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TikTok Owner to Challenge Spotify and Apple With Music Service | Anthony S Casey Singapore

Inside Beijing ByteDance headquarters in Beijing, China.

Inside Beijing ByteDance headquarters in Beijing, China. Photographer: Giulia Marchi/Bloomberg

ByteDance Ltd., owner of the popular video app TikTok, is developing a paid music service that will challenge industry leaders Spotify and Apple Music in emerging markets, according to people familiar with the matter.

ByteDance expects to introduce the new app as early as this fall in a handful of territories, mostly poorer countries where paid music services have yet to garner large audiences, said the people, who asked not to be identified because the plans haven’t been announced. The company has already secured rights from T-Series and Times Music, two of India’s largest labels, according to executives with those companies.

While the new app isn’t named after TikTok, ByteDance will try to convert some of TikTok’s audience into paying customers, the people said. TikTok and Douyin, its Chinese equivalent, have been downloaded more than 500 million times and have become two of the most influential apps in the contemporary music industry. The No. 1 song in the world for the past month, “Old Town Road,” first became popular in videos on TikTok.

ByteDance, based in Beijing, declined to comment.

No Clone

The new app will include a catalog of songs available on-demand, as well as video, and isn’t a clone of Spotify or Apple Music, according to the people. The app is far enough along that many music industry executives have been given demonstrations of it.

ByteDance’s plans for a paid service were previously reported by the South China Morning Post, but the story made no mention of the timing of its release or the rights deals.

ByteDance is already one of the world’s most valuable startups, valued at more than $75 billion in its most recent round of fundraising. The company’s first signature app was Toutiao, a news aggregation app whose name means headlines.

TikTok Boom

TikTok extended ByteDance’s reach around the world, a rare feat for a Chinese technology company. It also gave it a large user base to monetize through ads. With this new paid music app, ByteDance is looking to reduce its reliance on advertising and prove subscription music can work in emerging markets.

Paid music services have boosted music sales across the world, and are now the single largest source of revenue for the global record business. But the approach is still largely a Western phenomenon.

Though Asia, the Middle East and Africa are home to the majority of the world’s population, they only account for about 10% of Spotify’s customer base. Tencent Music Entertainment, the dominant music company in China, makes six times more money from what it calls social entertainment than from subscriptions.

The most popular online music services in Asia, such as Tencent’s QQ Music and Google’s YouTube, are available for free. YouTube has had particular success in markets like India, Indonesia and the Philippines. TikTok was the most downloaded free app in India in the first quarter of the year.

The new paid service will increase the competition between ByteDance and Tencent, which owns WeChat, China’s most popular app. At home, ByteDance and Tencent are already locked in a fierce competition to gain more attention from China’s smartphone-savvy young people. Douyin has become one of the biggest challengers to WeChat, spurring the latter to block Douyin links on its platform.

Tencent’s music services are focused on China at the moment, but could expand in the years ahead.

Record Labels

ByteDance has yet to secure rights from the world’s three largest music groups: Universal, Warner and Sony. Their catalogs account for a minority of listening in most emerging markets, but would be vital if ByteDance wanted to expand anywhere in Europe, Latin America or North America.

Another paid service will be music to the record labels’ ears. Universal, Warner and Sony have tried to limited the availability of music for free on the internet. It also presents an opportunity to squeeze ByteDance for extra money. They credit their songs with boosting TikTok’s popularity, and have demanded hundreds of millions of dollars to renew their current rights deals. Those companies won’t grant the rights for the paid music service without sorting out the rights for TikTok as well, the people said.

Killer jellyfish in Australia | Anthony S Casey Singapore

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Berlin Startup Idagio Is Spotify for Classical Music Buffs – Bloomberg | Anthony S Casey Singapore

Idagio aims to do for Gluck and Grieg what other platforms have done for Lady Gaga and Ariana Grande.

relates to This Berlin Startup Is Spotify for Classical Music Buffs
Photo illustration: 731 for Bloomberg Businessweek

The offices of Idagio GmbH have all the requisite tropes of a Berlin startup: A dog frolics in the airy industrial loft, tattooed employees park their bicycles along brick walls, and the kitchen is packed with snacks such as raw fennel and ginger. But the Steinway grand piano near the door betrays the mission of a company that moves to a soundtrack that’s more Yo-Yo Ma than Yo La Tengo: digital access to an art form that’s long remained proudly analog.

Idagio streams classical music, from Gregorian chants to the minimalist movements of Philip Glass. While the genre accounts for just 5 percent of the recorded music market, listeners tend to be affluent and loyal. But it requires an organizing structure unlike that of popular music, which is easily sorted by song, album, and artist. The classical catalog resembles a long list of cover tunes, with multiple orchestras performing the same pieces—something akin to countless, nearly identical recordings of every Beatles or Elvis song.

With so many versions of most compositions, consumers will search for Tchaikovsky using different metrics than they would for Taylor Swift: a specific orchestra or conductor, a long-forgotten recording, a favorite soloist. And the fan base might easily distinguish adagio from andante but is often clueless when it comes to apps and smartphones. “Our typical user will be somebody who asked his grandchildren to move his CD collection onto a hard drive,” says Till Janczukowicz, who co-founded Idagio in 2015 after two decades managing classical musicians.


