Digital DNA

ReadWriteWeb just posted a list of 18 music streaming services. Good list, though it is missing a few subscription based services (like Rhapsody) and services that are well known within certain territories (like We7 in the UK). It also doesn’t make a differentiation between the licensed services (legal) and the more questionable services.

Last week saw the inaugural TechCrunch Europe Awards – baptised the Europas – announce its shortlist and winners. Judging by all the tweets on the day, it sounded like a great bash. I really need to go next year!

The thing that struck me most was the success of entertainment-based services (Spotify, Songkick, Songcloud are just three examples) and specifically the adulation that Spotify received. They were the clear winners on the night. I love seeing European companies getting traction and being rewarded for their success, however, I am a little perplexed that a service like Spotify, which is ultimately just another way of streaming content, had so much success. There is a real question mark over the long term viability of any content delivery service that doesn’t own its content – no matter how brilliantly intuitive or designed it is (and Spotify is both!).

My belief is the future will see us all have access to any music and video, any where and at any time. And the beauty (for consumers) and problem (for content services) with this is that if we can easily access all music on Spotify and We7 and Last.fm and any other newcomer in this space, what stops me from jumping from one to the other depending on what’s cheapest or coolest or best integrated? It’s not like you loose all of your music if you move to the next coolest music or video service, so what is it that keeps me there?

Last.fm developed a music social network, We7 have been attracting users by hosting exclusive content for a limited period and Spotify have focused on the simplicity of their UI and quality of the files. But is this enough to keep the technophile music fans from jumping ship next time another service launches?

Every week there’s a news alert about ‘ad funded music services’ Spotify or We7 reaching new milestones for user numbers. Last week Spotify announced 2 million UK users, this week it’s We7′s turn to announce 2 million unique users.

I am chuffed to bits to see two European-based music businesses growing so rapidly. These guys have clearly demonstrated that there is a demand for free (and legal) music which is effortlessly available on the web/desktop. This demand will ultimately lead to us having access to all entertainment content at any time on any device. There are still many distribution, rights and business model issues that need to be sorted before this happens, but it will happen.

So, once digital distribution has been sorted, the businesses that will thrive will be those who have also sussed out digital demand. In a world where everything is available to everybody at any time and on any device, demand is no longer based on what is available, but on what content is most relevant to us at that specific time. We will need smart filters that serve up relevant content to us based on location, time, entourage, past activity, tastes and mood.

That is why I am so excited about the work that my team is doing at The Filter. For the last 5 years we have been developing recommendation and relevance technologies for all types of digital content that use multiple inputs (consumption data, meta data, location, time zone, social data, etc…) to build models that enable us to work out the probability of what content goes with what situation – by using behaviour and mashing it up with meta data to provide a user with the most relevant content possible for them.

I am very proud that we have proven beyond any doubt that providing users with relevant choices of content leads to an increase in consumption per visit AND an increase in the number of visits because the user finds more content that they like at each visit. Over the last 12 months partners that use The Filter on their sites have seen uplifts in consumption of 15-20% based on increases in streams per visit and visits per week. And for us, it is just the start. As we get access to more data (using location on mobiles) and fine tune our engines, technologies like this will provide better content choices to individuals leading to more consumption.