Tech Brew Ride Home - Thu. 03/04 – Is Square Buying Tidal A Watershed Moment For The Creator Economy?

Episode Date: March 4, 2021

Square is acquiring a majority stake in Tidal, and either this makes little sense, or it’s a watershed moment in this NFT/creator economy phenomenon that’s suddenly washing over all of us. Apple walks the walk in terms of data portability. But they’re facing serious new anti-trust scrutiny in the UK and Arizona. And our year of Covid, at least measured in internet traffic numbers. Sponsors: Masterworks.io, promocode ride LinkedIn.com/ride Links: Square acquires majority of Tidal, Jay-Z’s streaming service, in $297 million deal. (NYTimes) Apple Launches Service for Transferring iCloud Photos and Videos to Google Photos (MacRumors) Apple Probed by U.K. as App Store Payments Scrutiny Mounts (Bloomberg) Arizona App Store Bill (The Verge) Ethereum now an option on Amazon’s managed blockchain service (The Block) Comcast: Pandemic drove peak internet traffic up 32% in 2020 (VentureBeat) Learn more about your ad choices. Visit megaphone.fm/adchoices

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 Tech meme right home for Thursday, March 4th, 2021. I'm Brian McCullough today. Square is acquiring a majority stake in title. And either this makes little sense at all, or it's a watershed moment in this NFT slash creator economy phenomenon that's suddenly washing over all of us. Apple walks the walk in terms of data portability, but they're facing serious new antitrust scrutiny in the UK and Arizona.

And our year of COVID, at least as measured by internet traffic numbers. Here's what you missed today in the world of tech. Square got a lot of people to do double takes this morning by announcing that it is acquiring, quote, a significant majority stake in Jay-Z's streaming music service title for $297 million. Jay-Z will also join Square's board of directors, quoting the New York Times. Title, which Jay-Z bought in partnership with other artists in 2015 for $56 million, provides members access to music, music videos, and exclusive content from artists, but the streaming music industry has been dominated by competitors like Spotify, Apple, and Amazon. In 2017, JZ sold 33%

of the company to Sprint for an undisclosed amount after a merger Sprint is now a part of T-Mobile. Earlier this week, Jay-Z bought back the shares from T-Mobile, and most will be sold on to Square as part of this deal. Mr. Dorsey and Jay-Z began to discuss the acquisition, quote, a few months ago, said Jesse Dorogusker, a Square executive who will lead title on an interim basis. It started as a conversation between the two of them, he said. They found that sense of common purpose, end quote. Mr. Dorogusker said Square, which was founded in 2009, will offer financial tools to help titles artists collect revenue and manage their finances. Quote, there are other tools they need to be successful and that were going to build for them, he said, end quote.

So this is one of those stories where the speculation and shableness. around it is almost as interesting as the news itself. First, of course, you've got the celebrity angle, Jay-Z and Jack Dorsey. It actually turns out that they are good buds. They vacationed together. You might have seen those yacht pictures from the paparazzi. Okay, but Square, a payments company, and title, a music streaming service of somewhat dubious success. How does a tie-up between them make any kind of sense? Here's what Jack Dorsey himself had to say, quote, It comes down to a simple idea, finding new ways for artists to support their work. New ideas are found at the intersections, and we believe there's a compelling one between music

and the economy. Making the economy work for artists is similar to what Square has done for sellers. Square started 12 years ago by giving small sellers a simple tool in order to participate more fully in the economy and grow. We did the same for individuals with Cash App, which now enables a comprehensive set of financial services for folks who weren't able to access it before. title started with the idea of honoring artists by being artists owned and led focused on an uncompromised experience of the art. It's refreshing and right. The vision only grows stronger as it's matched with more powerful tools for artists, inclusive of new ways of getting paid. Given what Square has been able to do for sellers of all sizes and individuals through cash app,

we believe we can now work for artists to see the same success for them and us. We're going to start small and focus with the most critical needs of artists and growing their fan bases, end quote. So he doesn't exactly say it there, but everyone is reading between the lines, looking around at this current NFT madness and remembering, though I didn't tell you about this, that Jack Dorsey and Jay-Z recently announced they were creating an endowment with 500 Bitcoins worth $23 million plus to fund teams working on Bitcoin development initially in Africa and India, and so everyone's thinking this is a crypto play, as Peter Kafka tweeted, quote, I would be surprised if there wasn't an NFT story here. That fits the Jack story and seems to be what

he's hinting at in his tweets. But again, you don't need to own title to sell Jay-Z's NFTs. This would be weird if Square was buying a music streaming service that people actually used, but it's much weirder. It's a publicly traded financial services company buying a failed music streaming company. I guess Square shareholders won't complain because they've already signed on for the Jack Dorsey experience, but whatever awesome artists and Square story Jack is promising here doesn't require a $300 million payout to Jay-Z, end quote. Other people can see other angles here. Let me give you some countertakes. This is Jason Del Rey, quote, plenty of people on the square buying title is dumb side, but I'll be on the other end. Could it be a mistake? Could it be a mistake?

