Friction is the Problem with Apple Music, not Complexity

Note from Jan Dawson: I’m honored and grateful to announce that Aaron Miller, my co-host on the Beyond Devices Podcast, will be authoring some posts on the Beyond Devices blog going forward as well. This is the first of what I hope will become a series of posts over time. These posts will have a slightly different tone from the rest of the blog, and will be educational in nature, and frequently tied to research concepts – a concession to Aaron’s day job as a business school professor. To reflect that, these posts will be tagged “Studying Apple“. For more about Aaron, check out the About the Authors page.


Walt Mossberg and others seem to love Apple’s new Music service, but Mossberg’s (and others like David Pogue’s) complaint has been that the applications delivering it are too complex. The criticism applies to both Music on iOS and iTunes on the computer. There is a lot going on in Apple Music; there’s no denying it.

Complexity isn’t the problem, though. Friction is. You might call it a semantic difference, but if you do you’re missing out on an essential aspect of everything human beings make. It’s worth understanding the difference between something that’s complex and something that’s frictional.

User Interface Friction

These three points explain something called User Interface Friction (UIF):

  1. Attention is a scarce resource. Mental effort falls under a concept known as executive function. Simplified, executive function describes the many ways we focus our attention on things. We have a limited store of attention. We can only pay attention to a few things at a time. We can also use up our attention, our ability to focus. Time and rest restore it.
  2. Friction is wasted energy (and wasted attention). Although physical friction has its uses, in most situations friction is wasted energy. It’s a great analogy for users’ attention and software. All of your attention spent on an app should help toward your goal. Wasted attention is User Interface Friction. As excellently described in this article from Coding Horror, low UIF is a goal but some UIF is inevitable.
  3. UIF is affected by both users and the interface. Just like physical friction is a measure of how two surfaces interact, UIF is a measure of how users and interfaces interact. And as app interfaces can be metaphorically “smooth” or “bumpy”, users can also be smooth (expert) or bumpy (novice). Expert users can handle bumpier interfaces, because they’ve learned how to use them.

Obviously, software designers should try to minimize UIF as much as possible. Low friction makes an app more useful and more enjoyable, even if it’s something boring like a banking app. Software designers can even measure cognitive load while users interact with the app, and pinpoint where attention is overspent. (Here’s a 2006 article [PDF] describing ways to measure cognitive load for testing website usability. The Sternberg Memory Test is especially easy to use.) The idea is that if users have to overspend attention to accomplish something, then the interface needs improvement.

I’m not a user interface expert, so I can’t go very deep into the principles of good UI design that have developed over the years. (This Quora discussion is a good place to start.) But I know when I’m experiencing friction. A lot of the time it’s from bad design, but not always.

Some apps are necessarily “bumpy” because of how much they do. Final Cut Pro, for example, is a massively complex video editing application. It does things editors could only dream about a few decades ago. Because of this complexity, Final Cut Pro relies on expert users to reduce UIF. (This is part of the reason Final Cut X, a huge interface revamp, was so controversial.) To be sure, Apple shouldn’t waste editors attention, but it has the benefit of editors knowing how Final Cut Pro works.

Any app, no matter how bad, can be learned with time. That means we can become experts in poorly designed interfaces if we just stick with them. Lazy or poor app designers demand more expertise from users than necessary. Users generally abandon an app if the expertise cost is too high for them.

Apple Music and Friction

Generally, Apple users are not computing experts. That’s not an insult. It’s just the reality of having hundreds of millions of users. Apple’s success fundamentally comes from its ability to make low friction interfaces for very useful products.

Like any company, Apple runs into problems when its novice users are presented with complex products. This encounter puts Apple’s design chops to the test. But some things are just too complex to simplify for novices, and Apple requires users to develop some expertise.

There’s a lot of depth and complexity to Apple Music. Consider all that it does:

  1. Integrates a streaming music library with your owned music library.
  2. Helps you purchase music to make it part of your owned library.
  3. Provides extensive music recommendations—through curated playlists and suggested artists—based on your (complex) tastes.
  4. Brings new music to your attention, organized by multiple criteria.
  5. Plays multiple radio stations.
  6. Gives you a way to organize streaming and owned music in playlists.
  7. Allows you to search for music by multiple criteria.
  8. Gives you control over the play order of the music you’re listening to.
  9. Connects artists and fans, giving artists a way to share their work and lives through multiple media.

This list gets dramatically longer in the case of iTunes on the computer, because it includes movies, TV shows, podcasts, iTunes U, audiobooks, iOS apps, even more radio, and ringtones, along with all the different aspects of organizing, using, and purchasing those things. And let’s not forget all the device syncing, with multiple generations of iPods, iPhones, iPads, and even legacy MP3 players.

How do you keep all of that simple? I’m not convinced you can. Siri commands help some, but don’t get you all the way there. In the end, even the venerable Apple can only get the interface to a certain level of smoothness.

That doesn’t mean we should excuse Apple for bad UI design. iTunes 12 was a big change that introduced a lot of friction. (The money quote for our purposes: “But for now, iTunes 12’s most basic operation—finding and playing media—requires a lot more thought than it should” [emphasis added].)

So what has Apple decided to do with its Music apps? It apparently expects us to develop some expertise. Walt Mossberg and everyone else complaining about the friction in Apple Music also seem to love the value it provides. Apple designers, intentionally or not, are banking on our willingness to stick with it and get better at it.

That doesn’t mean we can’t complain about the friction, though. For me, the worst offender is the mysterious ellipsis button. (Who knows what combination of commands it reveals every time I tap on it? It’s like the UI equivalent of a slot machine.) Over time, we can all hope that Apple reduces the friction for its fundamentally complex Music service. In the end, making complex things frictionless is how Apple pays the bills.

Apple’s evolving PR strategy

This week on the Beyond Devices podcast (embedded below), we talked among other things about Apple’s evolving PR strategy, using the lens of the Apple Music launch as a way to illustrate how things have changed. I thought I’d do a quick write-up of that segment here too.