Photographer: Thorsten Jochim

In the casual environment of Berlin’s startup scene, Janczukowicz stands out with his slicked-back salt-and-pepper hair (vaguely reminiscent of Beethoven’s), polished Oxford brogues, gold wristwatch, and pocket square billowing from his blue blazer. Because of his decades working alongside musicians and orchestras, he says he wants to give artists a substantial share of the spoils—something many pop performers say streaming platforms don’t provide. So in contrast to the likes of Spotify, which registers a song as streamed only after 45 seconds, Idagio pays for every second a piece of music is transmitted.

Janczukowicz says his aha! moment came a few years ago in Salzburg, Austria, when he saw a man awkwardly pasting up posters for a classical concert—evidence that the industry had become outdated in reaching its target audience. In 2014 he sold his flat to fund his idea, then brought on Christoph Lange, a Berlin entrepreneur and digital savant who’d created a German streaming company that went bust. The pair spent a year looking for backers before persuading Australia’s Macquarie Group to put up some cash. After a second funding round that netted $25 million, the founders hold just over 10% of the shares. “Classical is a part of the market that big players struggle to adequately address,” says Jochen Gutbrod, a partner at Berlin venture capital firm Btov Partners AG, an early investor. “If you can own this niche, it has great potential because the genre resonates globally.”

Today Idagio has about 90 employees at its headquarters along a Berlin canal and a small outpost in Bratislava, Slovakia. The team has gathered tracks from 1,000 labels, manually writing in data such as composer, soloist, instruments, conductor, and studio or live. It now has more than 1.2 million recordings from 2,500 orchestras, 6,500 conductors, and 60,000 solo artists—all delivered in CD quality, the most complete collection of classical music offered for streaming. The service became available in the U.S. last year, and it’s increasingly popular in Japan, South Korea, Latin America, and other places where appreciating classical music is considered a hallmark of distinction by a growing middle class grasping for emblems of high culture.

The Idagio dashboard includes what the company calls a mood wheel that lets users pick modes ranging from optimistic (Brahms’s Symphony No. 1) to tragic (Mahler’s Seventh) to passionate (Schumann’s Violin Sonata No. 2). The next challenge is creating a more immersive experience, with playlists curated by artists and critics, and video clips of musicians sharing stories of memorable recordings. “Classical musicians today need to be communicators if they want to remain relevant,” Janczukowicz says.

The app is still losing money, and the company is tiny when compared with the industry’s leaders. Janczukowicz says Idagio has been downloaded more than 1 million times, though he declines to say how many people pay the $9.99 monthly fee for full access. Spotify, by contrast, just hit 100 million paid subscribers. He’s not the only player in the field: A U.S.-Dutch rival called Primephonic was founded in 2017. And while symphony orchestras are mushrooming in China, many are wilting in places such as the U.S. and Germany. “The market needs a good classical music app, because neither Spotify nor Apple can credibly claim to serve that audience,” says Alice Enders, research director at media consultant Enders Analysis Ltd. “The challenge for Idagio is to convert the CD people, who are often very attached to their libraries.”

Janczukowicz says he doesn’t have an exit strategy and that the focus for the next few years is to enrich the platform: more podcasts, live sessions at Idagio’s Berlin loft, and working with promoters to quickly release recordings of concerts. Still, he admits it won’t be easy as a niche player with limited resources. “There’s a lot we want to achieve, but you can’t do it all overnight,” he says. “We have 25 engineers for the entire service. Spotify has 200 just for iOS. That gives you a sense of what we’re up against.”

Manchester City Should Spend What It Wants on Players – Bloomberg | Anthony S Casey Singapore

If Manchester City breached UEFA’s financial fair play rules, it deserves to be punished. But those rules should probably be scrapped anyway.

Wealthy new owners should be free to throw their money around if they want to.

Wealthy new owners should be free to throw their money around if they want to. Photographer: BEN STANSALL/AFP

It’s hard to beat the unscripted theater of the Champions League, which pits Europe’s best soccer clubs and players against each other in a battle for sporting immortality and unimaginable riches. And, in fairness to the superstars, it’s been a particularly stirring tournament this year, with Liverpool and Tottenham Hotspur both coming back from the dead against Barcelona and Ajax to claim their places in the final.

Right now, though, there’s some equally arresting drama happening off the field. Manchester City, one of the world’s richest clubs and the recently crowned English champions, faces a potential ban from the elite European competition. Owned by Abu Dhabi’s Sheikh Mansour, the talent-packed team could be barred for one season if the adjudicatory chamber of governing body UEFA decides it breached financial rules designed to curtail excessive spending on players.

Last year, Der Spiegel published emails revealing allegedly inflated sponsorship deals that concealed where some of the club’s money was really coming from. UEFA investigators’ decision to refer the Manchester City probe for judgment suggests there is a compelling case to answer.

