Golden geese, Stirring the pot, Shop Pay, social audio, music money, and random walks
February 12, 2021 Edition (#42)
A happy and healthy Friday to all. February is halfway over.
Take a gander at this (đđđ)
I know, I know, that headline was fowl (đ„). I canât help myself. I was and remain overwhelmed by Softbankâs latest earnings report. 23 of the first 40 slides feature a goose rather prominently. Itâs breathtaking. Is there someone at Softbank whose sole job is to design these magical slides, and who receives appropriate adulation as âMasaâs goose guy?â Do they get feedback on the âlook and feelâ of the goose? Genuinely just curious. Most of the other slides feature a font that is so gargantuan it suggests that these reports are to be presented on the Jumbotron at Cowboys Stadium. There seems to be an explicit rule that there must be no more than five words on any given slide. Itâs like someone took a management consulting trainee program a little too literally.
But really, it all starts and ends with the mastermind behind that defiantly luxurious golden goose. If I had this generational talent in my life, I would never let them go. I would commission elaborate illustrated invitations to all of my video-calls. Perhaps even Christmas Cards, with a festive but brand-safe message: HOLIDAYS = ENJOY.
Stir it up
Weâve written about Stir (now apparently âStir Moneyâ) in the past: an early stage âcreator economyâ startup that seems omnipresent in the creator trades, thanks to a rather vocal community of its investors. The companyâs core product is designed for creators who want to manage âthe gutsâ of their businesses, including all the complexity occasioned by collaborating with other creators. Stir has done a brilliant job of creating frequent product âdropsâ: feature experiments that act as an on-brand product marketing vehicle. Examples include: OnlyTweets (support creators directly on Twitter), Presubscribe (support creators before they go indie), and FYP.RIP (DL all your TikTok videos). [Ed.: Trillium is considering similar experiments, including OnlyLambs, a SaaSâshank as a serviceâventure with a singular, meaty product offering.]
Anyway, Stir raised $4M in October 2020 (Axios). Now, The Informationâs Kate Clark and Amir Efrati report that Andreessen Horowitz ârecently won a competitive dealâ to lead the companyâs Series A financing, with a $100M+ valuation. Clark and Efrati note that Stirâs product âresembles some aspects of QuickBooks,â albeit for creators instead of small businesses, and acknowledge the frothy private market funding environment in which we find ourselves (still). Itâll be interesting to follow what happens to Stir, as an increasingly high-profile example of a company that is providing picks & shovels to catalyze the broader creator economy trend. Itâs also worth noting A16Zâs continued focus on investments in the space, with Stir and Clubhouse as two different but related examples of the firmâs thesis about this market.
Shop Pay slouches towards ubiquity
This week, TechCrunchâs Sarah Perezâwhoâs starting to feel like a Trillium insider, though she almost certainly has no knowledge of our existenceâreported that Shopify is âextending its payment option, Shop Pay, to its merchants on Facebook and Instagram.â This may feel mundane, but itâs actually quite interesting in what it suggests for commerce within the Facebook ecosystem and for direct-to-consumer merchants more generally.
Specifically: Shop Pay was not previously available outside of Shopifyâs platform. Now, any Shopify merchant who uses checkout on IG/FB (in the U.S., for the moment), can utilize Shop Pay without kicking purchasers out of the native app experience. This should reduce friction for buyers, while making it easier for Shopify-powered sellers to use IG/FB to drive purchase activity, not just brand awareness.
Shop Pay is no slouch, having recorded 137M orders in 2020 alone, with $20bn in GMV since 2017. Integrating across Facebookâs primary consumer products makes sense, given Shopifyâs general strategy of providing a foundation for merchants, who are then responsible for recruiting their own customer demand. Much of that customer demand already originates within FB/IG and other social âwalled gardenâ apps, so this feels like a symbiotic relationship.
While Iâm sure merchants would prefer to drive traffic to their own Shopify-powered websites, where they can own the customer relationship, one can imagine that the loss of control might be counterbalanced by the greater volume enabled by easier in-app purchases. The economic relationship between Shopify & Facebook has yet to be revealed. Nonetheless, this news substantiates the general observation that FB/IG are focused on adding on-platform commerce capabilities, as an attempt to future-proof their business in light of what many project to be a rockier digital ads market over the years to come.
âSocial audioâ: ready for its close-up?
You knew we werenât getting through the week without something about Clubhouse. The app was all over the news this week, for a variety of reasons. Itâs now been reported by Apptoptia that Clubhouse has been downloaded 4.7M times since launch. (Axios) That number doesnât give us a great sense of retention and active usage, but itâs notable that there were roughly ~1M downloads at the end of last year, meaning nearly 5X growth in the first 1.5 months of 2021.