The old model

Under Steve Jobs and PR chief Katie Cotton (who retired from Apple last year), Apple’s PR strategy focused on two key components: tightly stage-managed events and announcements, and occasional “leaks” to favored publications, almost always off the record and quoted as being from unnamed sources. Executives did very few on the record interviews, and the media generally were given relatively little access to Apple behind the scenes for on the record stories.

The new model

With Steve Jobs’ passing and Katie Cotton’s retirement, we’re now in the Tim Cook / Steve Dowling era (Dowling was finally announced as the permanent head of PR after an interim period with no formal head of the department), and things are starting to change. The company seems looser and more open, with more access to executives, more communication on the record through other publications, and also more openness to new channels like Twitter.

Apple Music launch as the lens

I think Apple Music is a great lens for looking at all this, because it’s a good example of how some of these new approaches are coming into play. The launch is perhaps best thought of in phases (most of them likely planned, one certainly not):

  • WWDC keynote – the formal announcement
  • WWDC interviews – a range of interviews with publications at or right after WWDC
  • Taylor Swift – the blog post from Swift and the rapid response from Apple, which included more interviews
  • Blog posts and tweets from Apple personnel
  • The New York Times profile on Zane Lowe the week before launch
  • Reviews and interviews released the day of the launch
  • Post-launch activities.

WWDC

The WWDC keynote has been done to death elsewhere, so I won’t focus on that – it felt rushed and a bit unpolished, especially at the end, when the topic was Apple Music. But Apple provided access to Eddy Cue and Jimmy Iovine right after the keynote to a half-dozen publications, and these interviews focused on Apple Music, allowing Apple to provide more messaging and positioning around Apple Music and Beats 1 in particular. There were few new details here, except perhaps for some information about sponsorships on Beats 1, but there was a clear set of messages from the execs: Apple Music was about providing a service, not a utility, Beats 1 was about a human-driven experience in contrast to the algorithmic approaches of others, and wouldn’t be driven by market research but by gut feel, and Apple Music wasn’t about stealing subscribers from competitors but about growing paid streaming. Those messages didn’t necessarily come through as strongly in the keynote, but they came through very clearly in these interviews, about half of which were with music rather than tech publications (more on this later).

Taylor Swift

We covered the Taylor Swift incident in last week’s podcast, but the key things here were:

  • Apple responded incredibly quickly – on a Sunday, no less
  • The first official response came via Eddy Cue’s Twitter account, not an Apple press release – the first time Apple has broken news via the medium
  • Eddy Cue also made himself available for several interviews with publications on Sunday and Monday, to explain his / Apple’s reasoning and again provide messaging and positioning around the actions.

This highlights several of the changes we’re seeing in Apple’s PR strategy – rapid response, the use of Twitter as a medium, and the availability of executives for on the record interviews, used to provide more nuanced messaging and positioning around news. All of these are new – recall “antennagate” and the Apple Maps launch and how it took Apple to respond to those issues, for example.

Twitter and blog posts

Those tweets from Eddy Cue, though, haven’t been the only uses of the medium for breaking news about Apple Music. Zane Lowe has used Twitter throughout the buildup to the launch to tease things and break smaller bits of news, including the announcement of his Eminem interview. Pharrell Williams announced the exclusive debut of his song Freedom on Apple Music through Twitter as well.

Perhaps the most surprising thing (though I suspect it wasn’t an intentional thing on behalf of Apple PR) was the blog post written by Apple employee Ian Rogers, which was posted on June 27th, and announced specific times for the release of iOS 8.4 and the launch of Beats 1. Those times were subsequently scrubbed from the post, but  the very fact Rogers felt free to blog about the launch in this way is yet another sign of the increasing openness at Apple.

More broadly, I’ve very much enjoyed the broader use of Twitter by key executives at Apple – not so much for making announcements, but simply for sharing what they’re up to, making themselves visible on this social medium, and in the case of Eddy Cue even responding to some technical questions from other Twitter users this week.

New York Times profile

The New York Times ran a lengthy profile of Beats 1 lead DJ Zane Lowe on January 28th, and it was a good example of the new on the record pieces we’ve seen in recent months, in the same vein as the Stephen Fry and New Yorker profiles on Jony Ive. It was pretty unsanitized, and began with an apparently frustrating experience for Zane Lowe working with the equipment in his new studio (something which was weirdly echoed in the hour of Beats 1 programming before the official launch). But it also broke a lot of details for the first time about the other Beats 1 hosts and DJs, including Pharrell, Drake, Elton John, St Vincent, Josh Homme, Disclosure, and Dr Dre. This use by Apple of a publication like the Times to break this kind of news is again something of a departure – oftentimes these details in the past would have been leaked to such a publication from “sources with knowledge of the situation”, but this is the new, on the record, Apple.

Reviews and interviews around the launch

The last major phase of the Apple Music launch was the launch itself, for which Apple provided devices running previews of Apple Music the day before, and also provided yet more access to executives like Eddy Cue and Jimmy Iovine, and Trent Reznor. The reviews were nothing new (though the last-minute nature suggests a dash to the finish line rather than a new precedent for reviews), but the interviews were, though very much in keeping with the pattern we’ve already seen above. These interviews again hit many of the same points around positioning and messaging, and allowed Apple to put its spin and story around the launch rather than letting others do it for them. Many of the interviews were published in verbatim question-and-answer formats, allowing the executives to speak for themselves.

What next?

Even after the launch, we’ve seen a continuation of some of the same themes – Zane Lowe is still teasing new stuff on Twitter, Billboard did a profile on hip-hop artists and DJ Q-Tip about the show he’ll be doing for Beats 1 (among other things), and there’s a sense that many of the other themes will continue too.

But even beyond the launch of Apple Music, it feels like we’ve seen several elements of Apple’s new PR strategy here which will stick around for the future. The increased use of Twitter, the on-the-record interviews with executives, the communication with non-tech publications (music ones for the Apple Music launch but also fashion and jewelry publications for the Apple Watch), and so on feel like they will likely all be part of Apple’s PR strategy going forward. Tim Cook famously spoke about doubling down on secrecy a while back, so it’s not like Apple is going to suddenly spill the beans about everything as it happens. We’ll still see tightly stage-managed events to announce the big news, but it also feels like Apple is more willing to be open and to truly communicate about what it’s doing, which has to be credited in large part to Tim Cook, who’s made a number of subtle changes at the company since taking over.

