Timbaland interview – Ahead of the game

This is a REAL and honest interview with producer Timbaland. I can’t say that I’m a huge fan of Timbaland’s work, but I like his beats on various songs and albums such as Missy Elliot’s albums.  He’s worked with Jay-Z, Kanye West, Justin Timberlake, Justin Bieber, One Republic, Magoo, Drake, Aaliyah. Literally a who’s who of the music scene.

His sound is so unique and in the interview, one of the hosts says “your work is 3 – 4 years ahead of its time”.

A lot of the things he said in the interview resonated with me. He has this startup mentality – being the underdog and never felt appreciated by the music executives. They didn’t want to put out his music and they made decisions based on what they thought about his music, even though he was working hard late at night perfecting his craft and logging time in the studio when they were at home. He just wanted his music to be judged by the public and kept saying “you don’t know what it takes to get my music to you (the public)”.

I love his story about how he met Jay-Z and didn’t know who Jay-Z was. They went into the studio together and Timbaland produced a beat for him. Then he realised Timbaland was the truth. When Jay-Z came over and rapped some lines, Timbaland asked him “where have you written it down?”. Jay-Z looked at him with a quizzed look and indicated that he doesn’t write it down. Then he realised that Jay-Z was on another level from the ordinary rapper.

I’m out like writing down your lines,

Matt Ho

Is Spotify Profitable?

I just wrote an answer on the profitability of the music subscription model on Silicon Beach. I used Spotify as my example, cause that’s the one I’m familiar with and most high profile. Here is my full answer in case you are not a member of Silicon Beach.


Many organisations are banking on the paid subscription model – from music, news, movies etc..whether its the answer is another question.

Clay Shirky understands this better than most people. He explains the paid content model, comparing music subscription vs news subscription model here:


I have also been thinking about the music subscription model today. Apple has a whole ecosystem supporting the music experience. People will pay for this convenience and experience.

In terms of music, lets use Spotify as an example since they are most likely to extract value from the rest of the value chain. Is Spotify profitable?

Spotify has 10million users. News articles suggest they have approx 650,000 paying subscribers (~ 1 in 20 paying).



90% of users pay $10 Euros/month = $120 Euros yearly
10% of users pay $5 Euros/month = $60 Euros yearly

On a revenue basis, Spotify generated $74m Euros last year on music  subscriptions alone.


Gigaom reckons that Spotify made $58m in advertising. I take this with a pound of salt cause I don’t see how this could be true. My estimates below are based on the low side.

I project the following revenue streams:

– Advertising (PPC): 10m users x 1% of users click on ads x $0.02 x
365 days = $730k/year

– Ticket sales: $5 commission x 10m users x 1% purchasing yearly =
$500k/year. Using the average Posse commission prices.

– Merchandise: $20 tshirt x 10% commission x 10m users x 1% purchasing
yearly = $200k/year

That’s roughly $76m in revenue.


The only cost that’s public is music royalties at $30m. That leaves $46m on table.

I wouldn’t think the operating cost of a lean startup business would be any more than 40% of remaining revenues (assuming 20 staff, low overheads). Opex = $46m x40% = $18m.

Total profit is = 76m – 30m – 18m = $28m profit.

So in short, their music subscription model is profitable.

I’m sure they’ll have other revenue streams from deals with mobile companies. I think that’s where the real value is for Spotify – the mobile apps. People will subscribe to this. They probably need to get it to 10% – 20% of paying users (currently at 5%). Their push into the US is more likely to build a barrier to competition cause it will prevent other people from moving in.

I’m out like Myspace,

Matt Ho.

Link Love – Posse, Adioso, Boxee, Myspace

What I’m reading / checking out.

1. Travel + social discovery – great blog post by one of my buddies @pkattera. I was going to write about Adioso and Hipmunk as well, and his insights into how social serendipity and your social networks can influence your travel destinations are quite interesting. Yes, you should blog more!

