Tech Brew Ride Home - Fri. 04/23 – Spotify Quick To Counter Apple’s Podcast Moves

Starting point is 00:00:00 On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the TechMame Right Home for Friday, April 23rd, 2021. I'm Brian McCullough today. Spotify looks like it's going to quickly counter Apple with a podcast subscription competitor that might be extremely creator-friendly. The mystery of the driverless Tesla car crash, worth noting how quickly things have been turned around for the better over at Snapchat, and of course, the weekend long-read suggestions.

Starting point is 00:00:58 Here's what you missed today in the world of tech. You're going to want to listen to the Twitter space that is coming out this weekend because Chris and I and a bunch of folks dive deep into not just the Apple event and the new IMAX, but also the announcement of the big Apple podcast changes that included the arrival of subscriptions. I've not done a segment on it because I feel like it's maybe too niche a story in a way, but maybe it's becoming a broader story of the whole heat around the podcasting space coming home to Roos. because Spotify is holding a mysterious event next week, and the Wall Street Journal is reporting that at that event, they will announce an Apple podcast subscriptions competitor that will let podcasters set any price they want for subscriptions, and Spotify will not take any sort of cut. So I want to talk about this now, because you'll see how this touches on a whole bunch of recent narratives we've been discussing. With Apple making its move into subscription, there is this platform war emerging, said Josh Lindgren,

Starting point is 00:02:01 head of Creative Artists Agency's podcast department. Podcasters will pay Apple $19.99 a year to enable subscriptions and set their own prices for listeners. Apple will take a 30% cut of subscription revenue the first year and a 15% take thereafter. Spotify plans to announce its own offering next week, according to people familiar with the matter. It will not charge podcasters nor take a cut cut from their subscriptions and will allow them to set their own pricing, one of the people said. users of Spotify's iOS app who subscribe will be routed to a website for the transaction, meaning that Apple won't take a cut of that revenue, the person said. The broader competition between Apple and Spotify is intensifying.

Starting point is 00:02:42 Aside from competing for music subscribers, Spotify is far ahead of any other service with $155 million globally. As of December 31st, while Apple last reported 60 million subscribers in June 2019, Spotify has been among the tech company's most prominent corporate critics, claiming that Apple uses its strength to compete unfairly, which Apple denies, end quote. So point I'm making is this plays into the larger battle over the App Store and the so-called Apple Tax, the whole creator economy thing. Can different platforms win by being so creator-friendly as to not even charge them, as others

Starting point is 00:03:18 like Twitter have been suggesting? But also, this plays into the more fundamental battle of Spotify versus Apple Music for just naked subscribers. Remember, the shot here is Apple need subscription revenue for revenue growth, thus their instinctual desire to treat podcast subscriptions like any other services product and price it accordingly, the 30% cut. But Spotify wants podcasting for the purposes of increasing margins. If you sign up for a Spotify monthly subscription and use Spotify just to listen to podcasts instead of streaming music, which Spotify has to pay rights holders for, Spotify makes way more money. the more people they can habituate to listening to podcasts on Spotify, the better. And now the mystery of the driverless Tesla car crash. And I mean literally driverless, quoting intelligentser. A Tesla crashed into a tree in a Houston suburb Saturday night, leaving its two male passengers dead when the flames of the burning car were finally extinguished after four hours. The wreckage also left behind a mystery that is so far puzzled Tesla drivers,

Starting point is 00:04:29 investors, and the company itself. Neither one of the men in the car had been sitting behind the wheel. That was the conclusion reached by police on the scene, who found one body in the back seat and another in the passenger seat and were, quote, 100% certain that no one was in the driver's seat driving that vehicle at the time of impact, and quote, an official told local news station K-H-O-U. Authorities say the model S-S sedan was traveling at high speed when it failed to negotiate a turn and hit a tree head-on. While Tesla has not released a statement about the crash nor responded to request for comment from this or any other media outlet, its CEO Elon Musk offered some clues and raised even

Starting point is 00:05:09 more questions in responding to a tweet earlier this week. The car's owner had not purchased Tesla's full self-driving capability, Musk wrote, a $10,000 ad on that the company says can steer the car through lane changes, slow down at red lights, and park automatically. and the data logs that Tesla had recovered from the car, quote, so far show autopilot was not enabled, end quote, Musk wrote, referring to a more basic feature that can put the car into cruise control and help take over the steering. Tesla's instructions explain that the features still require active supervision. A driver must agree to keep their hands on the wheel to turn on autopilot and do not make the vehicle autonomous. If Musk is right, an autopilot was never turned on,