Apple Music first day review

Since Apple broke its usual rule of giving reviewers plenty of time to review its new products with the Apple Music launch, giving reviewers just a single day to review the service, I thought I’d break my own rule and do a review of my own based on my first day with the service.

Exactly the app I wanted

First off, the new Music app is just the app I’d wanted and hoped that Apple would eventually launch. I’ve always wanted to just be able to combine the music I already have in iTunes with new music I add from subscription services, but that’s always meant two apps in the past. Now it’s a single app, and Apple made this work just the way it should – “My Music” now means the combination of my library and the stuff I’ve added from the subscription service, seamlessly together in one place. I love this aspect of the service, and it immediately puts it head and shoulders above any other service by itself. The app itself is quick, responsive, not too glitchy (with some exceptions in the iPad version, in my experience today), and I found the layout perfectly logical and easy to follow. I’m increasingly convinced that reviewers calling Apple’s recent products and services “complicated” really mean that they’re very feature rich for v1 products, which I don’t see as a bad thing. By the same token, the iPhone is complicated, but I don’t think anyone calls it that.

As a result of all this, we’ll be discontinuing our other music services more or less immediately, once we’ve recreated a small number of playlists of favorite songs in Apple Music, something I largely completed today, which was very straightforward. I opted for the family plan on Apple Music, which means I’m finally headed for my first experience with Family Sharing. I haven’t heard great things about it from others who’ve worked with it, so I’m approaching this with a bit of trepidation, but hoping it works out OK.

Beats 1 is not for me – at least for now

One of the things I’ve been most interested in ahead of time was Beats 1, and exactly how it would work. We finally have a decent sense of the lineup, and today we got our first taste of Zane Lowe and his unique DJing style. I listened to Beats 1 for the first half hour or so, but found the genre-hopping jarring. Within those first 30 minutes, Zane Lowe played a bewildering mix of old and new material, genres as diverse as metal, rap, and pop, and it just reminded me why I’ve largely stopped listening to the radio in a world with digital music. My tastes in music are at the same time eclectic (I like many genres) and narrow (I tend to like just a few artists within each genre), which makes me a tough customer for this kind of thing (more on this later). I just didn’t like 90% of what I heard on Beats 1, and it gave me a headache. It also felt like Apple was working a bit too hard to promote its exclusives (Pharrell, Taylor Swift, AC/DC etc) and the service itself and Zane Lowe wasn’t free enough to be himself, so I hope that changes as the service goes on.

For You and personalized curation is better

I found the For You section and the personalized curation much more effective in my case, though I found my initial experience with the interest selection as frustrating as I had on Beats (which largely supplied the experience). The jiggling circles from which you choose first genres and then specific artists are fun visually but somewhat annoying to use in practice – as you choose items, they tend to crowd out other options that appear, and you end up choosing a variety of things that you kind of like because they’re the best options available, but they then make it harder to choose others. I think the best description for the genre I listen to most frequently is probably “singer-songwriter” but it’s not even in that initial list of genres, and many of my favorite artists never came up. As such, what I’ve told Apple Music I like is a weird mix of my second and third favorites rather than a true list of artists I really like.

Having said that, once I put a bit more work into this effort, selecting more of those artists with several taps of the “more artists” button, the recommendations For You provided started to get better. I’ve found several tracks I quite like that way already. As such, I think I’ll like this more personalized form of curation more enjoyable than the  generic stuff in Beats 1.

 

Absence of desktop iTunes was bizarre

The weirdest thing about the launch was the things that went wrong – the total absence of updated versions of iTunes for hours after iOS 8.4 became available being the most obvious thing. This meant that the social sharing elements didn’t work at all on devices other than iPhones, with lots of broken links and error messages. It was a bizarre omission and I can only think Apple did it to avoid overloading its servers or something. But it took the shine of the service for anyone who doesn’t own an iPhone or wasn’t able to update their software today for whatever reason. The other odd thing was the hour of music and other stuff Beats 1 played before its official debut at 9am ET, which included Zane Lowe testing his mic and chatting with people in his studio, which was an awkward reminder of the stuff in the New York Times piece about how his equipment wasn’t working in the studio when the reporters were there. Everything seemed to be working fine when the show finally started, but it was another element that seemed to lack polish.

Connect looks really promising

One element I know there’s been a lot of skepticism about is Connect, which is reminiscent of Ping for many people. However, I think this is one of the areas of greatest promise, and one of several things that has the potential to set the service apart from competitors. The content there today is fairly limited, though it’s an interesting mix of polished video, candid snapshots and half-finished material, and even tweet-like text content. The content has lots of shares and quite a few comments, many of them welcoming both the service and their favorite artists’ engagement with it, which bodes well. But we need to see a lot more content from a lot more artists on a regular basis for this to work, so that’s something we’ll have to keep an eye on. As a social platform, though, it already looks vastly better than Ping.

A good start with some polish needed

Although I felt that the lack of polish and the glaring absence of the new version of iTunes detracted from the launch, the app itself is fantastic, and I’m totally sold on it. It’ll easily replace my existing options and do it much better than they ever could, and that’s really what this needs to be. Apple should easily win converts from Spotify with the service, but the bigger question remains whether it can make new customers for paid music streaming. After three months of using this service for free, I suspect many users will find it tough to give up, and that’s another major element in what I think will ultimately be a successful launch. Of course, that also means we won’t see any real positive sign of Apple Music in Apple’s financials until it reports earnings in January 2016 (since the first trial users won’t convert until the very end of September or early October). Ironically, what we may well see before then is a sharper drop off in the already falling music sales on iTunes, so the first impact may be negative rather than positive, especially as Apple is now paying out royalties during the free trials.