Sure. Is the deal relationship-based? Sure, many are. But Square has done incredible things for small merchants and for everyday people with cash, so why not artists? End quote. This is Scott Belski, quote. For a big company to create an entirely new center of gravity inside it, you need a forcing function. With this lens and the growing need to outfit the creator economy with financial tools, this seems a logical step for Square, end quote. This is Dare Obasanjo, quote. Quere acquiring title to focus on new ways for artists to monetize is going to be seen as the watershed moment of the creator economy. We're tilting away from platforms capturing all the value to the people creating the content doing so directly for fans or indirectly via ads, end quote. And finally, Turner Novak goes really, really wild, but then it doesn't actually seem all that wild when you say it out loud and then think about it, especially when you see the products that Twitter has been building out lately. Newsletters, spaces, quote, Jack went so deep into the creator economy with Twitter the past six months, it leaked into Square. A great acquisition that will 10x everything

Square has been doing with consumer user acquisition. Not outrageous to think he merges Square and Twitter at some point, end quote. This is incredibly useful news to me, at least, since I've been putting together actual family photo albums recently. But also, it's just great to see Someone put their money where their mouth is in terms of data portability. Apple has debuted a service to let users transfer their I-Cloud photos and videos to other services, including Google Photos, quoting Mac rumors. As outlined in Apple support documents, you can go to Apple's privacy website and sign in to see the transfer a copy of your data option.

If you select this and go through all the steps, Apple will transfer your ICloud photos and videos to Google Photos, transferring photos and videos from iCloud photos does not remove the content you have stored with Apple, but it provides a backup method and stores a copy of the content on Google Photos. The transfer process takes between three and seven days, with Apple verifying that the request was made by you. To do the transfer, you have to have two-factor authentication turned on for your Apple ID account, and you must have a Google Photos account with enough storage to complete the transfer. Apple's transfer service is available to customers in Australia, Canada, the European Union, Iceland,

Liechtenstein, New Zealand, Norway, Switzerland, the United Kingdom, and the United States at this time, end quote. On the antitrust watch, authorities in the UK say they plan to investigate Apple's App Store to probe whether it is abusing its market power to restrict competition. Quoting from Bloomberg, the Competition and Markets Authority said it will focus on how Apple forces customers to use its own payment system for in-app purchases and will weigh the company's potentially dominant position in the supply of apps on iPhones and iPads. Complaints that Apple is using its market position to set terms, which are unfair or may restrict competition and choice, potentially causing customers to lose out when buying and using apps, weren't careful scrutiny, said Andrea Koskelly, who leads this CMA.

The probe adds to growing U.S. and EU antitrust scrutiny of Apple's rules that require apps to use its own in-app payment system. Apple's control of payments allows it to enforce a subscription fee of up to 30% for some subscriptions. The Dutch Competition Authority is also examining whether users get a free choice of payments on phones that restrict rival contactless payments, such as Apple phones. The Apple probe comes as the UK watchdog seeks to move to the forefront of tech regulation after emerging from the shadow of European Union regulators at the end of Britain's Brexit transition. It is preparing to set up a tech-focused unit and has warned that the largest companies will face extra scrutiny of everything from mergers to monopoly behavior, end quote.

Speaking of, do you remember when it looked like briefly there was going to be a bill making its way through the North Dakota legislature that might put the Smackdown on Apple's App Store rules? The bill was defeated, but the Arizona House of Representatives has passed bill. HB 2005, which would force Apple and Google to let apps in their app stores use alternative payment methods. The bill now heads to the Arizona Senate. You might recall that it was in the Senate where the North Dakota bill died, quoting the verge. The legislation, a sweeping amendment to Arizona's existing HB 2005, prevents app store operators from forcing a developer based in the state to use a preferred payment system, putting up a significant roadblock to Apple and Google's ability to collect commissions on in-app purchases and app sales. It will now head to the State Senate where it must pass before

it is sent to Arizona Governor Doug Ducey. The amendment specifically prohibits stores exceeding one million downloads from requiring, quote, a developer that is domiciled in the state to use a particular in-application payment system as the exclusive mode of accretive payments from a user, end quote. It also covers users living in Arizona from having to pay for apps using exclusive payment systems, though it's not immediately clear if that means developers outside Arizona can avoid paying commission to Apple and Google when they sell something to a state resident. The bill specifically exempts game consoles, quote, and other special purpose devices that are connected to the internet, end quote, and it also bars companies like Apple and Google from retaliating against developers who choose to use third-party payment systems. The amendment narrowly passed the Arizona House Appropriations Committee last week in a 7-6 vote, which sent it to the floor of the state's House of Representatives for a full vote on Wednesday.