2. Dear Mom and Dad – The first one is by Zach Klein, who founded Vimeo (think Youtube for HD videos). His current project is Boxee. If you know me, you’ve probably heard me talking about Boxee – great program. The blog post above is about social discovery, well Boxee helps you discover online video content and organises your media. Dear Mum This Is Why I moved To New York is another blog post by an employee of Boxee, Nick Crocker. He’s actually an Aussie who moved to New York. He co-founded We Are Hunted (another website I like).

3. Promote concerts using Posse – Came across this site a few months ago. It allows fans of music artists to promote concerts to their friends. You can generate money by selling tickets. In a way its like crowdsourcing promoters for concerts and generating a groundswell. The selection was initially quite limited, but it looks like its expanding. Win win for the artists and fans. The tech startup firm Pollenizer worked on this and Mitch Malone who I’ve met at Cebit is one of the devs at Posse.

4. News Corp to create iPad only newspaper. Magazines and newspapers have translated really well to this form factor. Question is whether an iPad only newspaper will get enough traction. As most of the iPad newspapers generally have an offline offering, but is also available through other online channels, predominatly a website.

5. I thought this was pretty funny – MySpace forced to offer FaceBook Connect. MySpace capitulated to FaceBook, but did they really have a choice? They had to allow it –  its the biggest social network. As has been written by many people smarter than me like Mark Mulligan, MySpace needs to reposition itself as a music social network not as a cool place for early adopters which aggregates your social information. Embrace it MySpace or die like Friendster. Oh, and the new logo sucks as well.

I’m out like Friendster,

Matt Ho

You Gotta Stream

Some of you may remember the popular Rheem ads from the 90’s with the tagline “install a rheem“. Well in today’s online age, “You Gotta Stream!”.

I have been meaning to write about this topic for a long time. The linchpin has been discovering this presentation via Mark Cuban’s blog, who knows a thing or two about online video himself given he is the chairman of HDNet and sold Broadcast.com for a bajillion dollars.

This slide deck is from Netflix. Its very honest and insightful into where this company is going, the opportunities, the threats and the future of entertainment. Check it.

Continue reading

Empire state of mind spoofs – New Dorks & Sydney State of Mind

Lovin’ these Empire state of mind spoof videos……I can relate to both of them. I love how people can mash up content, remix it, spit it out again and create their own unique versions. More power to the user! It makes the songs more well known, the artists get more plays and fans are introduced to the original song. Its the remix culture!

This is the local version, Sydney State of Mind which my friend Cheryl sent to me recently. I actually heard them mixing / playing it in the Nova station. Check it!

Yeah, Im out a Blacktown, now Im in Maroubra,
Right next to the Seals, Im Sydney forever,
Used to live in Newtown, couldnt dig the people there,
With the crazy coloured hair and you can always see their underwear,

So I hit up Carringbah, did my time at bizzos,
Saw some good bands and did some talking with my fists though
Started work at Panthers, uniforms an insult,
Still remembered as the Tiger Woods of Aqua Golf

I’m out like Empire State of Mind remixes,

Matt Ho.

U2 Concert On Youtube – the possibilities!

Youtube concert

Youtube concert

At approximately 2.30pm on Monday AEST, U2 staged the first live streaming Youtube concert online. And I witnessed it!!

U2 is easily one of the world’s best known bands. It’s probably not the first band to stream a concernt online, but the first of the major bands to do so and to such a large audience. I’m by no means a huge fan of U2, but I wanted to be part of this historic and momentous event. Plus I got to watch a concert for free!

I tuned in for about 2 hours and watched it in between doing work. I had it streaming in the background and witnessed an awesome concert unfold. They played a lot of songs that I was familiar with but didn’t know the names of and got me reacquainted with a lot of their music.