Apple Music’s other financial advantage

This is something I’ve though about quite a bit, and even wrote about briefly as part of a much longer piece ahead of the launch of Apple Music, but I feel like no-one is really talking about. But it’s potentially quite significant for the economics of Apple Music, and especially the per-stream payout rate Apple will end up passing on to labels and artists. Note: it’s already clear that Apple will have a higher per-stream payout simply based on the fact that it’s a paid-only service, whereas Spotify and other large services mix paid and free users. But I’m talking about an additional impact on top of that.

Integration of owned music is the key

The big factor here is Apple’s integration of the music you already own and store in iTunes into the Apple Music experience and into a single app. I think that’s huge for usability, and that was the key point in that earlier piece, but I think it could also be quite significant for the economics of the service. Why is that? Well, with almost any other subscription streaming service, you as the user tend to start from scratch in terms of your existing library. Perhaps you hop back and forth between apps when you play the music you own versus the music you’re streaming, but I’d guess many people just stick to a single app and play all their music from there, even the stuff they may have purchased somewhere along the way, because it’s all available in the streaming service and it’s easier to play it there than switch apps. Services like Spotify will pay out to artists regardless of whether the user already owns the track somewhere else (unless the user has imported their owned music). But when the user’s owned music is also available in the app, Apple won’t have to pay out when the user plays that music.

What’s really hard to know here is the balance between owned versus streamed music the average user plays during the course of a typical month. I know my own usage is heavily skewed towards the music I own and am familiar with, along with a few tracks or albums I don’t own and stream instead. Perhaps others are different, but I’d guess almost all users would spend a significant amount of time playing music they already own. With other services, the provider still has to pay out on this music because it all looks the same, but with Apple Music there will be a clear line between the music the subscriber owns and the music he or she is streaming through the service (even if it’s presented together in the context of the app). If the amount that’s played from the library rather than streamed is significant, this could substantially reduce the number of plays for which payments need to be made.

A higher per-stream rate on Apple Music

At this point, it’s worth thinking about how the economics of streaming music work. Although we often see per-stream rates used in discussions of how much artists get paid through these services, the reality is that there are no set per-stream rates. Rather, these services share some proportion of their overall revenue from subscribers and/or advertisers with those labels and artists whose music their subscribers listen to. The total pot is divided up with labels and artists according to a standard formula, and I’ve pasted the graphic Spotify uses to illustrate this formula below:

Spotify-Royalty-Formula

Once you understand that it’s a matter of dividing up the total pot, it becomes very relevant how many songs are streamed and therefore get to share in that pot. If Apple Music has fewer songs streamed through the service (because a significant proportion are played instead from users’ libraries), that in turn could dramatically increase the per-stream payout for those artists whose music is streamed. That will likely disproportionately benefit new artists and music over older artists and albums, which could be particularly good for those discovered through the service.

Of course, over time, this advantage will be mitigated as the balance between owned and streamed music shifts towards streamed music, as people will likely buy far less music (if any) going forward. But as the first Apple Music subscribers get past their trial periods and Apple starts paying out on its long-term formula, this could result in significantly higher payments per stream than other services. Add this to the existing advantage Apple has over competing services because of the paid-only nature of the service. Over time, that could have a really interesting impact on artists’ willingness to continue to work with other services. If, as an artist, you’re getting paid several times more on Apple Music per stream than on Spotify, Rdio, or Deezer, would you eventually consider pulling at least some of your music from those other services?

Note: I’m making a fundamental assumption here, which is that Apple will only pay out on plays of music the user doesn’t play from his or her own library. That seems a reasonable assumption, but I haven’t confirmed it. I can’t see why Apple would pay out on that music (unless it’s played through iTunes Match, which shares 70% with artists too), but it’s a remote possibility that it will, in which case the argument falls apart. 

Quick thoughts: Microsoft’s ad business

Given today’s news about Microsoft selling its display ad business to AOL and in turn replacing Google as the search advertising provider for AOL, I thought I’d quickly revisit some of my earlier analysis on Microsoft’s ad business.

By way of background, Microsoft has never directly reported the financials for its advertising business, but it has provided enough detail in its past financial reporting that I’ve been able to build a pretty good picture of this business over time. This past quarter, perhaps as a precursor to today’s announcement, Microsoft stopped providing any sort of information about its display ad business, but here’s a quick view of my estimates of Microsoft’s two major ad revenue streams over the past couple of years:

Screenshot 2015-06-29 16.02.44As you can see, Search advertising has been growing very well indeed, almost reaching the $1 billion per quarter mark last quarter, and likely to hit it very shortly, especially with the help of the AOL deal. By contrast, though, Display advertising has been heading south for some time now, and was under a quarter of a billion in revenue for each of the last two quarters of 2014. The split between the two, then, is roughly as shown in the chart below:Screenshot 2015-06-29 16.04.58In other words, search advertising was not only vastly outperforming display advertising in growth terms, but as a percentage of Microsoft’s overall online advertising business. As such, it’s made sense for some time for Microsoft to jettison this part of the business in favor of focusing on the part that’s working: search advertising. Part of the reason for the disparity between the two is general industry dynamics – display has been struggling for other companies too, while search continues to be one of the most effective forms of advertising and to command commensurate rates.  Microsoft’s display ad business, though, was also sub-scale, and hadn’t made the transition to mobile devices and native advertising effectively. Search, meanwhile, has benefited both from positive industry trends and the growth of Bing and Yahoo’s growth in search market share in the last couple of years.

The impact on Google

AOL’s decision to switch from Google to Microsoft is not enormously impactful on Google by itself, but in the context of Firefox’s earlier switch to Yahoo as its default search engine in the US, and the potential for a much more significant switch away from Google by Apple sometime this year, it’s part of a drumbeat of bad news for Google. One of Google’s challenges at this point is that it’s come to compete with many of its erstwhile partners, with Apple as perhaps the most striking example, and it’s arguably starting to pay the price for that strategy.

Some thoughts on Apple’s Beats 1 DJs

For the Beyond Devices podcast last week (embedded at the bottom of this post), we discussed Apple’s content-focused announcements from WWDC, including Apple Music. For our Question of the Week (a regular feature), we discussed one specific element of the Music service, and that was the three DJs Apple hired for Beats 1. We discussed that for probably 10-15 minutes (it starts around 20:25 in the episode), but I thought I’d quickly share some of the key points here.

