through friends. The fact that services are now putting so much of their effort into curation and editorial suggests they discovery may be less social than once thought. 
I think there's an important lesson in these inactive accounts that should not be overlooked: most people say they love music but won't invest much time in it. Nielsen's recent study "The Buyer and the Beats," unveiled at SXSW, indicates this fact very clearly. The survey found that most people don't enjoy creating playlists with specific themes or sending playlists to friends. Most of them don't read music blogs. Even the groups of consumers that account for over half of all spending on music don't really care to receive emails from favorite musicians. 
Yes, it is unfortunate that music services have so many inactive accounts. But since this is also an issue faced by other Internet services that offer free registrations, where does one draw the line between an acceptable and inacceptable amount of inactivity? Where does it cease being a typical problem and start being a problem that needs a solution?
I think a better way of looking at this issue is to follow the most important metric: subscribers. The paying customer is a far stronger driver of a music service's revenue than advertisements that target the free customer. To get subscribers a service has to register new users, and it’s going to register more users if registration is free. Some users will become paying subscribers, others will remain active users and others yet will become inactive users. Along the way the service can take steps to prod inactive users to rejoin the flock and add to subscription growth. 
A freemium model like Spotify and Deezer will certainly register many ambivalent music consumers who are better served by Internet radio. These services just aren't for everyone. Some inactive users may return once functionality improves or new features are added. A key lesson of the 80/20 rule is that companies should focus on the 20% of customers from which they derive nearly all their revenue. In the case of Spotify and Deezer, that means catering to the relatively small number of consumers who will pay for the service. 


Waiting To Exhale fans were left in a state of confusion after the sudden death of Whitney Houston. The singer, who played TV exec Savannah, was set to join her three co-stars in a long-awaited sequel before passing in 2012. Since then, excitement surrounding the project has died down, leaving many to think it will never happen.
Golden Globe winner Angela Bassett was spotted on the red carpet for the premiere of her latest film Olympus Has Fallen, looking gorgeous in a strapless yellow dress. When asked about the film’s status, she assured fans that it’s still in the works. “They’re still writing. One of our original producers, from the first Exhale is on board,” she said. “So that’s a good sign, but they’re still working on the script. It’s just how to deal with it [Whitney’s loss]. And probably the best way to deal with it is just deal with it. It’s like what happens in life, in a way. Life is about life in passing, living and dying, winning and losing. So that’s what I know so far.”


Diehard Tupac Shakur fans can own a piece of history as reports claim a hat worn by the late hip-hop mogul in his "California Love" music video.
According to reports, Pac's fedora is currently up for grabscourtesy of the ex-wife of rocker Vince Neil.
Fedoras suck. Except if they were owned by the late Tupac Shakur. The rapper's Biltmore Imperial homburg hat can be yours--the hat Shakur wore in the infamous "California Love" video is up for auction. Provided by Motley Crue frontman, Vince Neil's ex-wife Sharise Neil (with a letter of authenticity), you can look as cool as the West Coast legend, for a price, of course. Right now, the hat is going for over $3,000 and has more than three days left on the auction. So get your money up, if you have any "ambitionz az a ridah." (Complex)
Along with the cap, the ex-wife is throwing in a few more little goodies.
Billed as "possibly the finest peice [sic] of hip-hop memorabilia to ever hit the open market," the Biltmore Imperial hat comes complete with a notarized letter of authenticity from Neil, as well as a ticket stub from a trip she took to Cabo San Lucas where she met Shakur, Suge Knight, and Snoop Dogg. That trip was mentioned in another Tupac song, "Heaven Ain't Hard 2 Find," which Neil believes is about her. (AV Club)
The bid has now reached $5,363 and will expire by this weekend.
Due to Shakur's early and unfortunate passing in 1996, worn/signed items of his are incredibly scarce and collectible with an ever growing fan base. This item glorifies what many believe to be one of Shakur's best songs on his bestselling album, "All Eyez on Me." Accompanied by a Letter of Authenticity from Iconic Memorabilia and a notarized affidavit from Sharise Neil. (Iconic Memorabilia)
Last year, the late rapper's Juice movie contract landed on the eBay auction block.
eBay is the largest online auction site with thousands of items being bought and sold on a daily basis. It's when the rare items goes up for auction, that people begin talking. Recently, the contract for the late Tupac Shakur to appear in the 1992 film Juice popped up on the eBay marketplace. The contract is currently listed for $6,500 as a Buy It Now auction with potential buyers being allowed to submit offers for this one of a kind piece of elusive Tupac memorabilia. This particular contract is special for its connection to Shakur, who was shot and killed back in 1996. Having his signature on the document only adds to the value of the memorabilia. (XXL Mag)