There was a bit of lag at times (about 3 or 4), but overall the streaming was smooth and there were heaps of different camera angles. Considering that there were in excess of 1.3 Million channel views, that was a pretty impressive job by Youtube. Their cloud servers must have been running at max capacity!

Monetisation Streams

As I was watching it, I was talking to my friend @dacheah about the monetisation possibilities. I feel that this was a public demonstration of Youtube’s streaming capabilities. This was a free concert, but imagine how much advertising, publicity, and album sales were made in the lead up, during the concert and post concert.

On the right side of the streaming video, you could purchase a download of the album off iTunes. Or donate to Bono’s Red charity or find out new information about their new album. These are just the direct actions you can take. By using iTunes it allows people to make an immediate purchase and receive the album on demand, an even cheaper distribution method.

But what happened indirectly?

They were able to bring in people like myself who aren’t big U2 fans into their music. Created new fans and advocates of the brand.

Given all that is happening in the music industry with the profileration of free downloads and pirating, there needs to be alternative money stream. Stream the concerts for free and entice people to purchase singles, albums and merchandise.

However, I think the biggest play would be to charge people access to live streaming concerts. This could be Youtube’s monetization model, have people pay $5  -10 to watch a world class concert. You could potentially have a subscription service as well, whereby people pay a yearly fee and get access to number of online streaming concerts. I’d also pay for this.

The ability to use streaming online video is now quite easy. We used it for our basketball game via Livestream (formerly Mogulus).

Back of the Envelope numbers

Using some general online stats that only 10% of people would pay for an online service, lets assume that 130,000 of the 1.3m viewers would have tuned in @ $5 a pop (lower end of the scale).

$5 per viewer x 130,000 number of viewers = $650,000  Revenue


Video Costs

1. Streaming costs

Youtube offers branded channel but their not cheap. If you advertise more than $80k with adwords, you can get it for free. They also have free accounts as well at the public level. But I feel that its going to be bundled together with streaming, storage space  similar to how Livestream and Ustream do it. Let’s do a yearly calc based on Livestream current costs:

1 Channel with 25GB streaming, HD up to 1.7 MPS: $350 a month

20 premium channels with 200GBs streaming, HD up to 1.7 MPS : $1,250 a month

I assume that there will be an option in the future for premium users for 1 Channel with 200 GBs available for larger concerts. It could possible use Google App Engine or Amazon EC2 which will bring the cost down. However, lets go with $1,250 since this is a publicly available cost. Give that 130,000 viewers watching video could potentially smash the server, lets multiply the cost of streaming by 5 fold to be ensure there is enough capacity to handle the extra traffic.

I’ve chosen a yearly fee because the band will want to maintain it and possibly do a number of concerts.

$1,250 per month x 5  x 12 months = $75,000

Note that this is a variable cost because it can be cancelled or use more/less bandwidth. But you will probably want to retain it and the more concerts you do, the more the cost will be spread.

2.  Camera crew for 2 hour concert

Camera crew will be needed for full day to prepare, stream and record,  dismantle stuff. This staff is in addition to existing sound crew. I don’t want the regular sound crew worrying about online streaming in addition to the concert as well.

This could be you

This could be you streamed online....

Lets say 5 are needed – one in the booth to check video, three camera people to give different shots (upclose, in the crowd, pan wide), maybe an extra sound guy. That’s 5. I use 8hrs for a full day required for a 2hr concert.

$80 p/h  x 8hrs x 5 staff =  $3,200

3. A couple of IT and social media guys

On standby to monitor streaming, computer/servers crashing, social media feedback, commenting, drive traffic – 3 staff. I’ve chosen the figure $120 an hour to get more quality staff with experience.

$120 an hour x 8 hrs x 3 staff = $2,400

Total costs

$75,000 streaming + $3,200 camera crew + $2,400 IT staff = $80,600

$650,000 Total Revenue – $80,600 Total Cost = $569,400

That’s approximately $570,000 profit.