Apple has hired three DJs for Beats 1 (so far):

  • Zane Lowe, who comes from BBC Radio 1, and is the figurehead of the service, and by Apple’s implication pulled in the other two
  • Ebro Darden, from New York’s Hot97, a mostly hip hop station, where he was until about a year ago the station director, and where he has been presenting the morning show
  • Julie Adenuga, from RinseFM in London, the least experienced and well known of the three.

I’ll talk about each in turn below, and then share some general thoughts about these DJs and their significance.

Zane Lowe – Global (LA)

Zane Lowe will be the voice of the global station, and this is the last of a series of transitions that’s seen him go from growing up in New Zealand to working in a record shop in London’s Notting Hill to hosting a show on XFM in London, to BBC’s national Radio 1 station, to arguably the first mainstream global radio station at Beats 1. Zane Lowe has a unique style as a DJ, though it was frustratingly difficult in my research to find examples of him broadcasting (ironically, because BBC iPlayer provides a great legitimate source of rebroadcasts, but yanks them after a month or so, and Lowe stopped broadcasting in March). He tends to talk over tracks, react vocally to things, and generally make lots of noise. Above all, he’s an enthusiast about music – not a critic for criticism’s sake, but someone who genuinely loves music and wants to share the best stuff with other people. That’s also made him something of a tastemaker, helping new acts break into the public consciousness – that’s important, and something I’ll come back to below.

Lowe is also a performer in his own right as a DJ, and has contributed producing and writing talent to other artists, which earned him a Grammy nomination for his work on Sam Smith’s breakthrough album. He’s brought some interesting segments to his Radio 1 show in the past, including doing deep dives on classic albums, playing the whole thing through and discussion it and related topics on his show – it’d be very interesting to see him do something similar on Beats 1, though I’m sure he’s got plenty of other ideas. He’s also done lots of interviews with high profile artists including Kanye West, Jay-Z, Chris Martin, and Eminem. Above all, Zane Lowe is a mainstream, top 40 music kind of guy, covering all the popular genres without going deep on any of them. Radio 1 is the BBC’s youth-oriented popular music station, and that’s very much his role at Beats 1 too.

Ebro Darden (New York)

Ebro Darden is another very experienced DJ, but one who’s much more narrowly focused on a specific genre, hip hop, rather than covering the breadth of stuff Zane Lowe covers. Hot97 is one of the major hip hop stations in the world, and as such he and his fellow DJs have become some of the arbiters of what’s good and even what counts as “real” hip hop (see this Radiolab episode for a fascinating discussion of one of Darden’s colleagues at Hot 97, a Jewish guy called Peter Rosenberg who’s nonetheless one of the major influencers in the hip hop world, somewhat controversially). So even though Apple positions Ebro Darden as covering the New York music scene, I suspect he’s actually going to be covering mostly that genre, a subset of the stuff Lowe will play.

Darden is also a more controversial figure, willing to mix it up with artists and others on Twitter and elsewhere, calling them out on their false claims to hip hop credibility and such, which makes him a more controversial figure than Zane Lowe, and one who’s willing to call out things he doesn’t see as kosher. Again, though, he’s a tastemaker as well as just spinning discs people already know and love.

Julie Adenuga (London)

Julie Adenuga is to my mind the most interesting and surprising of the three: she’s far less well known than the others, she’s a lot younger (mid 20s rather than early 40s), and has a lot less experience as a DJ. She’s a fascinating choice in that way. She’s also much more like Ebro Darden than Zane Lowe, in that she’s associated with a particular genre of music, broadly speaking a certain brand of London club music, but more specifically the Grime genre, which is a sort of evolution of the UK flavor of garage music (both styles combine electronica with rap-style vocals). She has two brothers who are prominent grime musicians in London too, so there’s some family credibility in that particular genre in addition to her own self-made success as an up-and-coming DJ on Rinse FM, a former pirate radio station that went legitimate around the same time she joined a few years back.

She’s got a fun personality both on the radio and in videos I came across during my research, and my favorite quote from my research was “Her drive time Rinse FM show became scientifically proven as the only thing that could make you smile on your way home on a London bus”. That should make her a fun DJ on Beats 1, too. Like Zane Lowe, she’s done lots of interviews with popular artists both on the show and elsewhere, and I wonder if she’ll bring some of that to Beats 1 too.

General thoughts

What really stood out to me with all three of these DJs is that they’re not just figureheads, but tastemakers, defining tastes and breaking new artists in a way no algorithm ever could. Though Spotify, SoundCloud, and the like have undoubtedly helped break some new artists, it’s largely the social element and the users that have made that happen, not the curation or recommendations from the services themselves. Beats 1’s DJs could therefore add an interesting new angle, not just helping you discover stuff you don’t know about that others do, but helping to bring new artists to the world for the first time as well.

Another big question in my mind is exactly how Beats 1 will be structured – with just three DJs, it can hardly be a 24/7 radio station, so how will Apple fill the remaining air time? How often will each of these DJs “broadcast” and to what extent will this be a live experience or a pre-recorded thing more like a podcast that you listen to when it’s convenient? And although there are three DJs already, it’s clear that there’s plenty of music out there that these three wouldn’t cover, notably jazz, classical, and even many other sub-genres of the mainstream stuff Zane Lowe covers, with just two genres covered by Darden and Adenuga for now. It’ll be interesting to watch this set of DJs evolve over time and to watch also how Apple will package all this up into a radio station.

It’s also fascinating to watch Apple building a radio station, when traditional radio stations (including Zane Lowe’s former employer Radio 1) are evolving their branding and position beyond the traditional radio model and towards YouTube, Snapchat and other media in addition to radio itself. Apple, of course, has many other music related offerings beyond Beats 1, including Apple Music and its new Connect service, but in some ways Apple is moving against the stream (no pun intended) at the moment. It’s worth noting that even Spotify is moving into video.

