Nov 22

Every Company Needs A Chief Digital Officer


Editor’s note: Neha Sampat is CEO of raw engineering and an expert on the enterprise market, with 15 years in product marketing for enterprise software, cloud computing and online experiences for companies like Sun Microsystems and VMware.

In an increasingly digital world, where everything from marketing to RD and customer service is becoming digital, the Chief Digital Officer (CDO) is more important than ever in helping drive company growth and a better connection with customers.

Recently Gartner released its top 10 strategic technology trends for 2015 citing the impact of the digital business shift as a driving force behind these trends. With that, the number of CDO jobs has doubled since 2013 and continues to grow.

The rise of the CDO comes at a time of much industry debate regarding the divide between business and IT. Amid the disconnect between CMOs and CIOs, the CDO finally promises some relief and reconciliation: CDOs understand the digital opportunities – as well as the threats of cutting corners in the interest of time-to-market – and have a solid grasp on both the technology choices and corresponding trade-offs before them.

Where the CMO may be preoccupied revamping the company’s brand by pursuing a viral mobile app, IT may still be struggling with bring-your-own-device (BYOD). The CDO, meanwhile, can think holistically about how a company’s strategy is executed across all digital channels – such as mobile, the Internet of Things (IoT) and an increasingly important SaaS-based web – and can provide insight and recommendations on how to reconcile the digital experience for key target audiences.

Think of the last time you were at a conference or big event, for example…wouldn’t it be refreshing if there was a consistent, continuous experience as an attendee? Yet surprisingly, it is still all too common to have a registration experience that seems completely disconnected from the on-site experience.

If there is a mobile app, it typically doesn’t sync up with any pre-event outreach (nor the post-event follow-up) and is barely relevant to actual on-site behavior and preferences. Despite, or perhaps because of all the different avenues through which event organizers collect and disseminate information, personalization ends up falling short, resulting in a lack of engagement.

The tide is beginning to turn, however. To stick with our example, more and more event teams are replacing cookie-cutter apps and siloed systems, fundamentally rethinking the way an attendee experiences a conference. Done right, a seamless digital experience extends beyond the conference for a continued dialog with attendees on topics relevant to them, long after they have returned to their daily lives. Great CDOs are masters of facilitating this in a non-intrusive manner.

It takes vision, discipline and a thorough understanding of a broad set of technologies to effect digital change. In my experience, technology is rarely the main issue. Rather, it’s about finding the organizational that allows a business to be successful defining and implementing its digital strategy. In most companies, such a will doesn’t come without formal ownership.

A true CDO owns and drives digital strategy across the entire organization and helps it extract value for the business. Anecdotally, this is where startups and smaller companies have an edge, because they typically have fewer traditional (and fewer intuitive) boundaries.

From a technology perspective, CDOs spend a lot of time dealing with the continued impact of the mobile revolution. However, they also realize that companies need to start thinking about every aspect of their business and its digital impact, from mobile application development to managing distribution channels for content via new digital technologies.

How do you engage potential customers and provide a consistent experience across a mind-boggling number of devices, each with their own unique capabilities and restrictions? How do you effectively manage content across channels, especially when they are supported by widely varying technology stacks? And with IoT expected to gain traction over the next 12 months, CDOs have to formulate a plan to embrace the next wave of digital innovation.

Here, too, many startups have the advantage of being born digital and having embraced the latest digital technology to build its internal IT systems. Many startups we work with run entirely on cloud services such as Google Docs, Zoho and Expensify and inherently treat mobile and web channels as equally important. Thinking digital is in their DNA, which leads to an intuitive understanding of digital technology across every member of the team.

LinkedIn already lists some 1,300 CDOs today, but many more digital operating executives lurk right beneath the SEO surface, especially in larger corporations, with titles such as “Chief Media Officer”, “Head of Digital Strategy”, “VP Digital Marketing” or simply “VP Digital”. Look for many of these to be updating and “upgrading” their profiles over the next year.

Just as the CDO role is going mainstream, peer-led events such as the upcoming Chief Digital Officer Global Forum are testaments to a growing community of like-minded professionals. They’re also a great place to mingle with, exchange best practices and, yes, scout for CDO talent.

Featured Image: Bryce Durbin

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Nov 21

India to Overcome United States as Second-Largest Internet Market by December

Updated: November 21, 2014 at 9:48 am CET.

According to a report by the Internet and Mobile Association of India (IAMAI) along with IMRB International, the two organizations forecast that Internet users in India are expected to reach 302 million by the end of the year. The forecast is a 32 percent increase from the 213 million Indian Internet users at the end of 2013.

Currently, the ranking puts China in the first place with 600 million Internet users, with the United States at 279 million Internet users and India following closely behind and battling for second place.

Reported by The Hindu news source, upon release of the report the IAMAI and IMRB released a statement.

“The Internet in India took more than a decade to move from 10 million to 100 million and 3 years from 100 million to 200 million. However, it took only a year to move from 200 to 300 million users. Clearly, Internet is mainstream in India today.”

Further projections in the IAMAI-IMRB report forecasted India to reach 354 million internet users by June 2015, a critical progression necessary for bitcoin and other digital currencies to become a viable means of payment in the country.

By June, the report projects that 216 million users come from an urban area while 138 million come from a rural environment. Currently, urban internet users are up 29 percent from last year.

More Usage In India May Not Mean Better Access

While the numbers look exciting at first, one needs to take into account a few issues on the horizon when evaluating the report. 138 million internet users come from a rural environment, a place where nearly 70 percent of the population still lives. When breaking down the numbers, only around a third of India’s Internet users come from the majority of the population.

According to Kiran Karnik, the former head of India’s National Association of Software and Services Companies, there are a few challenges India faces in terms of Internet growth. The International Business Times quoted Karnik speaking at a conference in New Delhi outlining the following:

“Demand is a question — it is really a matter of how you price it and what people are willing to pay for. In the rural context, these services could be skills, innovation. Last mile connectivity is going to be a challenge. That is where one is looking for innovation.”

Despite the issues, Mozilla decided to unveil their low-cost Firefox phones in India earlier this year, pushing accessibility to bitcoin, and other digital currency, usage even further. At the affordable price of $33, the Intex Cloud FX could do more for general internet access and bitcoin adoption in India’s developing market.

The biggest barrier for feature phone users is cost and usability,” Jane Hsu, director of product marketing, said upon the announcement referring to upgrading users of devices with limited Internet capability. “We think this is the best phone for them.

Also read: Mozilla Foundation Now Accepting Bitcoin Donations

India’s internet future is still unknown, but projections don’t lie. India may very well overtake the United States in December as the second-largest internet market, but they desperately need to tap into the rural area in order to continue growth and development against China.

What do you think of the future of the Internet in India and China? Comment below!

Images from Wikimedia Commons, Pixabay and Shutterstock.

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Nov 20

Small retailers push hard to rise above the crowd

Joseph Gaylord isn’t just a store manager. He’s a member of a community he cares about, and he devotes much of his time to sitting on local boards that work to strengthen the backbone of Ithaca.

“We work with local people and charities,” said Gaylord, who runs American Crafts by Robbie Dein, on The Commons.

The store, which carries the work of 250 American artisans, draws customers based on its unique inventory. But Gaylord knows that being intrinsically woven into the surrounding community matters to the store’s success, too.

For several years, since the proliferation of Big Box stores and the advent of the Internet, life has been changing at breakneck speed – and nobody knows that more than those who run small retail businesses.