I haven’t included advertising costs, but this could be done in conjunction with their concert promos i.e. a URL at the bottom of the concert poster, twitter updates / facebook updates, email, radio. The cost of this should not significantly increase current advertising spend.

Of course not all bands are going to have this kind of fan base like U2. Smaller bands can cut costs by hiring less staff, opt for a smaller online account, but I dont see how they couldn’t take advantage of this.

Plus you also need to add in the profit from ticket gate receipts, album sales, tshirt sales, iTunes downloads, etc….

Final Thoughts

Online streaming simply provides an additional revenue stream for music bands via concert. I’m sure some bands and event planners are concerned that people might not turn up to a concert if shown online for $5 instead of a concert ticket price of $130. But nothing beats seeing something live.

However, there is going to be a significant number of fans that can’t afford the ticket price, cannot make it due to work / commitments or are simply living overseas. Surely this can be monetized! Your providing them with the chance to also participate in the concert, be a part of the crowd, and sing along.

Side note: Youtube has also introduced paid search for video,  and the videos shows up as a sponsored link. There is also Google Music Search, which produces results for all the different music services.

I’m out like Mogulus,

Matthew Ho.

Bada Bingwa Bada Boom: Charmaine rocks the Civic

On arriving at the Civic Hotel, on the corner of Goulburn & Pitt St, everything was calm and as per usual. We headed downstairs and were told we needed to be on the guest list. I thought to myself, how many people would be turning up to Charmaine Bingwa’s EP launch?

After telling the door staff we registered via the web, we pointed to our names. Much darker than upstairs, we wandered in as the sounds of old school 90’s rnb tunes wafted through the doors. To my surprise, the place was 3/4 full. I wandered around looking for my friends and found them in the “pit”, this dancefloor area sunken into the ground, with raised bar around it. There was still nothing on stage, so we went to get some food on Pitt St.

On our eventual return to the Civic, the place was packed. Couldn’t even move around. As I brushed past the bodies, I made by way back to the pit. There definently was some buzz in the evening. Most people had RSVP’d via the facebook group or on Charmaine’s website. I suspect the majority of the crowd were friends or friends of friends. I came because my friend Neha (@twittledeeps) was a backup singer.

Charmaine Bingwa rocking the Civic Underground

Charmaine Bingwa rocking the Civic Underground

Charmaine came out the blocks with a Beyonce cover. Full of energy, she had that vibe goin’ on! She did a couple more tracks  including her own stuff and pulled out her red guitar. Sang and strummed the guitar at the same time. I always like it when a singer plays an instrument – she’s legit.

Oh yeah, and did I mention she had some crazy sneakers on – blingin sparkling aqua sneakers from General Pants.

It was a pretty good night. She definently has some potential, though not sure about the strength of her voice. I don’t think her tracks show off her range. It’s mostly “funk,rock, snap, crackle and pop” as she describes on her website. She’s been gigging for a year now and has an EP out. Something about her – she’s got the buzz. 

After she did her final song and walked out. I told G that she’d be back, he looked at me and said “nah, she’s done”. To which I responded, “if she’s worth her salt, she’ll come back out”. After a few minutes, some chanting, particularly from the groupie girls next to me, and a sneak peek through the curtain, they came back out. Charmaine did two more songs and called it a night. I’ll let her have the final word on the night:

Charmaine Bingwa on twitter

Charmaine Bingwa on twitter

She then came out and hugged some of the people, and I think some of the guys I was with were disappointed they didn’t get a hug too =p

I heard on the grapevine that she’s actually Zimbawean (G did a google search before he came).

$64 million dollar question – who does Charmaine Bingwa look like? 

She’s a dead ringer for Brandy – in fact some other people told me independently. Its the dreads and the chocolate coloured skin. In case your wondering – she is hot.




You can check her out on Myspace, twitter and her official website. 

I’m out like the Civic underground,

Inspiredworlds aka Matt.