Starting point is 00:05:54 it makes even less sense why the owner got into the backseat just as it left the driveway, as a brother-in-law of one of the victims told another local news channel, KPRC, too. Did he think he'd turned on autopilot but actually tragically failed to do so? End quote. Or is there another weirder possibility here? Have people been essentially tricking their Teslas into driving them, not only autonomously, but almost completely, I don't know, passenger-less, people-less, human-less? Suspitions of such led consumer reports to test the hunch and announced yesterday that it was, quote, easily able to trick Tesla's autopilot system to operate without anyone in the driver's seat, quoting the verge. Using a weighted chain attached to the steering wheel to simulate the pressure of the driver's hands,

Starting point is 00:06:43 two consumer reports researchers were able to use the steering wheel dial on a Tesla Model Y to accelerate from a full stop and then drive around a closed course test track for several miles, all while sitting in the passenger seat and back seat. They stopped the vehicle by again using the dial to bring the speed back down to zero. Tricking the Tesla to operate without someone behind the wheel was as simple as keeping the driver's seatbelt buckled, not opening the driver's side door during the test, and using the weight to simulate hands on the steering wheel. Quote, the car drove up and down the half-mile lane of our track repeatedly, never noting that no one was in the driver's seat, never noting that there was no one touching the steering wheel, never noting there was no weight on the seat.

Starting point is 00:07:25 Jake Fisher, Consumer Reports, Senior Director of Auto Testing said in a statement, it was a bit frightening when we realized how easy it was to defeat the safeguards, which we proved were clearly insufficient, end quote. Fisher also warned against trying to similarly trick Tesla's autopilot, noting this experiment should not be attempted by anyone but a trained professional. In addition to conducting the test on a closed course, consumer reports also had safety crews standing by and never exceeded 30 miles per hour. Let me be clear, anyone who uses autopilot on the road without someone in the driver's seat is putting themselves and others in imminent danger, Fisher says.

Starting point is 00:08:00 The track on which Consumer Reports conducted its test had painted lanes, which Tesla CEO Elon Musk has claimed autopilot needs in order to operate. His response to the crash in Spring, Texas, in which two men were killed and what authorities have described as a driverless Tesla Model S, noted that the road they were on did not have painted lines. However, some Tesla drivers have demonstrated that autopilot works on roads without painted lanes. Federal crash investigators are now examining the crash in Texas. Musk also claimed that data logs recovered from the crash model S, quote, so far show autopilot was not enabled, end quote, but research has shown that autopilot can turn off unexpectedly without notifying the driver, quote, autopilot makes mistakes.

Starting point is 00:08:43 and when it encounters a situation it cannot negotiate, it can immediately shut itself off, Fisher said. If the driver isn't ready to react quickly, it can end in a crash, end quote. When we started this show three years ago, an earning season would roll around, there were always two companies that seemed to consistently disappoint investors, Twitter and Snap. So I just want to take note of how much Snap has turned things around, at least if we're using investor sentiment as a yardstick. Snap's Q1 revenue, which was announced yesterday, was up. 66% year over year. Its daily active users were up 22% year over year. And that was the biggest thing for

Starting point is 00:09:26 Snap a few years ago, if you'll remember. Snapchat's users were flat, sometimes even shrinking. That was a problem, but also losing money was a perennial problem. So it's worth noting that free cash flow at Snap hit $126 million, making Q1 the first quarter of free positive cash flow for Snap as a public company. And remember that other big problem, that terrible Android redesign, Quoting CNBC. Snap expects year-over-year revenue growth of 80 to 85% for the second quarter. Snap Chief Financial Officer Derek Anderson said in prepared remarks, a significant acceleration from the 66% annualized revenue growth at Saul in Q1.