It hasnât all been sunny, however. First, there was a wave of speculation around whether the Clubhouse model of drop-in social audio could work in China. (South China Morning Post) Questions quickly emerged around possible government censorship, as well as the broader universe of Chinese audio apps like Dizhua, Tiya, and Yalla (a Chinese-owned app that primarily operates in the Middle East). Lizhi, a Chinese social podcasting app, and its subsidiary (Tiya) also offer a related product that allows users to tip creators, join digital karaoke contests, and converse directly with other users.
While there are a range of local options, Clubhouse has/had a particular cachet and momentum. TechCrunchâs Rita Liao wrote a thoughtful piece in which she explored what Clubhouse could mean for the Chinese startup community, as early adopters, and for broader usage by the Chinese diaspora and users at home in mainland China. As Liao noted, âdemand for invitations in China runs high, with people paying as much as $100.â [Ed.: Trilliumâs Clubhouse black-market invite operation remains open.]
But Liao was also clear-eyed about the likelihood of a ban in China, reasoning that the appâs unmoderated rooms were already focusing on âtopics that are normally censored in China, from crypto trading to protests in Hong Kong.â Given the Chinese governmentâs penchant for information control, it didnât seem like a stretch for an app that promotes spontaneous and free-flowing dialogue to run afoul of the powers-that-be.
Guess what? It did! At first, Chinese users found that they couldnât see the iOS app in Chinaâs App Store, meaning that they would need to switch to another countryâs App Store. Then, on February 8th, it was reported that Clubhouse had been officially blocked in China. (TechCrunch) As Liao and Darrell Etherington note: prior to the ban, a room âdiscussing the 1989 pro-democracy Tiananmen protestâŠreached the maximum number of participants at 5,000.â Chinese users, new and existing, will no longer be able to officially access the app, although there are reports that some have been able to do so through a VPN. I wouldnât expect the state of play to change, even if Clubhouse does introduce meaningful moderation and content flagging controls.
Meanwhile, itâs not just in China that Clubhouse faces challenges. Twitter is apparently working on âaudio-only chat roomsâ through a private beta program called Twitter Spaces. (TechCrunch) Mark Cuban is launching a new app called Firesideâa ânext-gen podcast platformââwith features including conversation recording and fan-creator payments. (Verge) Thereâs even Quilt: âan audio social network focused on self-care.â (TechCrunch) [Ed.: Iâm not going to try to explain this one.] And, lest we forget, thereâs the majestic Scrubhouse: drop-in audio chat âfor the rest of us.â What a world.
Making [music] money moves mandatory
Itâs been a few weeks since we last checked in on the wild world of music streaming payouts. As a refresher, keep in mind that the top ~5% of artists on Spotify account for 95% of streams. No surprises here: income inequality is very much a thing in the creative world, too.
One of the ideas that has been proposed to counteract this economic imbalance is something called âuser-centric payouts,â which is a different model from the âpro-rataâ status quo. Under the pro-rata model, the royalty pool for a given service is divided up based on the number of streams that an artist receives. Translation: some percentage of your subscription payment to Spotify is going to Beyonce, even if you donât listen to her. With the user-centric model, by contrast, the royalties pool generated by each user is paid out to the artists whose music that user consumes. If you want a longer explanation, check out this MusicAlly primer.
Itâs not clear that this model would really make a meaningful difference because, spoiler alert, it turns out that a lot of people actually like and listen to Beyonce for many of their waking hours. Indeed, a recent study from the French National Music Center (MusicAlly), suggests that a move from pro-rata to user-centric payouts would reduce royalty payouts to the âtop 10 artists by 17.2%.â Itâs something, and there would be a shift in payouts at every level of the pyramid, but the actual cash implications are pretty muted: âat most a few euros per year on average.â
Itâs tough to imagine that streaming, in this incarnation, will be a meaningful revenue generator for âthe average artist,â in my view. Perhaps the best case is to use it as a vehicle for marketing, while direct payments to artists (from fans) through platforms like Bandcamp provide a greater share of annual income. Spotify is also enabling âmerch shelvesâ for artists to sell physical products in-app, along with its âArtist Fundraising Pickâ (tipjar) experiment.
Interestingly, Soundcloud, a product that I once loved but that broke my heart by callously destroying its user experience, is reportedly planning to introduce a tipping feature. (Input) Given that many Soundcloud creators are quite niche and wonât be able to generate real income from streaming services, tipping and other modes of direct fan-creator payment would make a lot of sense.