At any rate, if you want to listen to us discussing all this on the podcast from last week, you can do so using the embed below, or go straight to the website to see this and other episodes as well as links to iTunes, Overcast, and so on for adding the podcast to your podcast app of choice.

BlackBerry’s future comes into focus

BlackBerry reported earnings today, and as ever so much of the analysis in the mainstream news media is glossing over some of the most important details. To my mind, the most important thing in the earnings was the revenue the company announced from Software and Technology Licensing this quarter, which jumped significantly. This revenue line is the single most important element of BlackBerry’s business, and the numbers this quarter along with some of the executive commentary on the earnings call lead me to believe that the company might finally be on a trajectory to get where it needs to go to build a sustainable and growing business over time. This echoes an earlier piece I wrote, which outlined BlackBerry’s situation and the challenges it faces as it moves forward.

First, the bad news

So much of that mainstream news coverage stayed at a fairly high level, or picked up on the same old trends we’ve seen now for a couple of years, so let’s cover those at least briefly. Firstly, the hardware business is a shadow of its former self, and continues to decline, although the company has now been profitable at a gross margin level for hardware for the past year. Hardware has always been the core of BlackBerry’s business, but it simply can’t be anymore – the company doesn’t have the broad appeal to be a mass-market devices company. But those devices are still important for two fundamental reasons: BlackBerry is still the device vendor of last resort of the most regulated industries and for governments, and device revenue (and the associated service revenue – more on this below) are critical to its revenues as it works hard to grow its future revenue source: software.

The services revenue line has always been closely tied to devices, and is declining in a very predictable fashion, at around 15% or roughly $50 million per quarter:Screenshot 2015-06-23 10.39.05

The fact is that this decline will continue until there is almost nothing left, since this revenue line is tied to BlackBerry’s dwindling base of devices. Hardware revenue will likely stabilize in the coming months with somewhere around 1 million devices shipped per quarter, so the decline is likely mostly over there at this point.

Software finally gets a boost

My biggest skepticism about BlackBerry’s future has come from the fact that the company set an ambitious goal of $500 million in revenue from software this year, and its run-rate has been nowhere near that, until this quarter. What changed this quarter – and dramatically at that – is that BlackBerry suddenly posted a huge boost in Software and Technology Licensing revenue. The revenue line for this segment is shown below:Software and Tech Licensing Revenue

You can see this line bouncing around with hardly any growth, and with a run-rate much closer to last year’s revenue of around $250 million than to the goal for next year of double that. However, it grew modestly in the February quarter and then it suddenly spiked in the quarter just reported. What’s behind this spike in revenue in this segment? Well, a lot of it came from a technology licensing deal with Cisco, which is the major reason BlackBerry renamed this revenue line from just Software in previous quarters to the new, more expansive moniker. This deal seems to have added an enormous amount to this segment’s revenues in the quarter, and also to BlackBerry’s overall North American revenues, which grew by $80 million quarter on quarter after a fairly steady decline. This deal is clearly good news for the software revenue growth story, although it’s questionable whether this is really the kind of revenue the company was talking about when it set that $500 million goal.

Understanding this deal is an exercise in frustration

The big problem, though, with this deal (and another execs mentioned on the call but haven’t formally announced) is that the economics associated with it are utterly opaque. The earnings call was one of those entertaining ones where analysts try to find any way they can to get more information on a particular data point, largely without success. The deal with Cisco is apparently subject to such tight non-disclosure terms that BlackBerry couldn’t say how much the deal would bring in, whether it was a one-time item or recurring revenue, what exactly was included in the revenue, or anything else of interest. All of this makes it incredibly tough to evaluate the real significance of the Cisco deals and others like it, because it’s almost impossible to tell what it means for the future. John Chen did say on the call that there were more such deals in the pipeline and that they should land later this fiscal year (which ends in February 2016), but he provided no real visibility at all over what the run rate in this business is likely to be, other than to say that the $500 million goal now looks very achievable.

That still feels to me like moving the goalposts on the original goal of growing software revenues (rather than technology licensing revenues) to $500 million, but the larger story is that BlackBerry looks like it might finally have an alternative source of revenue which can in time take the place of its legacy hardware and service revenues, which is the company’s single biggest challenge. As those older revenue streams fall, BlackBerry has struggled to find a new revenue stream that could offset the decline and get the company back to growth. It’s possible that it’s now found that revenue stream, through a combination of fairly modest core enterprise software growth and this new technology licensing stream. The big question is whether that revenue stream is sustainable over time – will it provide recurring revenues each quarter going forward in a way that can mimic its previously very dependable hardware and service revenues? Or will it be a series of, as John Chen said on the earnings call, “lumpy” one-off payments that provide no real certainty over the future of the business?

The revenue mix is changing again

If this Software and Technology Licensing revenue stream really does keep up the momentum, it will mean a second major shift in BlackBerry’s revenue mix. The first was due to the decline of hardware, which once regularly accounted for 70-80% of BlackBerry’s revenues but has now dropped to 40% or so, with Services making up most of the difference. This second shift, though, will see software become first a significant contributor to overall revenue and in time the major contributor to revenue. This quarter was the start, as the chart below shows:Revenue mixThe question is whether BlackBerry can keep this momentum going – it’s not too much of a stretch to suggest the company’s future depends on it.

Ten quick thoughts on WWDC

Yesterday was a busy day, as these keynote days always are – several hours of waiting around with very little to do, followed by several hours of frenetic activity both during and immediately after the keynote, as I prepare a quick comment for reporters, talk to some reporters, and do quick write-ups for clients. I feel like my head is still spinning, and although I have a variety of things I want to write about, I don’t feel quite ready to do a deep dive on any of them yet. As such, I’m going to do something a bit different – post several short thoughts here, some of which I may expand on with proper blog posts later, and some of which we may talk about on the Beyond Devices Podcast later this week (we’ll be recording Wednesday and the podcast will hopefully go up Thursday).

Music majors on what I said it should

Apple Music majors in part on what I said it should in this piece I wrote back in April – that is, it differentiates partly on the basis that it gives you a single home for your existing collection of music and the new stuff you access through the service, with the ability to easily add new material to your library. I also said in that piece that I thought Apple Music might be most relevant to older folks with more money than free time, and that still feels right.