Starting point is 00:10:02 The company also expects to reach approximately 290 million Dows in the second quarter, up from 280 million in Q1. Snap CEO Evan Spiegel also announced that Snapchat's Android user base is now larger than its iOS user base. Spiegel called that inversion, quote, a critical milestone that reflects the long-term value of the investment we made to rebuild our Android application, end quote. It's also a significant milestone for Snap because it blamed problems with its Android app for lackluster growth in the first few years after its IPO, end quote. So, you know, kudos for writing the wrongs, I guess. That's sort of leadership, the ability to turn things around, maybe doesn't get as much attention. But it is in many

Starting point is 00:10:41 ways more impressive than simply being a founder or an inventor of something, creating a company is a hard thing to do, but building a long-term, viable, and healthy company is ever harder. Quoting Zoe Schaiman on Twitter, quote, been saying for a while, but don't sleep on Snap. Their ambition, their focus, and the ecosystem they're building out are all insanely impressive, end quote. And quoting Ashley Carman, Clubhouse got to launch that Android app quick because look at Snap now, after it waited years to launch a non-buggy functional Android app,

Starting point is 00:11:15 end quote. Time for the weekend long read suggestions. And this week, it's kind of just a laundry list of narratives and trends we've been following recently, fleshed out with greater color and magnification, of course. Netflix's earnings, for example, weren't that great this week. Subscriber ads were artificially inflated by lockdowns over the last year, and now that those are ending, the company is back to facing a completely saturated U.S. market where there are a slew of competitors now. So Netflix and everyone else are aggressively turned. to overseas markets for growth, quoting the Wall Street Journal. Following the lead of Netflix, companies such as Walt Disney and Amazon are pulling away from the production and distribution model

Starting point is 00:11:59 of old, in which Hollywood shipped its movies and TV shows abroad with the content dubbed or subtitled for the local market. Now, with a direct line to consumers through global streaming platforms, these companies are investing billions of dollars to make culturally specific local language content to woo subscribers. What you're seeing is more and more. streamers come online realizing the vast majority of their customers are going to be outside the U.S. over time, said Eric Barmak, a former Netflix executive who, during his tenure at the company, spearheaded international production. The question is, how international does your content need to be to be successful, end quote. The rise in overseas production is spurring a historic boom of

Starting point is 00:12:41 new films and TV series in many different languages, including Hindi, French, Portuguese, German, and Polish. The emphasis on global content is creating more work. and competition for international producers and storytellers, while also ushering in a new era in which Hollywood-made American content plays a smaller role in the worldwide entertainment industry, end quote. This next one was probably too small a story for us to ever cover properly, but I did want to include this Business Insider profile of PetCare Startup Rover, because it's a company that a year ago right now, you'd have almost felt certain would not survive the COVID era. But now Rover is going public at a 1.35.

Starting point is 00:13:19 billion dollar valuation, and I want to try to lend an ear to stories like these, some of the COVID Times survival stories, quote, overnight business nearly evaporated. The country's first case of the coronavirus was confirmed in the Seattle area. The lockdown orders and social distancing guidelines meant many people were no longer traveling or going into an office, and they were at home to care for their pets. The company's revenues were slashed in half during the pandemic from $95 million in 2019 to $49 million last year, according to $8 million. According to $8,000, regulatory filing. We had a period of negative net sales, Easterly said. I never thought I'd see that, end quote. It's not rocket science. Rover slimmed down, did emergency layoffs, unfortunately, and then hunkered

Starting point is 00:14:03 down to try to write it all out. And in their case, the boom in quarantine puppy adoptions has been the wave that they've been riding to get out of the doldrums. Okay, here's a use case for virtual reality that I hadn't considered, but which makes a ton of sense now that I have. therapy, quoting the New York Times. Exxar Health is one of the few companies focusing on providing VR physical and occupational therapy at home. Based in Boston, it is covered by many insurance programs in Massachusetts and nationally by Medicare. The company is working to get more insurance companies to cover its services. Without insurance, people can pay $179 monthly for the headsets and two physical or occupational therapy appointments monthly from a panel of therapists the

Starting point is 00:14:46 company provides. The company has all of its programs registered with the FDA, said Around Orr, founder and chief executive. Not all the programs offered for VR rehab are games. Some clinics allow a patient to virtually practice real-life skills they may have trouble doing, such as grocery shopping or dishwashing, end quote. Next, I continue to be fascinated by how important one single company TSM has become not just for the entire tech industry, but for the entire geopolitical situation surrounding the silicon chip shortage. If you're Apple or Amazon or whomever and you want to design your own silicon, you go to TSMC to actually make it. And it's become so strategic, remember, that last week we war-gamed a scenario where China might actually be incentivized to invade Taiwan