In 2010, American Express decided to begin promoting shopping at small businesses by declaring the Saturday after Thanksgiving “Small Business Saturday.” The giant credit card company’s national advertising muscle helped the notion of supporting smaller retailers catch on as part of the Thanksgiving shopping tradition, which includes Black Friday and Cyber Monday.

Whether retailers or not, small businesses are a major force in communities everywhere. Some definitions say a small business employs fewer than 1,500 while others say fewer than 500. But even that 500 level includes most businesses in the Tompkins County area.

Our area businesses truly are small — and large in total.

Tompkins County is home to 2,037 businesses that employ fewer than 20 employees, according to the U.S. Census Bureau’s County Business Patterns in 2012, the latest available. Those very small businesses account for nearly 9 out of every 10 businesses in the county. In many New York counties, the number of those businesses declined from 2002 to 2012, but in Tompkins they grew 8 percent, according to the census data.

Even smaller are the non-employer businesses — ones that have no employees and are sole proprietorships or put family members to work. In 2012, Tompkins had 7,129 of them, an increase of 19 percent from 2002, according to the census’ Nonemployer Statistics survey.

What keeps small businesses alive in the ever-more-challenging retail environment? They all rely on the same fundamentals: delivering solid customer service, offering popular product lines and opening the door wide for the same steady clientele, sometimes families spanning generations. But to survive and thrive, some do still more.

Cyber savvy

Most small businesses take advantage of the Internet, even if only on the Facebook social media site. Others have polished web sites not only to lasso whatever amount of online commerce they can, but to showcase specific products or events.

Ginny Coon, who runs a quaint toy-and-clothing shop called Imagine That! in Corning’s Gaffer District, used to have a blast with Friday Facebook Fan Fun Day.

“I’d put out toy trivia questions and the first person to answer correctly got a $10 gift card,” she said. Then Facebook changed its rules, requiring her to “boost” her appearance by paying for it. “So right now I don’t do it anymore.”

Handwork, Ithaca’s Artisan Cooperative, began in 1976 and recently ramped up its marketing efforts by asking shoppers to fill out a paper survey indicating what the store is doing right and how it could improve. Now they’ll go digital with it to reach thousands more.

“We’re going to expand the survey to online platforms,” said marketing and promotions manager Jill Hoffman. They make use of Facebook, Twitter and other social media, and encourage people to sign up for the newsletter, which is also available on their website, handwork.coop.

Gaylord tries to stay in touch with students who attended college in Ithaca long after they’ve gone on to careers in other parts of the country or the world.

Their Facebook page is updated daily, and their web site, myamericancrafts.com, shows off their artisans’ latest works.

Online sales count for only a small percentage of their business, he said, but he knows that’s a segment with enormous growth potential.

Passion counts

“When we hire new help we try to find people genuinely and naturally interested in wine or spirits or both,” said Dana Malley, general manager of Northside Wine and Spirits in Ithaca, which began in 1959. “If you’re enthusiastic about something you’ll want to learn about it and pass that along to the customer.”

Some of the floor staff has been employed by Northside for years, to the point where they have their own following of customers who trust their judgment and knowledge of the products Northside offers in its 11,000 square feet.

The two dozen employees give the place a family feel, he said, and that, too, impacts whether a customer will come back again and again.

Big-box stores can’t easily muster that atmosphere.

Tom Ellis of Ellis Brothers Fine Home Furnishings in Binghamton often greets his customers by name, because his social life intersects with theirs. He or somebody from the interior design staff can help them integrate new pieces into a décor that might include furniture inherited from previous generations that shopped at Ellis Brothers since it opened in 1900.

And when he needs to buy clothing, he walks down the street to Sall-Stearns Fine Men’s Clothing and Tailoring, where second-generation owner Ron Sall knows Ellis’ taste in ties as well as he knows Ellis’ family.

“As long as I can remember, we patronized Ronny’s dad, then Ronny,” Ellis said. “Nobody could take such a personal interest as they always do. There was never an hour that was too late or a deadline that was too tight.”

Places such as those owned by the Ellis family and Ron Sall hope to benefit from Small Business Saturday.

Fabric of the community

As Joseph Gaylord sit on the board of the Community School of Music and Arts and participates in groups that help local businesses, many other small stores understand their role in supporting the world around them, too.

One of that store’s closest neighbors, Handwork, also insinuates itself into the community at every opportunity. Now it’s teaming up with the Learning Web of Tompkins County to help students pursue careers in the arts through grants of up to $1,000.

The 3/50 Project, a grassroots initiative begun by a struggling former small business owner, aims to “save the brick and mortars our nation is built on.” Its web site, the350project.net, points out that for every $100 spent at locally owned independent stores, $68 comes back to the community. And citing U.S. Department of Labor statistics, it states that if half the employed population spent $50 monthly at such businesses, more than $42.6 billion would be generated.

Like New York State’s site, it offers resources and encouragement for the beleagured small businessman or woman.

In her own corner of the world, Julie Delgrosso, who owns Christmas House in Elmira, tries to educate consumers about the bottom-line importance of supporting small locally owned businesses.

Her store pays property taxes that support municipal services and schools, while online merchants don’t make those vital contributions.

“When someone spends $20 (here), I may take it to the printer or another local business,” she said. “It stays in the community.”

Ginny Coon, too, tries to educate consumers about the bottom-line importance of supporting small locally owned businesses.

“So every time somebody shops online at this vague place, it helps the disintegration of the hometown,” she said. “I’m scared to death that this community will develop the look of big-box, cookie-cutter businesses.”

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Nov 19

Do It Yourself: 4 Tips for DIY Entrepreneurs

Credit: kuleczka/Shutterstock

There are many consumer-related factors that have contributed to DIY’s spike in popularity. For example, homemade versions of common household items are often environmentally and budget-friendly, and if they’re purchased from a local artisan, consumers can feel good about supporting a small business. But perhaps the biggest driver of the DIY industry is the technology behind it.

“Now, more than ever, people want to feel connected with the products they’re consuming, and want the transparency about where, how and by whom the products were made,” said Ethan Song,co-founder and CEO of menswear brand Frank Oak. “Etsy and Pinterest have been successful in creating platforms using this kind of information, offering consumers a more intimate and educational experience [about their products].”

“There has been a great emergence of new Web portals and technologies, like Weebly, Etsy, [etc.] … that have made business owners out of people who didn’t even know they had a product of value or demand,” added Jason Martin, chief technology officer of small business online marketing company 29 Prime. “Many local artists and hobbyists have now been able to display their works on a global level through blogs, Pinterest and Instagram, to gain a following. Through that following, they are also able to sell their items globally.”

Martin noted that many of these technologies are based on a DIY mentality, too, and that helps these entrepreneurs get up and running more quickly and cheaply. [7 Handmade Business Ideas for Nonartists]

“DIY for small businesses is nothing new,” Martin told Business News Daily. “When you are first starting a business, your No. 1 concern is saving money in every possible way so you can use that money to grow in other ways.”

So what’s the best way to break into the DIY business? Here are a few tips to help you navigate this growing industry.

Create a solid business plan. Because it’s relatively easy for a potential handmade-product entrepreneur to open an online shop, it’s also easy to forget that, at the core of it, you’re running a business. And like any business, you’ll need a plan to carry you over the long term, especially when it comes to the financial aspects of your company.

“Form a business plan,” said Lyla Rodriguez, president of homemade tea and soap retailer Tea ‘n Sanity. “You have to calculate your costs so that you still make a profit because people who buy in the DIY market tend to want things at a lower cost.”

“Set a budget for your business and do your very best to stick to it,” added Edward Parker, founder of clothing patch company The Easy Patch. “Businesses often slip down the path of spending far too much precious capital on under-researched ideas.”