Despite music executive Irv Gotti campaigning for a presidential spot and being turned down last year, Def Jam president Joie Manda has left his post to join Interscope Records.
Buzz behind the unexpected decision surfaced online Thursday (March 28).
Some interesting shifts of power are taking place within the music industry today. Word came down that Def Jam President, Joie Manda, has stepped down officially resigning from his position at the famed record label. He was named President nearly a year ago to the hip hop home of many legends and pioneers, but stepped down and introduced himself as the new President of Urban Music at Interscope Records. (Stupid Dope)
Manda also issued a statement on his new label home after a short stint at Def Jam.
"Despite having to move back to Los Angeles for personal reasons, I am truly grateful to Barry, John and Jimmy Iovine(Chairman & CEO, Interscope Geffen A&M) for this exciting new opportunity. I've learned a lot from Barry in the last year and am very appreciative of everything he has done for me. ... I am now looking forward to being part of the Interscope family, a company uniquely positioned for success despite this challenging marketplace." (Statement)
According to reports, Joie's last day will be tomorrow (March 29).
Speaking with late this morning, Manda said that his last day at Def Jam will be Friday and his first day at Interscope will be Monday, and said he's "excited to roll up my sleeves and get to work. They've done a great job with Kendrick Lamar and I'm really excited to build on that success." (Billboard Biz)
Last March, Def Jam CEO/Chairman Barry Weiss officially welcomed Manda to his powerhouse.
"As we look to expand Def Jam and our creative urban music activities even further, there is no one better to lead them than Joie," said Mr. Weiss. "He has emerged as one of the most respected young executives in today's Urban music landscape, possessing all the qualifications and experience that are essential to run Def Jam, the world's most important hip-hop destination. The entire Def Jam family looks forward to working closely with Joie as he puts his unique imprint on the next chapter in the label's storied and successful history." (Statement)
In January 2012, Irv Gotti discussed the aftermath behind his Def Jam presidency campaigning.
"It caused a buzz, and I want people to know I didn't start the whole 'Irv Gotti for president' thing; the people did," the former Def Jam A&R told MTV News as he walked the red carpet at the reopening of Jay-Z's 40/40 Club in Manhattan last week. "It was a crazy thing, and it was all good." It doesn't seem like Def Jam brass will put Irv in the big chair, but Gotti is appreciative of the support he has gotten from the hip-hop community. "Everybody was riding. It was a lot of love," he said last week. "Everybody felt what I was saying and was riding." (MTV)