Starting point is 00:15:32 just to grab TSM's fabs. This one is not so much a long read as it is 10 cool charts from Bloomberg that explained TSM's business at this moment in time. Next, if you want, a long-ish explainer of why the chip shortage is proving so confounding, the Wall Street Journal has you covered, quote, On top of a spike in demand, producers have been hamstrung by a series of freak events that have knocked out supply while ongoing U.S.-China political frictions and concerns of a prolonged shortage have prompted some manufacturers to stockpile chips. The current shortfall includes the less advanced chips that the industry's biggest players

Starting point is 00:16:09 have been pulling away from to pursue higher margin cutting edge. chips. Building new production capacity usually takes years. That could slow down the post-pandemic recovery for certain industries that use the chips that are looking to take advantage of rising consumer spending. It also feeds into inflation concerns as higher chip costs can stoke prices throughout the economy, end quote. And we started talking about supply chain issues revolving around trade wars, especially between the U.S. and China about a year and a half ago, wondering if Apple especially might need to diversify its supply chain beyond its heavy reliance on China. Well, Apple pundit Neil Seibart looks at how that's going in one of his free above Avalon posts this week,

Starting point is 00:16:51 quote, as for some of the finer strategy details found with Apple's move instead of announcing a big change like we are moving all iPhone production out of China, which Western media has been demanding for years, Apple is taking the more practical and intelligent approach. The company remains careful not to disrupt its existing assembly appellation. apparatus. The vast majority of product assembly remains in China. Apple has looked outside of China to handle assembly for newer products that sell in much lower volumes, at least relative to the iPhone. Such decisions involve a comprehensive examination of not just product assemblers, Foxcon, Pegatron, Luxhare, Wistron, but also the ability of key suppliers to work with the diversification

Starting point is 00:17:33 efforts. Apple benefits from having resources and assets close to assemblers. Looking down the road, it is reasonable to expect a growing percentage of Apple products will be assembled outside of China. It is even likely that Apple will bring manufacturing back to the U.S., and we would be talking something much larger than the Mac Pro. Instead of iPhones and iPads being made in Alabama, Georgia, or Tennessee, it is more likely that Apple cars will one day be produced in sprawling plants that are owned by third parties, but contain Apple-owned machinery and equipment, end quote. And finally today, we spoke about Spotify's moves and podcasting at the top of the show. but as Spotify as a company turns 15 years old, it's worth looking back on its impact on the music industry, quoting variety. Ask any executive what the music business was like in the 2000s, and their face may take on an expression more commonly associated with narrowly averted disasters like car accidents or more accurately attempted robberies. But streaming led by Spotify, the brainchild of Swedish entrepreneurs Daniel Eck and Martin Lawrenston, changed all that.

Starting point is 00:18:35 founded in Stockholm on April 23rd, 2006, and seeking a solution to the industry's privacy problem, the on-demand audio streaming service was built on the understanding that consumers who aren't inclined to buy a specific album or song might be willing to pay for ease of access to a large library of music. How completely has streaming transformed the music world? The platform rose from 7% of the U.S. market in 2010 to a whopping 83% by the end of 2020, and recorded music revenues saw their fifth consecutive year of growth, topping $12.2 billion per the RIAA. It is no understatement to say that streaming saved the recorded music business and that global market leader Spotify led the charge towards the stability and growth

Starting point is 00:19:20 that the industry is enjoying today. In honor of the game-changing digital service provider's 15th anniversary, variety breaks down 15 innovations, transformations, modifications, and other ways. Spotify has changed how people consume music and brought new functionalities to its platform. end quote. So for the weekend, ride home plus subscribers have a new interesting raise episode, which includes among eight other interesting raises, a startup that is maybe the most audacious I've seen in a while. They want to bring the whole buy now, pay later fintech fad to U.S. healthcare costs. And everybody will get the great Twitter space recording we did with a whole bunch of great folks pouring over the spring Apple event, the whole product roadmap for Apple going

Starting point is 00:20:11 forward. And yes, the Apple podcast news in depth. Enjoy that. Talk to you on Monday.

Tech Brew Ride Home - Fri. 04/23 – Spotify Quick To Counter Apple’s Podcast Moves

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