Test your idea. One huge advantage of using third-party marketplace platforms is that there’s very low investment and risk involved in testing out your product with your target audience. Parker advised launching your store and putting yourself out there, both on the platform itself and on social media sites like Instagram and Pinterest, to see if there’s a market for what you’re selling.

“Start an Etsy or Amazon store and get going,” Parker said. “Participation in the Internet marketplace will help you develop insights into your products’ viability.”  

Think ahead to future growth. If your goal is to transform your business from a side hobby to a full-time gig, you’ll need to consider what that growth might entail, including staff expansion.

“There are a lot of technology tools out there that can help any small business that wants to grow,” Martin said. “However … there is a time when you start growing that you will need to hire the right person or company to take over [some aspects of your business], so you can continue to focus on the core.”

Remember that your story matters. For some businesses, the novelty of their product is enough to make them stand out in the marketplace. In the DIY space, with so many competing sellers making similar items, you need to emphasize what makes yours different.

“[Find] what is trending and make sure that your products have a demand, [but make] sure you add your own personalized twist on it to stand out from the rest,” Rodriguez said.  

“Products that are simple enough to manufacture and have a unique story to tell have the potential to be most successful in the DIY space,” Song added. “Find something you’re really passionate about, and focus on one or two items you can make better than anyone else. Then, make sure your product and the story behind it become one in the same.”

Updated on Nov. 19, 2014.

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Nov 18

An Alibaba B2B e-commerce rival takes its show on the road

Yiwubuy.com, a China-based online wholesaler of general merchandise, is building bricks-and-mortar showrooms in major overseas markets to provide local buyers the option of purchasing products offline.

An Alibaba B2B e-commerce rival takes its show on the road

 

Yiwubuy.com, a China-based online wholesaler of general merchandise, is building bricks-and-mortar showrooms in major overseas markets to provide local buyers the option of purchasing products offline.

 

Yiwubuy.com, a business-to-business marketplace for products made in China, launched a bricks-and-mortar “product experience center” in Budapest, Hungary, last week to help suppliers sell more products to buyers in Europe, the company says.

The center could help to sell more products to Europe on its international B2B trading platform yiwubuy.com.  

The center, which encompasses 1,000 square meters, is located inside a Chinese products shopping mall, which covers an area of 43,000 square meters in the finance and trade zone of East Budapest, Yiwubuy says.

The construction of offline product experience centers is part of the global expansion strategy of Yiwubuy, whose competitors include the Alibaba.com marketplace for sourcing goods from China operated by Alibaba Group Holding Ltd., China’s dominant e-commerce company. Yiwubuy says it will open several similar offline showrooms in several other major European cities, including: Warsaw, Poland; Lisbon, Portugal; Madrid, Spain; Prague, Czech Republic and Rome.

The parent company of Yiwubuy.com is a state-owned company, Zhejiang China Commodities City Group Co. Ltd, also known in China as Commodity City.  Commodity City also operates one of the largest household products bricks-and-mortar wholesale marketplaces in China, the Yiwu Market. The Yiwu Market includes more than 70,000 stores, which together sell more than 2 million products, including apparels, toys and electronics to wholesalers from 200 countries.

Commodities City  is also using Internet technology to help grow the Yiwu Market. It has started to provide Internet escrow payment services and a sellers’ online ratings system to help international buyers purchase more easily from the Yiwu Market. While considering a purchase from a bricks-and-mortar seller in the Yiwu Market, for example, a buyer can go online to check how the seller has been rated by other customers and make a purchase through an escrow payment system, which holds the buyer’s payment until he receives the goods.  

Although most services on Yiwubuy are similar to those on Alibaba’s B2B platforms, Yiwubuy has one edge that Alibaba doesn’t have, Yiwubuy marketing manager Yuan Ying says. “Our advantage is we have offline markets. We can tie online and offline closer so that buyers from all over the world can find trustable suppliers on our cross channel platform.”

The company has also been growing its online B2B business rapidly in the past two years.

“Sales on Yiwubuy.com were 60 million yuan ($9.8 million) last year,” Yuan says. “Only in the first nine months of this year, the web sales have jumped to 500 million yuan ($81.64million). “ She adds that Yiwubuy projects full-year 2014 web sales of 1 billion yuan ($160 million), with total offline and online sales of 300 billion yuan ($48.98 billion).

Sign up for a free subscription to B2BecNews, a weekly newsletter that covers technology and business trends in the growing B2B e-commerce industry. B2BecNews is published by Vertical Web Media LLC, which also publishes the monthly trade magazine Internet Retailer.

 

 

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Nov 17

Revenue Streams

Daniel Ek, the C.E.O. of Spotify, is a rock star of the tech world, but he is not long on charisma. At thirty-one, he is pale, boyish, cerebral, and calm. Jantelagen, the Scandinavian code of humility and restraint, is strong in him. He doesn’t greet you with a firm handshake from behind an imposing desk; he doesn’t have a desk. He sprawls on a couch with his laptop, like a teen-ager doing homework. Or he wanders the company’s offices, which form an oval around the open core of a big building on Birger Jarlsgatan, in central Stockholm. The design encourages “random encounters,” which Ek once read was Steve Jobs’s plan in laying out Pixar’s offices.

Ek’s phlegmatic manner makes his unshakable, almost spiritual belief in Spotify burn all the more brightly. His vision, that Spotify is a force for good in the world of music, is almost Swedenborgian: salvation in the form of a fully licensed streaming-music service where you can find every record ever made. Spotify doesn’t sell music; it sells access to it. Instead of buying songs and albums, you pay a monthly subscription fee ($9.99), or get served an ad every few songs if you’re on the free tier. You can listen to anything on the service—the Beatles (as with iTunes, the surviving members are not rushing in) and Taylor Swift (who left the service in a flurry of publicity in early November) notwithstanding—and there is an astonishing amount of music. When Spotify launched, in October, 2008, in Sweden and a handful of other European countries, Ek’s dream seemed like the longest of long shots. Now Spotify is the Netflix of music sites. Mark Zuckerberg, Facebook’s founder, says, “Daniel just saw the opportunities of streaming music before anyone else.”

Spotify appeared nine years after Napster, the pioneering file-sharing service, which unleashed piracy on the record business and began the cataclysm that caused worldwide revenues to decline from a peak of twenty-seven billion dollars, in 1999, to fifteen billion, in 2013. The iTunes store, the industry’s attempt, in partnership with Apple, to build a digital record shop, opened in 2003 to sell downloads, but that didn’t alter the downward trajectory; indeed, by unbundling tracks from the album, so that buyers could cherry-pick their favorite songs, Apple arguably hastened the decline. Legal actions against individuals—thousands of people in the U.S. were sued for downloading music illegally—only alienated potential customers. As bad as the bloodbath was in the U.S., the situation was even worse in Sweden. Pelle Lidell, an executive with Universal Music Publishing in Stockholm, told me that by 2008 “we were an inch away from being buried, and Spotify single-handedly turned that around.”

Ek was one of the pirate band. Before starting the company, he had briefly been the C.E.O. of uTorrent, which made money in part by monetizing pirated music and movies on BitTorrent, a major file-sharing protocol. Later, the Napster co-founder Sean Parker, for years Public Enemy No. 1 to record-company executives, joined forces with Ek. Who would have imagined, as one label head put it recently, that “your enemy could become your friend”?

