Facebook music dashboard: Revenue at last?
Ad-clicker pennies are not enough ... bitch
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Analysis We all know why Facebook has such astronomical valuations. It is already as ubiquitous as Tesco. It is a place a billion people go to: whereas they only ever leave Google search, to go somewhere else. But people hanging around, poking, throwing cows, ignoring the adverts and goofing around doesn’t pay the rent. To increase revenue, Facebook needs to sell more stuff: products and services.
A Facebook music “dashboard” has long been rumoured: it would be a way of tying together disparate offerings such as eavesdropping on what friends are playing, streaming music yourself, or buying songs, ticketing or merchandise. A music dashboard is a subtle and relatively unobtrusive way of turning Facebook into a grown-up retail and services platform; an approach which borrows from the classic (Porter) Tesco philosophy of taking a tiny margin from a large volume of transactions.
So Facebook is expected to unveil many of these, including the dashboard, at its f8 developer conference next week. So far, so predictable.
The most interesting detail to emerge is that in addition to transactions there may also be an arbitrage opportunity. Facebook will apparently permit competing streaming music services (Spotify, Rdio and Mog in the US) to pipe music to users, and "reconcile" the content. So if your chat buddy is playing a song via, say, Spotify and wants you to hear it, you can hear it via your choice of streamer. This has been something of a Holy Grail for service developers – not helped by the music industry’s inability to get its metadata story correct. Facebook can even play one service off against another, driving the costs even lower.
But there’s also a downside.
One is that Facebook’s decision to open itself up as a platform, while this contributed enormously to its popularity, also has a downside. Supermarkets succeeded by putting everything you wanted under one roof. They created ersatz deli counters – but did not host rival delicatessens. Facebook’s willingness to use rivals raises long-term margin issues.
But the bigger problem is that there’s not enough money coming into the system. Three years ago, the conventional wisdom insisted that people would never pay for anything on the web. For some people, that’s going to be true now and forever. But that was before the App Store, and the successful (and porous) New York Times paywall. Facebook absorbs an enormous amount of people’s time. If a fraction (say 20 per cent) of them paid 99 cents a year, then the revenue picture would look quite different. If 10 per cent paid even more for premium services then Facebook wouldn’t be thinking about chiselling fractions of cents from its existing partners.
For all the talk of the web being the font of innovation, it's clear to me that it lacks some really basic features – paying for things is extremely tedious. These are innovations other businesses have put into the practice. And supermarkets have perfected the trick of making you quite pleased with the transaction. Maybe that's on the whiteboard for Web 11.0, but I think most web companies haven't given it a moment's serious thought.
A Facebook that received predictable subscription income wouldn’t be thinking of selling your data, either. The phrase that best sums up the web today – "You Are The Product" – would become less relevant.
I once proposed this idea on BBC radio, in a debate about privacy. My interviewer looked quite startled by the prospect of money changing hands in the beautiful Garden of Eden that is the web.
“Wouldn’t this violate net neutrality?” he mused.
I demurred.
Then a blessing of unicorns charged into the studio, and I was carried away to be re-educated. ®
COMMENTS
But of course, you'll actually be paying a fiver to be put on the list of people willing to pay a fiver, which is then sold both to the normal advertisers, and the advertisers looking for known payers.
Orlowski's contention that rapacious money-sievers will be content with one stream of money and forego another when they can have both while they dream up more, is bizarre and not supported by any modern business history I've ever seen.
"These are innovations other businesses have put into the practice. And supermarkets have perfected the trick of making you quite pleased with the transaction."
Spoken like a man who doesn't do his own shopping.
…some large silver Rizla, and a £10 Facebook top-up, please.
Hell yes, I’d buy into this in a flash. Facebook is now the number one place I learn about new bands, with a lot of them offering free albums in the crush to get noticed.
If Facebook could set up a pay-as-you go style payment system similar to mobile phone top-ups, and charge a super-low price to add an album to your stream, I think they’d be onto a winner. They could even be crafty like Microsoft and invent their own currency to obscure how much you’re paying (I certainly rarely bother to work out how much buying a dancing monkey for my xbox avatar really costs in real money, and as a result impulse buying is more frequent – look at the monkey dance!).
Of course, they’d have to not take the piss on the price, I’d say 50p to add an album is about as high as they could go without causing people to question the value (since you’re not downloading anything), and if enough went to the bands this would be a godsend to the unsigned. The question, as always, is whether the established labels would go for it.
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