Should the adjudicators find against the club, rival teams and fans will be enraged by anything less than a ban. After all, why bother complying with these so-called Financial Fair Play rules (known to everyone in the game as FFP) if there’s no ultimate sanction? The Italian club Roma, for example, claims it sold top player Mohamed Salah to Liverpool because it wouldn’t have been compliant otherwise.

UEFA’s credibility would be shattered if it just gave Manchester City another financial slap on the wrist, as has happened in the past. Der Spiegel’s reporting showed how supine the governing body was when questions about Manchester City’s and Qatari-owned Paris Saint-German’s compliance arose previously.

Manchester City says the accusations of financial irregularities are “entirely false” and its accounts “are full and complete and a matter of legal and regulatory record.” It is unlikely to back down without a protracted fight.

While it won’t find much sympathy if it loses that battle (it seems a reasonable principle that competing teams should all follow the same rule book), there is another question here: Does FFP even work for the greater good of the game? I’d argue not. It has tended to enshrine the power of already dominant teams by hobbling the capacity of up-and-comers to spend their way to the top table. In future, it might be “fairer” to weaken or scrap the break-even requirement – which allows clubs to spend only what they make in revenue – and let club owners invest how they please.

FFP was dreamt up after arriviste billionaire owners like Chelsea’s Roman Abramovich and Sheikh Mansour sparked an arms race for players. As salaries and transfer fees ballooned, a swathe of clubs made losses in the effort to keep up. Eight years since the system’s introduction, UEFA claims it has been a success and – superficially at least – the data seem to back that up. In the 2017 financial year, the 700 top division clubs in Europe made an aggregate profit for the first time and their balance sheets are in much better shape.

Sustainable Soccer

Losses and leverage have fallen since Financial Fair Play began

Source: UEFA

Shows aggregate results for the 700 top division clubs

Financial rewards haven’t been shared around, though. The top dozen clubs have added 1.6 billion euros ($1.8 billion) of sponsorship and commercial revenue over the past decade, while the next 700 have added less than 1 billion euros between them, UEFA data show. Europe’s 30 leading clubs had combined revenues of almost 10 billion euros in fiscal 2017, half of all the sales generated by the continent’s top division teams.

Because of FFP, the clubs that bring in most revenue can spend most on players and wages, meaning they’ve a much better chance of qualifying again and again for the Champions League, whose 32 participants shared 2 billion euros of proceeds between them last season. In contrast, the fair play rules have made it harder for the large cohort below to catch up because a new owner can’t just inject a wad of cash – as Abramovich and Sheikh Mansour did back in the day. In effect, the big guns used FFP to pull the ladder up.

The English Premier League is still reasonably competitive (although Manchester City appears to be challenging that notion after winning it twice in a row), thanks in part to a collectively negotiated TV deal. But elsewhere national football has become horribly predictable, as this list of recent winners shows.

Too Predictable

The Premier League remains the most competitive of the national soccer leagues

In short, instead of making football more equitable, FFP has helped make it more polarized and reinforced the power of already wealthy clubs. The system “kills competition and that’s bad for the game,” says Stefan Szymanski, a sports finance expert at the University of Michigan. As American sports fans – with their player drafts, wage caps and rich-team surcharges – understand, a lack of true rivalry is a very dull thing.

UEFA is thinking about reforming FPP and there’s no shortage of things it could do. Budget limits or U.S.-style salary caps sound appealing, but these types of intervention would invite a breakaway by the elite clubs. They are already angling to change the format of the Champions League to ensure most of them qualify automatically, thus limiting the number of qualification places to just a handful.

Another approach might be to give clubs that finish lower down a domestic league a greater share of the prize money or television receipts than the winners. However, in the U.S. similar rewards for failure have encouraged teams to deliberately lose games, in their cases to get better draft picks.

In truth, the ultra-capitalist approach of European soccer owners doesn’t really marry well with the surprisingly socialist tools used by the Americans to maintain an even playing field. So maybe it’s just better to let it rip. Softening or even getting rid of FFP altogether might be the easiest way to make things more competitive.

Would some clubs get into financial difficulties again? Almost certainly. It’s largely unheard of, though, for a leading club to go bankrupt and disappear altogether. There’s always somebody else willing to put in more cash, says Szymanski. For example, Italian club Parma went bankrupt in 2015, got relegated to the fourth division, then quickly fought its way back to the top again.

There’s no question that money already has too much influence over soccer, explaining the soulless atmosphere at many English top division games as clubs raise ticket prices and chase merchandise-loving global fans. But you can’t wind back the clock, and die-hard supporters can at least take comfort in the travails of maybe the world’s best-known soccer “super-brand:” Manchester United.

While that famous club is one of of the three biggest revenue generators in soccer, according to Deloitte, it finished a distant sixth in the England’s top division this season and failed to get past the quarter-finals of the European Champions League. PSG, Manchester City and Juventus, also failed to reach the competition’s semi-final, the latter despite signing mega-star Cristiano Ronaldo for 100 million euros. This year’s finalists, Tottenham and Liverpool, are paragons of modesty by comparison (although you’d hardly describe them as poor).

Throwing money at a soccer club still won’t buy you guaranteed success. Billionaires should be free to try though.