Beyond music, it does feel like weâre moving towards relative feature parity for many content platforms, as the standard suite of monetization types emerges. As Iâve written before, creator products like Patreon, Cameo, and OnlyFans are all converging on a similar set of options: membership, pay-for-content, and tipping, with merch and others soon to come. Mainline social networks and walled gardens are following suit, expanding monetization options for creators and pushing the envelope when it comes to on-platform commerce (see Shop Pay & FB/IG above). Spotify, Soundcloud, and Bandcamp seem to be heading in a similar direction.
Iâm curious to see what becomes the âkiller appâ that enables products in these markets to stand out from their increasingly homogeneous peers. Will it be something around unit economics and ease of acquiring/retaining users on the supply (creation) and demand (consumption) sides of the market? Or something fundamental, like the quality of the user experience itself (e.g., TikTokâs âFor You Pageâ and in-app dynamics)? Or something else entirely, like novel creation tools or a particularly effective distribution & discovery infrastructure for content?
NFTs in music
Or, maybe none of this stuff will matter and weâll all be hanging out somewhere in cryptoland, taking our dogecoins for a walk and chuckling heartily all the way to the bank. I enjoyed this piece from MusicxTechxFutureâs Bas Grasmayer in which he describes NFTs (non-fungible tokens) as âblockchainâs hottest new use case for music.â Now, before you throw your phone to the ground in disgust (@Reader KM), settle down for a minute.
Grasmayer gives an example of Mike Shinoda (from Linkin Park!) selling digital art for $30,000, using NFTs as the vehicle. The ownership of this piece is âtracked through a NFT on a blockchain,â akin to a digital certificate of authenticity or derivative property right (where the property happens to be intangible in nature). What I found particularly interesting about this piece is less the mechanics of the NFTs, and more Grasmayerâs discussion of how this surge in interest around NFTs represents the early days of a new digital economy: one in which goods are virtual, not physical, and may become portable between digital spaces (e.g., from Snapchat to Fortnite). He also pinpoints the gaming industry as a space in which early adopters are already exhibiting an inclination to purchase digital goods through NFTs & similar instruments. For example, think virtual real estate, and aesthetic elements/avatar wearables.
I still remain pretty committed to avoiding really attempting to understand all of the underlying crypto âstuff,â for a variety of reasons, not least of which is that I find it very dreary. However, I think the shift in our consumption behavior and purchasing preferences is fascinating as a representation of an evolving social agreement that these goods can have real financial value. Gen Z, in particular, seems not to differentiate between the value of a physical and a digital good. By contrast, when I talk to most non-Gen Zers about this stuffâeven people in the media and tech world!âtheir eyes glaze over and they just keep asking me why anyone would pay money for something thatâs ânot realâ and can âeasily be copied.â
While this feels like a fundamental paradigm shift (or disconnect) for many people, I do think that this type of virtual consumption of digital goods and experiences will be normalized rapidly over the coming years, particularly as these platforms get easier to navigate for the average consumer. Whatâs more: Gen Z will steadily become a larger portion of the global consumer-base, with discretionary income to spare ($GME?)
In an attempt to prove this thesis to myself, I may or may not have participated in an artistâs NFT âdropâ this past weekendâLushsux on Nifty Gatewayâand parted with a somewhat-substantial amount of my not-so-hard-earned cash for an American Psycho-themed meme artwork. Iâll save that story for another day. [Ed.: Worth noting that someone is selling THEIR edition of this work for $1,000,000 so, if you donât ever see another issue of Trillium, youâll know what happened.]
Random walks
For those who might be feeling restless, I recommend Sophie Haigneyâs recent New Yorker article: âThe Pandemic-Induced Popularity of Google Street View.â The title says it all, so youâre spared a pithy summary. Haigney also references a wondrous site, RandomStreetView.com, that, with each successive click, places the viewer in a new, randomly chosen location somewhere on Planet Earth. It is predictably enthralling, even though, as Haigney notes, much of the world turns out to be flat grassland crisscrossed with highways.
For the record, I wound up in a decomposing barn overlooking the Atlantic Ocean, somewhere near the remote island town of Orkney (U.K.) I would give you my address, but itâs literally âUnnamed Road.â There are worse fates. Turns out that there is still decent WiFi here in lovely Orkney, so I was able to write this newsletter, ocean breeze and all.
For your ears only
In honor of Detroit-originated Reader CGâand someday-Reader CG3âthis weekâs musical selection comes to us from the incomparable J Dilla, who died this same week in 2006. Three days before his death, Dilla released Donuts, a hard-to-define and still-amazing album that remains in frequent Trillium rotation. [Ed.: I confess to skipping âLightworks,â so as to avoid repeating âthe name of the game is LIGHTWORKSâ incessantly.] His 1996 track, âSunbeams,â is a particular favorite of mine, presented here in extended form with an appropriate visual.
See you all next week.
N