Beats 1 is a weird hybrid

Beats 1 is a funny mix – neither algorithmic curation nor human, personalized curation, but generic human curation, just like traditional radio. To my mind, Beats 1 is the strangest part of the Music launch – the piece that feels like it doesn’t belong, and perhaps was Apple’s desperate attempt to provide a headline feature to set Apple Music apart from other subscription music services. In my mind, it wasn’t needed – as I said above, I think Apple Music already differentiates itself in the most important way. Then, behind Beats 1 is now hiding a series of more customizable radio stations, which used to be known as iTunes Radio. Lumping all this together as radio also feels like it might be confusing, but at least iTunes Radio is being infused with some Beats smarts, which should make it better. I also wonder if Beats 1 is a concession to trying to appeal to the younger crowd, despite the older appeal I think most of Apple Music will have.

Connect feels more significant

On the other hand, Connect feels more interesting, and more unique. Whereas Spotify (and to a lesser extent Deezer, Rdio etc) has always seemed the target (victim?) of Apple Music, Connect feels like it’s going after SoundCloud and YouTube, where many undiscovered artists make their start. The problem today is that once an artist breaks through they tend to withdraw from these platforms and become increasingly distant from fans. Some artists (Taylor Swift seems a great example) maintain a direct connection with fans through social media, but for many others there’s this disconnect. I feel like Connect could be the first platform that gives artists a home that will work whether they’re undiscovered in their bedroom or coming off a platinum record. Connect also feels like a big tool for appealing to younger users.

The Music launch should have been its own event

Music was the “one more thing” at the end of the keynote, but it really didn’t fit there – in days past, this launch would have had its own event (likely in the fall, Apple’s traditional time for such events), but instead it was squeezed in here. This was a mistake – it didn’t do the service justice, and the Music segment felt rushed and cluttered, but still left all of us somewhat unsure about exactly how it works. It really should have been its own event, separate from WWDC (which is, after all, a developer conference, and there’s no developer angle to Apple Music – yet).

Developer events are getting cluttered

This brings up a broader point – each of the major developer events – Microsoft’s Build, Google’s I/O, and Apple’s WWDC – feels increasingly cluttered. As the aspirations and reach of these companies grows, a single annual two-hour keynote is becoming an increasingly poor way to communicate all that needs to be communicated. Microsoft does two keynotes, which is one way to deal with the problem (Google has done this in the past). But it just highlights the degree to which this two month period in the late spring is becoming a huge pile-up of news, that doesn’t really serve anyone well. All three companies should be thinking about spreading this stuff out more.

The Apple TV news merits its own event too

Speaking of all this, where in the world would Apple have fit the three major pieces of Apple TV news at this year’s WWDC? With a keynote that already felt light on detail and rushed, how could it ever have hoped to also announce new Apple TV hardware, and Apple TV SDK, and the Apple TV service? Thankfully, we didn’t have to find out, and that will likely all be announced together at a later date. I just hope it won’t all be crammed into September’s iPhone event. Perhaps the iPad event in October?

Native apps on Watch are the biggest developer news

Although iOS and OS X are the two big focus areas for WWDC each year, to my mind the most significant news by far was watchOS 2, and especially the ability for developers to create native apps and tap into the hardware and software features of the Watch directly. I’ve always felt that third party apps will be a huge part of the mainstreaming of the Apple Watch (just as they were for the iPhone and iPad before it), but the early model of companion apps and WatchKit just wasn’t going to cut it. I see a huge swathe of much more compelling Watch apps later this year when watchOS 2 becomes available, and I think we’ll see a huge growth and broadening of the appeal of the Watch as a result.

Google and Apple did stability releases while Microsoft goes big

There was some interesting timing this year at the developer events – Apple did its big overhaul of iOS in 2013 and OS X in 2014, while Google also did its major overhaul of Android in 2014. This year, both these companies focused on stability releases with relatively incremental improvements and lots of polish. By contrast, Microsoft is releasing its biggest Windows upgrade in years, across all device categories. I haven’t yet thought through all the implications of that (beyond mere intellectual curiosity), but it’s interesting to ponder.

Siri advancements reinforce Apple’s privacy stance

The Siri announcements were a wonderful validation of the piece I published last week on Apple and privacy. In that piece, I wrote that nothing in Apple’s privacy stance should prevent it from being able to do clever and useful things in iOS and beyond to better serve users with machine learning, and its WWDC announcements reinforced that. Enhancements in Siri and Spotlight are the best examples, but the natural language processing improvements in multiple individual apps are part of this broader picture too.

Apple is retaking control of content

Apple has been big in content for twelve years, since the launch of the iTunes Store in 2013, and continuing with major launches like TV shows and movies in iTunes, iBooks, Newsstand, and so on. However, for the last several years Apple has seemed adrift in content, a victim rather than a driver of trends, and has seen its content revenues stagnate and fall even as third party apps explode (along with the associated revenue stream for Apple). This year, Apple finally seems to be retaking control of control, with the News app, Apple Music, and presumably the Apple TV service later this year. Apple finally seems to be embracing subscriptions in music and video, and recognizing that some of its other content platforms (notably Newsstand) aren’t working and rethinking them. News puts it uniquely in control of a certain form of content, while Music also gives it some unique ownership of artist-created and DJ-created content, which is a fascinating shift.

Introducing the Beyond Devices Podcast

If you’re a regular reader of the Beyond Devices blog, first of all thank you! I appreciate your interest, and hope you find reading what I post here useful and interesting. I also regularly appear with other members of the Techpinions team on our weekly podcast, and absolutely plan to keep doing that.