Notable opponents of the bill have been Arizona Democrats who've argued that state legislatures shouldn't get involved in ongoing legal matters between companies in reference to ongoing antitrust lawsuits between Apple and Google and companies like Fortnite Maker Epic Games. There was also concerned the bill would interfere with interstate commerce and raise unconstitutionality claims, end quote. Is it just me, or can anyone else not make heads or tails these days of the politics of tech antitrust stuff, at least in terms of which party might be in favor or against which types of regulations? Well, this will be additional fuel on the fire for the NFT phenomenon. Amazon Web Services announced that Ethereum is now available on its Amazon-managed blockchain service, allowing users to set up Ethereum nodes, quoting the block. With this launch, AWS customers can easily provision Ethereum nodes in minutes

and connect to the public Ethereum main network and test networks such as Rick B and Robsden. Amazon said in its blog post, quote, With Amazon managed blockchain, customers get secure networking, encryption at rest, and transport, secure access to the network via standard open source Ethereum APIs, fast and reliable sinks to the Ethereum blockchain and durable elastic storage for ledger data, end quote. Amazon first began providing blockchain-related services back in 2019, which gave customers initial access to blockchain networks, nodes, decentralized applications, and smart contracts. In addition to Ethereum, managed blockchain also supports HyperLedger, a permissioned blockchain software

developed by a consortium of companies and organizations. This service was first only available to customers on the east coast of the United States, but now customers can access Ethereum across the AWS regions in the eastern U.S., Asia Pacific, and Europe, end quote. Finally, today we've got a reasonable snapshot of our year of COVID, at least through a tech lens. Comcast says that peak U.S. internet traffic rose 32% in 2020 over pre-pandemic level traffic. Video streaming, as its own category, rose 70% compared to 2019, quoting Venture Beat. Peak downstream traffic in 2020 increased 38% over 2019 levels, and peak upstream traffic

increased 56% over 2019. Despite the growth in upstream traffic, traffic patterns remained highly asymmetrical, as downstream traffic volumes were 14 times higher than upstream traffic volumes throughout 2020. Surprisingly, despite increases in video conferencing activity, entertainment activities continued to dominate network traffic with video streaming, accounting for 71% of all downstream traffic and growing by 70%. percent over 2019 levels. Other key drivers of downstream traffic in 2020 were online gaming and the accompanying software downloads, 10 percent, and web browsing, 8 percent. Despite experiencing growth, video conferencing traffic still only accounted for less than 5 percent of overall

network usage. For the first time, as Comcast customers surfed, streamed, and emailed more than ever before, they generated over a trillion internet requests DNS lookups each and every day, end quote. So our podcast, NFT, got a tiny little bit of press overnight. People seem to believe it is the first of its kind, or at least I will continue to believe that until I see evidence to the contrary, have gotten a few bids on it, and, you know, frankly, it's just been super valuable as a learning experience so far. What I've learned is, it's not very reliable yet to do this. It took a couple of tries just to mint the damn thing. And folks bidding on it have told me that it takes several false starts just to place their bids. And as I write this, I can't even get rarable to load

in order to see what the bidding has gotten up to. I'll definitely accept at least one of the bids at some point soon, just so we can see how this process works in terms of, you know, change of ownership, chain of providence, that sort of thing. Given the square title news today, one of the things that I've learned by doing this is super interesting. I can accept a bid, of course, and sell the NFT to someone, and I'll get paid the ETH for selling the ownership stake. But I also set it so that down the road, if the NFT changes hands again, I, as the original creator, get 20% of each sale.

It's built right into the contract. No one can change the terms, and I don't even have to lift a finger. If money changes hands, the ETH is automatically deposited into my wallet. So I think you can see and connect the dots how this might be appealing to, I don't know, streaming music artists. Yeah, sort of starting to have a oh moment around all this, aren't we? Talk to you tomorrow.