Spotify is now in fifty-eight countries. (Canada, its latest market, got the service at the end of September.) It has raised more than half a billion dollars from investors, including Goldman Sachs, to fund its expansion, and there are rumors of an I.P.O. in its future, to raise more. Spotify’s user base exceeds fifty million globally, with twelve and a half million paying subscribers. At the current rate of growth, that number could reach forty million subscribers by the end of the decade. To date, it has paid out more than two billion dollars to the record labels, publishers, distributors, and artists who own the rights to the songs. “I’m very bullish on it,” Tom Corson, the president of RCA Records, said. “The all-you-can-eat access model is starting to make sense to people. And we expect that free is going to roll into subscription and that is going to be a really huge part of our business.”

The question of whether Spotify is good for artists is considerably more vexed. The service has been dogged by accusations that it doesn’t value musicians highly enough. In 2013, Radiohead’s Thom Yorke memorably called Spotify “the last desperate fart of a dying corpse,” a remark that “saddened” Ek. In July, Taylor Swift wrote in a Wall Street Journal editorial, “In my opinion, the value of an album is, and will continue to be, based on the amount of heart and soul an artist has bled into a body of work.” For Swift, streaming is not much different from piracy. “Piracy, file sharing and streaming have shrunk the numbers of paid album sales drastically, and every artist has handled this blow differently,” she wrote.

In early November, when Swift’s new album, “1989,” was released, her label, Big Machine Records, not only declined to make the album available on Spotify but also removed her entire catalogue from the service. Is this a gesture of artistic solidarity, or, as one insider put it, “a stunt to wring the last drop of blood out of what is a dying model”—i.e., album sales? Swift’s impressive first-week sales of “1989,” which were just under 1.3 million albums, making her the year’s top seller, are still well short of the all-time first-week high, 2.4 million, set by ’N Sync, in 2000. And the sixty-nine-per-cent drop-off in “1989” ’s second-week sales suggests that Swift’s seventy-one million Facebook fans didn’t rush out and buy the album when they couldn’t get it on Spotify. They just streamed whatever was available on YouTube, which pays artists even less than Spotify does, or on other sites. Or they set sail for the Pirate Bay, where the album was also No. 1.

On Spotify, music consumption is “frictionless”—a favorite word of Ek’s. In tech terms, we’ve gone from a world of scarcity to one of abundance. Nothing is for sale, because everything is available. The kind of calculations you make on iTunes, such as “I like this song, but not enough to buy it,” don’t matter. It is a music nerd’s dream, which may be why the user population on Spotify tends to lie outside the mainstream. On Spotify, the Pixies’ top songs have about four times as many streams as Neil Diamond’s biggest hits.

The difference between Spotify and Internet radio services, like Pandora, is that Spotify is interactive. You can sample the complete catalogue of most artists’ recordings. (Spotify also has a non-interactive radio component.) Spotify now has some twenty million songs on the service, and twenty thousand new ones are added every day. If you are a “lean forward” listener—that is, the kind of motivated fan who takes the time to discover the music you want—Spotify is a celestial jukebox. But, for Spotify to continue its rapid growth, it must bring in the “lean backers” Pandora caters to. Spotify tries to do this with playlists. It has staff-curated playlists, and users can also make their own—there are more than a billion on the site. The playlist is the album of the streaming world. Spotify is working on getting its service into car stereos, and is negotiating agreements with automobile companies; one such agreement was announced this week. The power of playlists will only grow.

When Spotify launched in the U.S., in 2011, it relied on simple, usage-based algorithms to connect users and music, a process known as “collaborative filtering.” These algorithms were more often annoying than useful. You think because I listened to Neil Young that I want to listen to America? America ripped Neil Young off! But over time the algorithms have improved. Earlier this year, Spotify bought a Boston-based startup called the Echo Nest, which has developed a form of artificial music intelligence—a kind of A.I. hipster that finds cool music for you. The Echo Nest powers Spotify’s automated radio stations and is also behind an in-house programming tool called Truffle Pig, which can be told to sniff out music with combinations of more than fifty parameters, such as “speechiness” and “acoustic-ness.” Now that the Echo Nest is part of Spotify, its team has access to the enormous amount of data generated by Spotify users which show how they consume music. Spotify knows what time of day users listen to certain songs, and in many cases their location, so programmers can infer what they are probably doing—studying, exercising, driving to work. Brian Whitman, an Echo Nest co-founder, told me that programmers also hope to learn more about listeners by factoring in data such as “what the weather is like, what your relationship status is now on Facebook.” (In 2011, Facebook entered into a partnership with Spotify.) He added, “We’ve cracked the nut as far as knowing as much about the music as we possibly can automatically, and we see the next frontier as knowing as much as we possibly can about the listener.”

All this, Ek explained, will help Spotify to better program the “moments” of a user’s day. “We’re not in the music space—we’re in the moment space,” he told me. The idea is to use song analytics and user data to help both human and A.I. curators select the right songs for certain activities or moods, and build playlists for those moments. Playlists can be customized according to an individual user’s “taste profile.” You just broke up with your boyfriend, you’re in a bad mood, and Justin Timberlake’s “Cry Me a River,” from the “Better Off Without You” playlist, starts. Are you playing the music, or is the music playing you?

You can design your own Spotify day. You wake to the “Early Morning Rise” playlist (Midnight Faces, Zella Day), and get ready with “Songs to Sing in the Shower” (“I’m hooked on a feeling/I’m high on believing”). Depending on how much work you have, there’s “Deep Focus,” “Brain Food,” or “Intense Studying.” By eleven-thirty, you’ve hit “Caffeine Rush,” and, after a sandwich at your desk (“Love That Lazy Lunch”), it’s time to “Re-Energize” (Skrillex, Deorro) for the afternoon. A late-in-the-day “Mood Booster” (Meghan Trainor) gets you pumped for your workout (there’s a “House Workout,” a “Hip Hop Workout,” and a “CrossFit Mix,” to name just a few). Then it’s “Happy to Be Home” (Feist, the Postal Service). After “Beer n’ Burgers” (rockabilly) or “Taco Tuesday” (Celia Cruz), you “Calm Down” (Wilco, the National) and then, depending on your love life, click on “Sexy Beats” or “Better Off Without You” (or maybe “Bedtime Stories,” for the kids), followed by “Sleep” (heavy on Brian Eno, king of the z’s).

My problem with playlists is not the Starbucksy rubrics, or the spying on my embarrassing Lana Del Rey obsession. My problem is that I end up skipping most of the songs anyway. I lean forward and check the next song when I’m supposed to lean back. The human or the A.I. who chose Pharrell’s “Happy” for the “Mood Booster” playlist isn’t getting the job done for me.

By the time he turned twenty-two, Daniel Ek had achieved his life’s ambition: he was rich. A gifted programmer, he had been making money by working on Internet-based tech products since he was fourteen. After selling an Internet advertising company called Advertigo, in 2006, he retired. He rented a big place in Stockholm. He bought a red Ferrari and drove it to night clubs, where he arranged for good tables for friends and attractive female companions, whom he plied with expensive champagne. He lived like this for a year or so, until one morning he awoke to a startling realization. “I was completely depressed,” he said.

“I realized the girls I was with weren’t very nice people,” Ek went on, “that they were just using me, and that my friends weren’t real friends. They were people who were there for the good times, but if it ever turned ugly they’d leave me in a heartbeat. I had always wanted to belong and I had been thinking that this was going to get solved when I had money, and instead I had no idea how I wanted to live my life. And no one teaches you what to do after you achieve financial independence. So I had to confront that.”

