SXSW Interactive Was Big on Parties and Celebrities, Light on Breakthrough Products
-- During SXSW Interactive, commonly written as SXSWi, I asked 20 or more people -- music industry professionals, digital professionals, random people -- which technology or apps were making an impression.
Geolocation/networking apps like Highlight and Glancee were expected to battle for the unofficial title of breakout app of SXSWi 2012. They're perfect for a conference with a reported 25,000 attendees who cling to their mobile devices and want to connect with friends and meet new business contacts. And some from the media reports that came out of SXSWi, most notably a report at Mashable, named Highlight as the breakout app of the conference. But there is also a general consensus that seems to be no one app made a splash this year. In fact, Business Insider argues this year's breakout app was the same as last year's breakout app -- group messenging service GroupMe (which was acquired by Skype last August).
Meida reports are one thing, but I saw no indication of breakout success on the ground in Austin. People I spoke with were either waiting to use these types of apps, which inhibits the network effect necessary for the apps to be valuable, or were already disillusioned. Marc Fort from the Texas Music Office says he tried out Geoloqi but "deleted it a day later."
Gray Blue, director of industry management relations at FanBridge, says Highlight had disappointed him and drains a smartphone's battery. People were content to use Twitter (the breakout app of SXSWi 2007), Foursquare (the king of SXSWi 2009) and Apple's Find My Friend app.
What SXSWi lacked in killer new products it made up for with parties. The mind-blowing wall of lights set up by Google on East 4th Street and Congress. Nokia's white bio-dome that became iridescent at night. Twitter's #FEED space with fantastic digital representations of the company's traffic. The number of parties was as staggering as the length of lines to get in some of them.
The celebrities showed up in numbers. TV celebrity chef and author Anthony Bourdain's panel appeared to be one of the best attended of the conference -- an ironic statement about the power of one-way communication in an interactive, social era if there ever was one. Actor Rainn Wilson was a trending social media topic after his SXSWi panel, according to social data company Radian6. The Google Village, a collection of various houses that hosted a variety of events, had everyone from comedian Bobcat Goldthwait to author Michelle Haimoff.
In spite of growth in celebrity sightings, late-night parties and lack of breakout products, SXSWi is still a place where people go to expose themselves to new technologies, expand their ways of thinking and generally exercise their intellectual curiosities. I found a small number of music industry professionals who made the trip to Austin early in an effort to improve their knowledge and find ways to improve their companies' digital strategies. But most music people showed up Tuesday and missed these panels and presentations. It's understandable -- SXSWi registrations aren't cheap -- but it's unfortunate more people can't enjoy what SXSWi has to offer.
Are Subscribption Services Energizing Music Fans?
-- Subscription service executives have continually and consistently argued their products cannibalize piracy rather than sales. Some new numbers suggest these executives are right and hint subscription services could actually be energizing music fans.
First is a set of on-demand audio streaming numbers released by Nielsen. The numbers show on-demand streams from services like Spotify, Rdio and Muve Music rose from 242.6 million in the week ending Nov. 27 to 494 million in the week ending March 4. Other than a dip during the week after Chrismas -- a time of high digital download sales -- streaming activity rose steadily over the period.
Second is NPD Group's finding from its "Annual Music Survey" that shows in 2011 the number of Americans buying CDs rose 2% to 78 million, while the number of digital music buyers increased 14% to 45 million. Consumers' average digital spend increased 6% to $49 per person per year, according to NPD.
While there is just a little time overlap in NPD's and Nielsen's numbers, when taken together these numbers depict a U.S. music market that has hardly been hurt by subscription services. With the launches of Spotify and Muve Music, and growth in Rhapsody, Mog and Rdio, there are far more on-demand subscribers yet digital sales continue to rise steadily. Lower CD prices are all but certainly a factor in the 2% increase in CD buyers in 2011. Maybe subscription services have, at least for the time being, done more than offer an alternative to piracy. Maybe they have created more interest in music in general and digital sales have increased as a result.
( Los Angeles Times, NPD Group press release)
The Automobile's Role In Pandora's Future
-- The automobile is important to the future of Pandora, but how long until the future gets here? The company has integrations with 16 auto brands and seven after-market hardware companies. But there's a catch: an automobile is a big-ticket item, and big-ticket purchases are made far less frequently than the consumer electronics purchases (smartphones, tablets) that have driven Pandora's growth until now. Automobiles have a long product replacement cycle and, according to market intelligence firm Polk, the cycle is getting even longer.
Polk has found the length of ownership of cars that were purchased new has increased to 71.4 months. The average age of cars on the road now stands at 10.8 years. The time new and used car owners are holding onto cars has risen 23% since the third quarter of 2008. "Unemployment rates continue to be high, and we expect many consumers will suffer from the lingering effects of the downturn, further contributing to longer ownership trends," Polk said.
What does a longer automobile replacement cycle mean for music? For one thing, it means equity analysts who have built in a certain amount of expected revenue and cash flow for the future might want to slightly adjust their models accordingly. If a longer replacement cycle means a longer wait to get into automobiles, Pandora will take longer to gain listener hours in the automobile, which means slower growth in overall listener hours.
This trend could reverse itself if the economy improves and aggregate demand for new automobiles improves. And a slowing in new car sales provides an opportunity for after-market manufacturers to sell receivers that work with today's digital music services. But as long as people are holding on to their old cars, Internet radio -- whether it's Pandora or Clear Channel's iHeartRadio -- as well as on-demand subscription services seeking an entry into the automobile could be affected.
( Polk press release)