However, a friend and I often have conversations about Apple, and I’ve always found his perspective really interesting. Aaron Miller used to blog about iMovie, and as a result was asked to co-write the iMovie: The Missing Manual books with David Pogue. Aaron is also a long-term Apple fan and watcher, and actually brings a longer history to this topic than my own (my focus on Apple began rather later, in the early 2000s). He often knows interesting tidbits of history and so on which I don’t, and I always find his ideas thought provoking and refreshing. So the two of us have decided to start a podcast, which is called simply the Beyond Devices Podcast and hosted at a subdomain of this site (podcast.beyonddevic.es) as well as SoundCloud and iTunes, which will likely focus largely on Apple itself. Our first episode is up now, and previews next week’s Apple Worldwide Developer Conference. Next week, we’ll focus on the biggest announcements from WWDC in episode 2.

I invite you to listen to the first episode and, if you like what you hear, subscribe to the podcast on iTunes or SoundCloud, or your favorite podcasting software, and share it with your friends and colleagues. And we certainly invite your feedback too. Thanks again for your interest in the blog, and I hope you enjoy the podcast too.

Apple and Privacy

Apple’s privacy stance has been in the news again this week, mostly because of a speech Tim Cook gave to an event in Washington, which honored him for his (and Apple’s) commitment to privacy and encryption.

Apple’s admirable but over-played privacy stance

My reaction to the speech has been somewhat mixed, as these two tweets indicate:

As I see it, Apple’s commitment to privacy is an admirable one, and one that provides a useful competitive vector as it seeks to differentiate itself against companies like Google and Facebook. But I feel that here, as when Tim Cook repeats the now-hackneyed phrase “when you’re not paying, you’re the product”, he’s overplaying Apple’s hand 1. There’s an underlying truth to both of these claims, but it’s not as cut and dried as Tim Cook makes it seem to be. And I believe that’s likely just positioning, or in other words making the point in the strongest possible black-and-white terms, even though Tim Cook (and the rest of Apple’s leadership) clearly understands that there’s more nuance to this in reality. It’s obvious that many people do value these free services, and are willing to make the tradeoffs inherent in them (if they understand them at all). If Apple really believed everything Tim Cook said in literal terms, I’d be worried about the company, but I don’t actually believe it for a minute, though I absolutely buy Apple’s commitment to privacy and its intention to continue to differentiate on this basis.

Privacy and machine learning

Ben Thompson, in his excellent Stratechery daily email (subscribe here) makes to some extent this same point in his email today, and I agree with those thoughts pretty completely. But he and others have also taken this point further and talked about a supposed downside to all this, which is that by refusing to collect personal data about users, Apple risks not being very good at machine learning. I actually think this point is false, because it conflates three different kinds of data collection and analysis:

  • Data collected on an aggregate basis to allow computers to determine broad trends, better understand text and speech across the entire base, glean information about searches and the best responses to them, and so on. There is nothing user-identifiable about this form of data collection.
  • Data collected about individual users to better customize services and products to their individual needs – i.e. learning favorite places, home and work locations, building patterns of searches to better interpret future searches, and so on. This kind of data collection exists on a spectrum, with some forms of data explicitly provided by the user and others easily inferred, with other data reliant on deeper analysis.
  • Data collected about individual users to build profiles which can be used to target advertising. The only benefit to the user from this form of data collection is making the ads they see more relevant, and the downside is a vague sense of creepiness that third parties are suddenly serving up ads which make use of quite private data from browsing, searches, or the contents of emails (and potentially photos).

The reality is that machine learning takes place across these three different types of data collection, but only the first two are primarily about creating a better experience for users, and Apple has shown itself to be perfectly willing to engage in the first kind with products like Siri and Spotlight, and quite comfortable with at least some forms of the second. It’s only the third category that Apple eschews and which Tim Cook appears to be criticizing other companies for in his public remarks.

Apple’s privacy stance

The table below summarizes my inferences of Apple’s privacy stance on these three categories:Screenshot 2015-06-05 09.37.14If this is accurate, and I believe it is, then Apple isn’t constrained at all when it comes to broad improvement of its services on an aggregated basis, because it’s clearly entirely comfortable with this form of data collection and analysis, and has even recently started crawling websites itself to further this effort. In the second category, it seems very comfortable with building basic profiles of its users through a combination of data users actively pass to its systems and a small amount of data inferred from behavior 2. As such, it’s capable of customizing certain of its services and willing to do so. One good example of this is the customization of its QuickType keyboard on a per-user basis, although Apple is careful to point out that “Your conversation data is kept only on your device, so it’s always private.” When Apple does customize services on a personal basis, it often keeps the information on the device, unlike competitors who use cloud services to make these customizations available across devices, which really does constitute a compromise on Apple’s part. 

However, it’s the third form of data where Apple really seems unwilling to engage in broad data collection and analysis, and that really doesn’t affect its ability to provide its users with compelling services. As such, I think it’s a stretch to suggest that Apple will somehow always be inferior at machine learning because it eschews targeted advertising – the two are for the most part separate, and it’s entirely possible for a company like Apple to engage in both broad based aggregate machine learning and machine learning on an individual user basis without either compromising privacy or engaging in the type of behavior it’s criticizing in others.

Apple still has work to do in machine learning

None of this is to say that Apple is just as good at machine learning as competitors. I honestly believe this is the core of Google’s differentiation as a company and Facebook seems to be becoming increasingly strong in this area too. Apple is currently weaker in these areas, but I don’t believe that its privacy stance is the reason – I just think it hasn’t chosen to invest in these areas as heavily, and to the extent that it is doing so now, it has some catching up to do (and it seems that at WWDC Apple may announce some advancements in this area relating to Siri).

The same applies to Apple’s cloud services in general – this simply hasn’t been a major focus for Apple so far, for a variety of reasons, and its cloud services simply aren’t as strong as competitors’. Google Photos is a great example of that – its seems to do certain things much better than Apple’s Photos product, and a large part of that is about machine learning. And yet Google Photos is also a great example of exactly what Tim Cook is talking about – the inherent unease about sharing such personal data with a company you know would like to use it to target advertising to you. If Apple produced a similarly compelling product, there would be none of that unease, but you’d likely pay for the privilege of using it directly. Therein lies the real difference between Apple and its competitors.

Notes:

  1. For a more nuanced analysis of the latter claim, please see this post
  2. See this earlier post for an example of this, which Apple hasn’t shouted about much to date