Ek describes himself as “missionary,” by which he means he likes to formulate five-year missions for himself. “That’s how I think about life,” he said. “Five years is long enough for me to achieve something meaningful but short enough so I can change my mind every few years. I’m on my second five-year commitment on Spotify. In two years, I will have to make my next one. I will need to ask myself if I still enjoy what I’m doing. I’m kind of unusual that way, but it gives me clarity and purpose.”

Ek sold the Ferrari, got rid of the apartment, and moved to a cabin near his parents’ place in Ragsved, a Stockholm suburb, where he meditated about what to do with his life. He had soul-searching conversations with Martin Lorentzon, the Swedish entrepreneur who had bought Ek’s advertising company, and was himself looking for a new project. “And we always came back to the music industry,” Ek said. Like many teen-agers around the turn of the millennium, Ek had become infatuated with Napster—in particular, with the idea of a site where all the world’s music was available for free. Radio offered free music, too, of course, but radio wasn’t interactive; you couldn’t pursue your own interests, the way you could on Napster. Ek said, “Before that, I was listening to Roxette,” a Swedish pop-rock band from the eighties. “I discovered Metallica and learned that they were inspired by Led Zeppelin, and King Crimson, and then I got into the Beatles. And from there I went to Bowie and the whole British scene from the Eurythmics to the Sex Pistols. Hearing the anger and frustration of the Sex Pistols or the Clash made you feel like you were in the seventies. You started to understand culture. It was pretty magical.

“It came back to me constantly that Napster was such an amazing consumer experience, and I wanted to see if it could be a viable business,” Ek went on. “We said, ‘The problem with the music industry is piracy. Great consumer product, not a great business model. But you can’t beat technology. Technology always wins. But what if you can make a better product than piracy?’ ” Ek continued, “Piracy was kind of hard. It took a few minutes to download a song, it was kind of cumbersome, you had to worry about viruses. It’s not like people want to be pirates. They just want a great experience. So we started sketching what that would look like.”

Their “product vision,” in tech parlance, was that the service had to give the impression that the music was already on your hard drive. “What would it feel like?” Ek asked. “That was the emotion we were trying to invoke.” The key was to build something that worked instantly. Streaming, whether audio or video, tends to have built-in delays while you wait for the file, which is stored on a server in the cloud. But if the music starts in two hundred milliseconds or less—about half the time it takes, on average, to blink—people don’t seem to perceive a delay. That became Ek’s design standard. He told his lead engineer, Ludvig Strigeus, a brilliant programmer he had worked with before, “I don’t accept anything that isn’t below two hundred milliseconds.”

Strigeus responded, “It can’t be done. The Internet isn’t built like that.”

“You have to figure it out,” Ek insisted.

The solution involved designing a streaming protocol that worked faster than the standard one, as well as building their own peer-to-peer network, a decentralized architecture in which all the computers on it can communicate with one another. In four months, they had a working prototype.

“And I knew when we had it that it was going to be very special,” Ek said.

Ek’s original idea was to launch Spotify in the U.S. at the same time that he launched the service in Europe. Ken Parks, Spotify’s chief content officer, said, “Daniel thought he could just go down to the corner store in Stockholm and pick up a global license.” He didn’t realize that he would have to negotiate directly with all the different copyright holders, a herculean task. Not surprisingly, the labels weren’t interested. Ek was an outsider—a techie, and a Swedish one at that. Parks, an attorney who’d worked at E.M.I., recalled, “We needed to overcome the music-is-free mentality that Spotify represented.” Of the labels’ attitude, he went on, “If you have something you’ve invested a ton of money in, and you’ve been selling it for a lot, and you feel raped by piracy—to say to that person, ‘The only way to beat this is to co-opt the people who are stealing from you,’ that was a challenge.” Ek said, “If anyone had told me going into this that it would be three years of crashing my head against the wall, I wouldn’t have done it.”

Eventually, Ek decided to start regionally and prove that his concept worked. “And I invested all of my personal money in it,” he told me, “saying, you know, here’s my balls on the table. For them, the risk of trying it was kind of zero.” Swedish labels, gutted by piracy, literally had nothing to lose.

Sean Parker lives in the Plaza Hotel, in a private residence in the northeast corner of the building, looking out at Fifth Avenue and Central Park South. The grand, high-ceilinged dining room has commanding views in both directions, and it was there that the thirty-four-year-old billionaire was sitting on a warm fall afternoon, dressed in jeans and rust-colored high-tops, drinking tea from a white china cup. It was a setting that would have impressed Edith Wharton, even if the owner’s attire might not have.

Parker was talking about Napster, which he and Shawn Fanning started back in 1999. “Napster had been this cultural revolution, much more than it was ever a legitimate company,” he said, stroking his neatly trimmed beard. Napster, which had sixty million registered users at its peak, taught the world how to get music from the Internet. Parker says he had always wanted to go legit, by making a deal with the record industry, but instead the labels put Napster to sleep. “There was this unique opportunity in history. We said, ‘If you shut down Napster, it’s going to splinter, and you’re going to have a Whac-A-Mole problem on your hands, where you’re fighting service after service and you’re never going to get all those users back in one place.’ And that’s what happened.” From the dragon’s teeth sprang Kazaa, Grokster, Morpheus, and Limewire. “It was one of those things where it can be totally clear to you and everyone in your generation and you can explain it in the clearest of terms, not as a threat or a negotiating tactic—just, ‘Look, you just have to see this.’ And they couldn’t see it.” Napster was the enemy, pure and simple, and it had to be killed. “This was the biggest existential threat to the music business and they wouldn’t listen.”

Parker sipped his tea. “So I went off and did other things”—he became president of Facebook in 2004, and helped turn it into a company, which helped turn him into a billionaire—“but in the back of my mind I was thinking about the untimely fate that Napster had met. That aborted mission.” He had watched while other entrepreneurs tried to realize the dream that was Napster. “They’d try to negotiate with the record labels and they really didn’t speak the language and they’d end up adapting their product vision to the terms they were able to get,” he said. In 2009, a friend told him about a Swedish service called Spotify. Parker had never heard of it. He sent Daniel Ek an e-mail and they arranged to meet.

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“The thing that made Spotify very different when I first met Daniel and Martin was that they had this incredible stubbornness,” Parker went on. “In a good way. They were willing to let the product vision lead the business deals.” He agreed to invest in the company and help Ek in his negotiations to enter the U.S. market. “Daniel said, ‘I think it’s going to take six weeks to get our licenses complete.’ It ended up taking two years.” Of the four global music companies at that time—E.M.I., Sony, Warner Music, and Universal—Ek had managed to get E.M.I. and Sony on board, but Universal and Warner were holdouts. The latter was led by Edgar Bronfman, Jr., who had spearheaded the move to close down Napster, back in 2001.

This time, Parker was more persuasive. “He did know a lot of people,” one top label executive said. “Daniel Ek didn’t. And he worked it non-stop.” The Swedish trial period was key. The record industry’s total revenues in Sweden grew by more than a third between 2008 and 2011. Piracy plummeted. As the label executive recalled, “It was like—O.K., proof of concept, we should be doing this if we can get the right license.”

Another factor in the labels’ thinking was Apple’s iTunes store, which had proved to be an unsatisfactory business partner. Music had been an important part of Apple’s business when Steve Jobs first negotiated the iTunes licenses, back in 2002—the music helped sell the iPod. But by 2011 music was more important to the Apple brand than to its business. Apple would not even let Android users, who today represent more than eighty per cent of the global mobile business, have iTunes on their phones, because it wanted to sell iPhones. Spotify offered a way out of a troubled marriage.