Rick Ross Under Fire for Lyrics That Critics Say Condone Date Rape

Rick Ross is facing a growing online firestorm over lyrics that critics say condone date rape.
The song in question, “U.O.E.N.O.,” by Atlanta rapper Rocko, features verses from Ross and Future and was released on a mixtape, Gift of Gab 2, back in February. On the second verse, Ross seems to rap about drugging a woman with molly, slang for crystallized MDMA, and having sex with her:
“Put molly all in her champagne / She ain’t even know it / I took her home and I enjoyed that / She ain’t even know it.”
Although the song was released weeks ago, the lyrics’ didn’t spark outrage online until last weekend.
On March 23, a petition calling for Rick Ross to “publicly apologize for glorifying drugging/raping a woman” was posted to, an online petition platform. It’s gathered more than 500 signatures since.
On Monday, Rosa Clemente, an activist, journalist and former Green Party vice presidential candidate, posted a Youtube video criticizing Ross. "This lyric is obviously promoting rape. Not just date rape, but rape and rape culture and violence against women. We live in a society that, by the time that African American women and Latina women are 18, almost half of them -- 44 percent -- have been sexually abused."
Jerry Barrow, senior editor for Urban Daily, connected the lyrics to the recent conviction of two high school football players from Steubenville, Ohio, for raping a drunk 16-year-old girl, wrote about the lyrics on Monday as well:
“The timing of this lyric couldn’t be worse as women in Delhi fight to protect their womanhood from rape and young boys in America are being sent to jail because they think it’s okay to have sex with women who are too drunk or high to give consent… It is not acceptable to preach the practice of drugging women to have sex with them ‘without them even knowing.’ If she didn’t know she didn’t give consent. And if she didn’t give consent she was raped. You’re out here telling your fans that it’s cool to rape women and YOU don’t even know it.”
Yesterday, 103.7 the Beat/WUVS-LP, a non-profit community station in Muskegon, MI, announced it was pulling all Rick Ross songs from the rotation because of the song. “Following that teen rape case in Ohio, we felt [Rick Ross] was very insensitive. It sends the wrong message out to the youth that’s following him,” Paul Allen Billings, general manager/program director of the station, told Billboard. “To promote a date rape drug in a song, it’s like saying its OK to do this behavior. He’s saying it’s acceptable.”
Billings says that listener feedback from the boycott has been positive so far. “Our community has been in support so far. They know that we’ve always very cautious about the music that we play in the past. But we’ve still always been in the top 6 in the market. They’re accustomed to that. But this time we wanted to go a step further and take all the artist’s songs off. We wanted to say we don’t support him on any level. We respect freedom of speech, but at some point we have to draw the line.”
The station also announced that it was pulling Lil Wayne songs from rotation as well, in light of his guest verse on Future’s “Karate Chop” remix, which references Emmett Till, a black 14-year-old who was murdered in Mississippi 1955 for allegedly flirting with a white woman—an incident widely considered a catalyst for the civil rights movement. “I’ll beat the p***y up like Emmett Till,” Wayne rapped. Future’s label, Epic Records, later apologized, and pledged to release a new version of the song without the lyrics in question.
Ross responded to the controversy this morning in an on-air interview with New Orleans radio station Q93.3 FM: “There’s certain things you can’t tweet. I want to make sure this is clear, that woman is the most precious gift known to man, you understand? There was a misunderstanding with a lyric, a misinterpretation. The term rape wasn’t used. I would never use the term rape in my records. As far as my camp, hip-hop don’t condone that, the streets don’t condone that, nobody condones that. So I just wanted to reach out to all the queens that’s on my timeline, all the sexy ladies, the beautiful ladies that had been reaching out to me with the misunderstanding. We don’t condone rape and I’m not with that.”

Ayana Byrd, cultural critic and co-editor of the book "Naked: Black Women Bare All About Their Skin, Hair, Hips, Lips, and Other Parts," was not impressed by Rick Ross’ clarification.
“This is not an apology, it is the typical approach of blaming the woman,” she tells Billboard. “Specifically, in Ross's case, blaming the ‘queens’ or ‘sexy ladies’ who clearly heard his lyrics about drugging and raping someone. Women know what sexual violence is; we do not need the word ‘rape’ to accompany it. We have been raised and continue to live in a culture that all too often condones it and excuses it and even, at times, celebrates it. So we can identify it no matter what words it goes by. Shame on Rick Ross for thinking he could be slick and excuse this with some word play.”
A rep for Def Jam, Ross' label, said neither the company nor Ross had further comment on the matter.