Thomas Hesse, who led the negotiations for Sony, told me, “The main reason it took so long for Daniel to get all the majors on board was that he had this free tier, where all the music was on demand. Was that going to cannibalize the download world?” In the end, the free tier was limited to personal computers, so users would have to pay for subscriptions in order to listen on their mobile devices, a major incentive to convert to the paid tier. Nevertheless, Hesse continued, there was “a lot of discussion about how much Spotify needed to pay for the free streaming and how many paying subscribers it could potentially guarantee.”

After Universal made a licensing agreement with Spotify, Warner was virtually compelled to join the other major labels in negotiating. At the time, the company was also looking for a buyer. Parker told me that he tendered an offer to buy Warner with Ron Burkle, the Los Angeles-based venture capitalist. When another buyer, the Russian oligarch Len Blavatnik, expressed interest, Parker said that he told him, “Look, if you make Spotify contingent on the deal, I will withdraw my offer and you’ll get the company.” In 2011, Blavatnik bought Warner, for $3.3 billion. Parker became a Spotify board member and helped broker its partnership with Facebook.

The exact terms of the licensing deals that Spotify made with the majors are not known; all parties signed nondisclosure agreements. In addition to sharing with other rights holders nearly seventy per cent of the money Spotify earns from subscriptions and ad sales—about the same revenue split that Apple provides on iTunes sales—the majors also got equity in Spotify, making them business partners; collectively, they own close to fifteen per cent of the company. Some analysts have questioned whether Spotify’s business model is sustainable. The company pays out so much of its revenues in fees that it barely makes a profit. It operated at a loss before 2013. (The company maintains that its focus has been on growth and expansion.) The contracts are renegotiated every two or three years, so the better Spotify does, the more, in theory, the labels could ask for. This makes Spotify unlike many Internet companies, in which the fixed costs of doing business become relatively smaller with scale. For Spotify, scale doesn’t diminish the licensing fees.

When Spotify began in the U.S., labels demanded up-front payments as the price of getting in the game. These payments were not always passed along to the content creators, even though it is their work that makes the catalogues valuable in the first place. Month by month, Spotify pays the major labels lump sums for the entire market share of their catalogues. How the labels decide to parcel these payments out to their artists isn’t transparent, because, while Spotify gives detailed data to the labels, the labels ultimately decide how to share that information with their artists. The arrangement is similar on the publishing side. Artists and songwriters basically have to trust that labels and publishers will deal with them honestly, which history suggests is a sucker’s bet. As one music-industry leader put it, “It’s like you go to your bank, and the bank says, ‘Here’s your salary,’ and you say, ‘But what is my employer paying me? I work for them, not you!’ And the bank says, ‘We are not going to tell you, but this is what we think you should get paid.’ ”

Parker’s tea had grown cold, and he poured some hot water into it. The October light dimmed in the high Plaza windows. He pondered the progress of the tide of humanity flowing up and down Fifth Avenue. For him, Spotify was a do-over—a second chance to get Napster right. And that felt “very vindicating.”

The deals that Spotify made with the major labels launched on-demand streaming in earnest. But although the way the consumer gets access to music had changed, the way the creators of music are paid for their work had not. Somehow, the billions of micro-payments parcelled out in the form of streams have to be reconciled with a royalty-payments system that is rooted in a century-old sales model. No economic infrastructure exists for that apples-to-oranges transformation.

Spotify is only one of many streaming sites. There are competing services like Rhapsody (which recently bought a rebranded, fully licensed Napster), Rdio, and Google Play Music, but there are also thousands of other sites where songs are streamed. Labels, publishers, and performing-rights societies struggle with dozens of different technologies to monitor this welter of outlets. And with any given stream of a song there is a myriad of copyrights—performing and mechanical rights apply to both the recording and the composition—which makes sorting out who’s owed what no easy matter. Liz Penta, an artist manager in New York, told me that, in addition to larger payments, she regularly gets checks for one penny from the Harry Fox Agency, which administers mechanical royalties for Spotify, among other streaming services. YouTube, which is by far the largest streaming-music site in the world (it wasn’t designed that way—that’s just what it became), is notorious among rights holders in the music industry for its measly and erratic payouts. Spotify’s exponential growth rate suggests that the chaos in royalty collection is only just beginning.

Not surprisingly, companies that specialize in digital royalty collection constitute one of the hottest growth sectors in the music business. Among the leaders is Kobalt, founded, in 2001, by Willard Ahdritz. Part collection agency, part music publisher, and part tech platform, Kobalt has built a system of enormously complex Oracle databases that compute billions and billions of transactions and royalty lines from all over the world, and collects on behalf of some two thousand artists, including Paul McCartney, Maroon 5, and Skrillex, while the rest of the industry uses Excel spreadsheets to try to piece everything together. On YouTube, Kobalt’s proprietary song-detection technology, ProKlaim, detects unclaimed videos for its clients. Ahdritz says, “We create transparency, which drives liquidity, and the money is now flowing.”

Spotify’s payouts to indie labels and digital-music distributors such as Tunecore are considerably more transparent than its dealings with the major labels. Spotify sends out monthly statements showing the total streams per artist, broken down into individual songs. To come up with the royalty rate per stream, Spotify divides the monthly streams of a single artist’s work by the total number of streams on Spotify that month, and arrives at the artist’s share. It multiplies that number by the total monthly revenues, and keeps thirty per cent. Labels, publishers, and distributors then pay the artist according to their royalty deals.

But exactly what is the royalty rate for a single stream? It depends on many factors. The more popular you are, the higher your metric. Some countries’ streams are worth more than others’. Free, ad-supported streams are worth less than subscriber streams, because the company makes less on ads than on subscriptions. (One of the reasons that Swift left Spotify was that her label wanted her music to be exclusive to the premium tier in the U.S.; it was willing to make her catalogue available for free in the rest of Spotify’s markets.) According to the company’s Web site, the average stream on Spotify is worth between six-tenths and eight-tenths of a cent. If you do the math, that means that around a hundred and fifty streams equal one ninety-nine-cent download. But that metric is hard for many musicians and record executives to accept. (I don’t stream my Lana favorites close to that many times.) On the other hand, seven-tenths of a cent is better than nothing.

Some artists are already making real money from Spotify. Swift’s music was earning about five hundred thousand dollars a month at the time she pulled it. E.D.M. artists like Avicii and David Guetta are seeing payouts in the millions. Avicii’s “Wake Me Up,” the most streamed song on Spotify, has more than three hundred million spins, which, using Spotify’s benchmark per-stream rate, would be worth about two million dollars to the rights holders. Daniel Glass, a music-industry veteran who is the founder of Glassnote Records, an indie label, told me that he is very happy with the royalties Spotify pays his artists, who include Mumford Sons, Phoenix, Childish Gambino, and Chvrches. “We’re getting big beautiful checks from them!” he exclaimed.

At a recent series of educational meet-ups with the music industry in New York, Nashville, and L.A., Spotify representatives tried to reassure managers and artists, offering rosy-sounding future royalties, based on growth projections. A niche indie album, which now earns thirty-three hundred dollars a month, will receive seventeen thousand dollars in royalties a month when Spotify hits forty million paid subscribers. A breakthrough indie album, now earning seventy-six thousand dollars a month, will pull in three hundred and eighty thousand dollars. A global hit album, currently earning four hundred and twenty-five thousand dollars a month, will get $2.1 million. How likely are these projections to come true? When I asked Ek, he said, “Is there a definitive way of knowing? Of course not. But I’m not the only person who believes it. Pretty much everyone is in agreement that streaming will keep on growing over the next few years.”

AM/FM radio pays the writer of the song on a per-play basis, but gives the performer and the owner of the recording of the song—generally, the record label—nothing. On digital streaming services like Spotify, the situation is nearly reversed: the owners of the recording get most of the performance royalty money, while the songwriters get only a fraction of it. Songwriters, who can’t go out on the road, are particularly hard hit by the loss of publishing royalties. As one music publisher put it, “Basically, the major music corporations sold out their publishing companies in order to save their record labels. Universal Music Publishing took a terrible rate from streaming services like Spotify in order to help Universal Records. Which, in the end, means that the songwriter gets screwed.”

Ek’s answer to the question of whether or not Spotify is good for artists tends toward the tautological. If it’s good for listeners—and almost everyone who uses Spotify likes it—then it must be good for artists, because by encouraging more listening it will “increase the over-all pie.” Many music-business people think he’s right. Richard Jones, the Pixies’ manager, says, “Particularly for artists who are established with solid catalogues and are big live-touring acts, streaming services can be extremely beneficial. I’m a massive supporter.” He said of Swift’s decision to pull her music, “It’s purely P.R.-driven, which is fine. But let’s not pretend it’s artist-friendly. Because actually the most artist-friendly thing here is for everyone to make streaming into something that is widespread.”

Spotify does offer undiscovered musicians new opportunities to break through. Playlists tend to be much broader in scope than commercial-radio playlists. Lorde is often cited around Spotify as an artist who gained crucial early exposure after Sean Parker heard her song “Royals” when a friend played it for him. In April, 2013, before the song was a hit anywhere, Parker added it to his “Hipster International” Spotify playlist, which currently has seven hundred and ninety thousand followers. Parker’s followers added it to their playlists, as did their followers; users shared it with one another; and within weeks “Royals” was the second most popular song on Spotify. Spotify’s director of economics, Will Page, says, “Now, remember, there is no Old World business model here, no radio pluggers or traditional marketing—just a playlist. But it’s like becoming a broadcaster. And you could see the viral nature of growth that led to this artist becoming No. 1 in America before Christmas.” Still, the fact is that Lorde had a major label and its marketing budget behind her. Jason Flom signed Lorde to his Lava label months before Parker playlisted her. “ ‘Royals’ was not to be denied,” Flom told me. “Nothing could stop it.” Even so, he said, “Spotify—and especially Sean—was definitely helpful in establishing Lorde the way we wanted to establish her. It gave her a foundation with the cool kids.”

Record companies are beginning to figure out how to employ Spotify’s potential to their advantage, sometimes by manipulating release dates. “Windowing” releases—start out on iTunes only, and add Spotify after two weeks of sales—is popular at some labels (and very unpopular at Spotify). In Taylor Swift’s case, Big Machine Records decided to keep her previous album, “Red,” off Spotify in the first weeks after its release in order to increase record sales. “Red” was later added to Spotify, before Swift removed the entire catalogue.

But there is another class of musicians whom Ek hasn’t helped so far. For them, Spotify has further eroded their CD and download sales, without coming close to making up the difference in streaming revenues. Ek acknowledges that the switch from a sales model to a streaming model could be bumpy for some artists. “In Sweden, there was one tough year and then the debate changed,” he said. “That will happen in the larger markets. The end goal is to increase the entire pool of music. Anything else is part of the transition.” He added, “This is the single biggest shift since the beginning of recorded music, so it’s not surprising that it takes time to educate artists about what this future means.”

Two artists who are part of that transition are Marc Ribot, an esteemed jazz guitarist, and Rosanne Cash, whose work has won a Grammy and received twelve nominations. Both are mid-level, mid-career musicians who are a vital part of the New York City music scene. Both have worked with major labels. (Ribot is currently releasing his music on indies.)

I met them in New York one October afternoon. Ribot and Cash brought along their Spotify numbers. In the past eighteen months, Ribot reported, his band made a hundred and eighty-seven dollars from sixty-eight thousand streams of his latest album, available on Spotify in Europe and the U.S. Cash had made a hundred and four dollars from six hundred thousand streams. The math doesn’t fit Spotify’s benchmarks, but that is how their labels and publishers did the accounting.

When I mentioned that both Ek and Parker seemed to be sincere in their desire to help artists, Ribot replied, “Well, our ‘friends’ in the online-distribution business have helped artists to go from a fourteen-billion-dollar domestic record business to a seven-billion-dollar one, and now Spotify wants to help us reduce it even further. With friends like that, give me the old Brill Building system.”

He went on, “Here’s the simple fact that no one wants to talk about. Spotify says it pays out seventy per cent of its revenues to rights holders. Well, that’s very nice, that’s lovely. But if I’m making a shoe, and it costs me a hundred dollars to make it, and the retailer is selling that shoe for ten dollars, then I don’t care if he gives me seventy per cent, I don’t care if he gives me one hundred per cent—I’m going out of business. Dead is dead.”

Cash said, “I don’t think any of us want to make the streaming services go away. We are not Luddites. We just want to be paid fairly.”

“And we’re not going to say a model is viable unless it’s viable for the creators,” Ribot added. “I know Daniel Ek is going to do just fine. I don’t know that about the people in my band.”

“And, if the artist can’t afford to work, the music is going to suffer,” Cash added, with feeling. “Spotify is not acting in its own self-interest by obliterating us.”

Or maybe Spotify itself will get obliterated. Apple, Amazon, and Google have recently begun to enter the on-demand streaming market. (YouTube débuts Music Key, an ad-free paid-subscription service, this week, which will include access to Google Music Play.) Spotify’s advantage, Ek maintains, is its data and its ability to analyze that information. “We’ve been doing this for years,” he said. “And what we’ve built is the largest set of data of the most engaged music customers. I think it would be really hard for anyone to come in and do what we do better. Maybe someone could lower the cost of a streaming service and make it hard for us to survive. But am I concerned that someone will build a better product? No, because they can’t.”

James McQuivey, an analyst with the Boston-based Forrester Research, is less optimistic about the company’s prospects. “Spotify has shown people value streaming,” he said, “and that means somewhere someone could use that value in a bigger chess game. Someone like an Apple or a Google is already realizing how valuable music is as a customer-engagement tool and will offer something quite similar to this, without making you pay for it, the way Amazon has included video in the Prime membership without expressly charging. And then suddenly you’ve disrupted Spotify.” He added, “If I have to say yes or no will Spotify be as big and strong as it is five years from now, the answer will be no.”

Earlier this year, Apple acquired Beats Electronics, an audio company, which had entered the streaming business via Beats Music. It’s not yet clear what Apple wants to do with Beats. It could try to sign up Spotify holdouts like the Beatles (Taylor Swift hasn’t pulled her back catalogue from Beats, which is subscriber-only) and promote its service as more comprehensive. On the other hand, Apple faces the classic innovator’s dilemma. An Apple on-demand streaming service would undermine its iTunes downloads business. But if streaming is the future of music—and even people who fear the prospect agree that it is—Apple will need to enter the market soon. iTunes’ music sales have dropped almost fourteen per cent since the start of the year.

Apple could pose a real threat to Spotify, by pre-installing a service—iStream, maybe—on the next generation of iPhones and including the price of a subscription in the plan. Siri could be your d.j. That would insure a paying user base in the hundreds of millions almost instantly, easily eclipsing Spotify’s. And, since Apple makes money primarily from its hardware, it could afford to undercut Spotify on the price of a subscription—a scheme it is currently promoting to the labels. Of course, that would require the support of the labels, and they are Spotify’s business partners in streaming. “You might want to take a discount in a business you have equity in,” one label head told me. “You might not want to take a discount in a business you don’t have equity in. Would we subsidize Apple with no real upside for us? We did that once before. It was called unbundling the album.” In any case, the downward pressure on price from increased competition seems likely to diminish the pot of money that the rights holders get to divide.