It's never too late to fix a broken relationship. Just ask Real Housewives of Atlanta star NeNe Leakes. The budding actress recently revealed to In Touch that she'll be remarrying her ex-husband Greg following their split in 2010. But the even more shocking news is that she's inviting former Housewives castmate, Kim Zolciak to her wedding.
Apparently, the two have put an end to their feud and are working on mending their longtime friendship. "[Kim's] invited to my wedding, and I believe she'll come," said NeNe.
Kim shared NeNe's sentiments, telling the mag: "I have always been and I continue to be happy for NeNe, and I look forward to being invited to the wedding. NeNe and I started this journey together and although we have had our ups and downs, I am excited to get our friendship back on track. We were friends long before RHOA, and we will be friends long after RHOA if it's up to me."
NeNe is planning her "big fantasy wedding," which will take place this summer in Atlanta. With her wedding and reconciliation with Kim, sounds like a Bravo special in the works.

Joie Manda Resigns as Def Jam President, Moving to Interscope

In a surprise announcement, Joie Manda has resigned as President of Def Jam Records to relocate back to Los Angeles.  As part of his relocation, he will remain within the Universal Music Group family by joining Interscope Records as President of Urban Music.  The announcement was made today by Barry Weiss, president & CEO of UMG’s East Coast Labels, and John Janick, president & COO of Interscope Geffen A&M. Manda will now report to Janick.
Manda was appointed president of Def Jam -- the label's first president sinceJay-Z stepped down in 2007 -- just over a year ago.

“Despite having to move back to Los Angeles for personal reasons, I am truly grateful to Barry, John and Jimmy Iovine for this exciting new opportunity," Manda said in a statement. "I've learned a lot from Barry in the last year and am very appreciative of everything he has done for me. I am now looking forward to being part of the Interscope family, a company uniquely positioned for success despite this challenging marketplace."

"While we understand Joie’s personal reasons for wanting to move back to Los Angeles, we’re thankful for all of his contributions to Def Jam,” Weiss said. “We wish him success in his new role at our sister label.”

"Joie is an important part of the fabric of UMG, and I'm glad we were all able to work together to make this transition possible for him,” said Janick. “I've known Joie for some time and I've always been impressed by his work ethic and instincts.  He's going to play a big role in the future of Interscope."
Speaking with late this morning, Manda said that his last day at Def Jam will be Friday and his first day at Interscope will be Monday, and said he's "excited to roll up my sleeves and get to work. They've done a great job with Kendrick Lamar and I'm really excited to build on that success."
Looking back over his year at Def Jam, he said that his personal highlight was Frank Ocean "talking about his sexuality in such a brave way, and us rallying around him as a company, I'm excited to work with an artist who broke barriers." He also noted that the label had three No. 1 albums during his tenure -- Rick Ross, Nas and 2 Chainz (inside just four weeks last summer), and singled out the latter's success as a particular highlight. "He and Kendrick are the breakout rap stories of the year."
Asked what his biggest disappointment was, Manda paused for a moment and then said, "Not getting to be here when a Kanye record was released. I've worked with him but not on releasing an album, and that's disappointing because I'm such a huge fan."
As for whether or not there will be a next president of Def Jam any time soon, he said he wasn't certain about Weiss' plans: "I guess I'm friendly competition now," he laughed. No plans for a new president were mentioned in the release, but a source close to the situation said that a new president eventually will be brought in.
Prior to joining Def Jam, Manda served as head of Urban Music for Warner Bros. Records, where he was involved in the signing of Common, Rick Ross' Maybach Music Group (Wale, Meek Mill), Waka Flocka Flame and Jill Scott, among others. He started at WMG as Executive Vice President of Asylum Records, starting when the label was revived in 2004 and signed Paul Wall and Bun B. Mr. Manda began his career in music as an artist manager.


Judge Joe Brown will be delivering his last verdict on TV this year. CBS has confirmed that the longest running African American TV Judge show has been cancelled after 15 years on air.
Judge Joe Brown could not come to an agreement with CBS over his $20-million salary. The no-non-sense judge reportedly asked for a bigger salary even though his show ratings were starting to decline. He was only second to Judge Judy in ratings.
He became famous after his presiding in the appeal of James Earl Ray, Martin Luther King Jr.'s assassin. The court show will continue to air original episodes and re-runs until September.