Even if Spotify does manage to survive Apple, it will take years to complete the paradigm shift to streaming. Meanwhile, album sales will continue to decline—even albums recorded by Taylor Swift. The labels, feeling the pinch in their bottom line, may try to squeeze more money out of Spotify, imperilling its future growth. They may even try to cash in their equity stakes. Proving that, while your enemies can indeed become your friends, the reverse can also be true. 

Permanent link to this article: http://homebiz2bizreview.com/revenue-streams/

Nov 16

Taylor Reaume: Do You Know the ABCs of Web Strategy?

In today’s tech-driven world, online marketing is a linchpin for success. The average consumer is changing how they go about finding products and services, with the Internet being one of the first places that they look. Therefore, no matter what sort of industry your business is in, its online web strategy is invaluable.

As important as a web strategy is, it’s also important to remember that it’s just one piece of the puzzle that makes up a business. And with so much else to take care of, it can seem nearly impossible to keep up with the ever-changing atmosphere of online marketing. But while it may be worthwhile to hire an online marketer or social media specialist to handle the day-to-day tasks, it’s still important that managers and owners have a basic understanding of web strategy and online marketing.

The “50,000-foot view” is common business-talk that refers to a general understanding of how part of a company works. For example, a business owner may not know every step of the process that a dedicated marketing team makes, but it’s still important for the team to know the general highlights and direction of the company. When it comes to online marketing, here is a general outline that highlights the ABCs of web strategy.

Know Your Audience

As with any approach, the first key is that you know where your target is. Therefore, your web strategy should have a firm understanding of your audience and how you plan to attract it. If you believe that you already know your audience, you may want to think again.

Most companies will begin by setting up an online marketing strategy that approaches their audience the same way that it would with offline efforts. However, it’s important to know that the Internet is changing the way that you reach customers.

For example, you may have a stand-alone retail store that nobody outside of your neighborhood knows about, but that doesn’t matter once you go online. Your target audience expands to people around the world when it comes to online marketing and approaching new customers.

By understanding who your audience is and whether it is local, regional, national or global, you can develop an online marketing strategy that directly approaches it. This is also the chance that a business can rebrand its image and find new ways to expand in ways like never before.

Determine What the Audience Wants …

The next step in the web strategy for 2014 should be determining what it is that the audience wants and how easily it will stay interested in what you provide. For example, some online strategies may be to post viral videos to social media accounts. Other businesses might rely on blogging or posting new information for their audience to see. Others may even rely on an email list that is used for a monthly newsletter.

There are a variety of different approaches that may work best for your audience, so determining what it wants will help you focus your approach.

Before you jump to the conclusion that more content is better, keep in mind that this may not be true for your specific market. While there are plenty of videos or memes out there that attract a lot of interest, your target market may not be interested in such “viral content.” Instead, your audience may want more relevant information to your industry and what it is that you provide.

Looking to get 1 million views on a video might be a viable online web strategy for some, but it’s most certainly not the only option. Therefore, know what will interest your audience the most and be sure that this is the type of media you use for your approach.

… And Where They Want To Get It From

It is estimated that Facebook has more than 1.2 billion users who have registered accounts. Twitter has roughly 200 million, and Instagram comes in at around 100 million. These are staggering numbers, but it also shows that there are great disparities between each social media site.

As nice as 200 million users is for Twitter, it has a long way to go before it passes the 1 billion mark like Facebook.

Keeping some of the numbers in mind, it’s important that your web strategy is available to your target market via resources that it uses most often. Facebook is obviously a good resource because of the sheer amount of people who are on it, but it’s not the only outlet for your web strategy. Instead, your business may be better suited with an online blog, YouTube video channel, or a simple monthly email.

If you are aiming your online marketing approach at places where your target audience won’t see it, then you are wasting your time. However, providing information to users where they already are looking will help to increase the online presence of a business.

Optimize for SEO

Anywhere you look for tips on how to make your web strategy better, you are going to hear that SEO should be one of your most important considerations. SEO, or search engine optimization, refers to the ranking that a website has on a Google search query. In order to get higher rankings through SEO, a business needs: 

» Keyword-rich content that triggers search engine results

» A website that runs smoothly and functions properly

» Correct contact information for a business (called “NAP” for: Name, Address, Phone number)

» No filler content to take up space

Plan Ahead

Whatever your approach is for online marketing, be sure that you plan ahead. This will help you save time and be much more effective with your online approach.

By planning ahead and having a routine schedule for improving your website, you won’t have to worry about missing posts or running short of content. Instead, you’ll always have new material to help with SEO, while also keeping the interest of your audience.

Unless you are ingrained in the web strategy approach of your business, it can be hard to keep up with everything. But with this 50,000-foot view of the best practices of web strategy in 2014, it’s much easier to see how valuable each part of the process is.

— Taylor Reaume is an e-Business coach and founder of Search Engine Pros. He can be contacted at taylor@thesearchenginepros.com, or 1.800.605.4988. The opinions expressed are his own.

Permanent link to this article: http://homebiz2bizreview.com/taylor-reaume-do-you-know-the-abcs-of-web-strategy/

Nov 15

New Powerful Video Creation Software: Explaindio for Business Owners and …

Explaindio, LLC announced the availability of new powerful video creation software Explaindio Video Creator, available immediately.

New Powerful Video Creation Software: Explaindio for Business Owners and Internet Marketers

Business owners and internet marketers looking for the latest powerful video creation software can now purchase explaindio video creator. Explaindio Video Creator is designed to appeal specifically to offline and online business owners, affiliate marketers and internet marketers.

Whiteboard or Animated Videos can actually create wonders for businesses. Explaindio VideoCreator is one such tool that is one of the fastest profit generating videomaker. The software was developed by Todd Gross, a marketer who has createdthis tool to offer the best video creating software to other marketers. Withthe help of this tool, one can create animated videos which can be used toincrease user engagement and boost conversions through doodle animation.Powerful whiteboard videos can be created to generate sales and increaseprofits.

The tool comes with ready-made themes, styles and templates making itthe easiest tool that can be used by amateurs as well. Be it email marketing,CPA, selling products online or affiliate marketing, Explaindio will makeeverything simple and easy by offering super-effective results. This videocreating software will also help in driving targeting traffic when accuratemarketing language is used in the videos. High traffic keywords, cutting edgetactics, etc. can be incorporated in the videos to gain more conversions.

Explaindio Video Creator benefits includes:

Creating Sketch Video In Minutes – With little effort, explaindio will help produce powerful sketch videos.

Full Motion Videos – The motion video can be combined with the sketch video which is never done this easy before.

Adding Animation Videos – This is like 3-in-One video creation software that will combine animation video as well.

Solomon Solomon, The Software Marketer, when asked about Explaindio Video Creator said:

This is the most easy to use, but highly powerful video creation software of all time. Explaindio Video Creator is the business owner’s success companion…period!

Those interested in learning more or purchasing the product can do so at http://businessescalate.com/videomax/.

For more information about us, please visit http://businessescalate.com/videomax

Contact Info:
Name: Solomon Solomon
Organization: BusinessEscalate.com
Address: 3916 Milgen Road, Suite # 8651, Columbus, GA 31907
Phone: 915-238-9384

Release ID: 68258

Permanent link to this article: http://homebiz2bizreview.com/new-powerful-video-creation-software-explaindio-for-business-owners-and/

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