STORM (SOUND)CLOUDS GATHERING: SoundCloud has been in the news lately. Over the past several weeks there’s been speculation of a sale to Deezer, Spotify or even Google. However, since none of these buyouts have come to fruition SoundCloud is now taking steps to cut costs. Yesterday SoundCloud announced the layoffs of 173 employees, which is a startling 40% of their workforce. The cuts include the closure of all offices except NYC and their Berlin HQ. The issue, of course, is a lack of revenue (ad rev or subscriptions) compared to their mounting royalties costs. When SoundCloud started they were a free music file sharing service (think Napster 2.0), who was living on the fringes of the legal music streaming ecosystem. Then in 2015 they legitimized their business by signing formal royalties deals, which also allowed them to monetize their service and make money. The only problem is that they’re not selling enough to stay solvent. I know that RIFs happen from time to time in digital media, but this was feels more like a cut into bone than just a trimming of fat.
APPLE GETTING BACK INTO AD MONETIZATION?: So this is interesting. For all of Apple’s brilliance as a creator of world-changing devices they’re notoriously bad as an ad sales platform – think back to iAd’s closure in 2015 if you need an example. Apple’s poor performance in ad sales has actually created a self-fulfilling circle where they spend more time/energy creating ad blockers than they do on monetization. With this in mind consider that some of Apple’s platforms, like Apple News, have amassed impressive user scale – 47M monthly uniques in just the US. But they aren’t selling ads to monetize this audience. This leaves Apple at a cross roads. Do they stick to their guns and leave potential ad rev on the table or give in to temptation and start monetizing? Business Insider is reporting a potential strategy pivot in the attached link. The guess is Apple will start allowing 3rd party publishers to run ads within their content which appears in the Apple News feed. And to do this Apple will allow guest publishers to use their own AdTech (even arch enemy Google’s DoubleClick) to serve these ads. If this comes to fruition the digital playing field could suddenly have a big new competitor to contend with.
NBC SAYS GOODNITE TO RATINGS INTEGRITY: Finally this week, I’d like to send you off with an incredible story about NBC’s Nightly News ratings which may have you second guessing the entire TV ratings system. Here’s what happened. On the Monday of Memorial Day (May 26th) NBC misspelled their embedded digital program title as “NBC Nitely News”. Because of the misspelling Nielsen’s automated system didn’t pick up and input that day’s ratings into the weekly average. And because holiday Mondays’ ratings are far below normal levels, the omission of Memorial Day caused NBC’s weekly average (calculated using the other days of the week) to shoot up. What?!? Bottom line . . . a simple misspelling skewed the national TV ratings for a whole week and most certainly impacted pricing on millions of dollars of TV buys. The industry is wondering if this was an intentional move by NBC to scam the system. I’m wondering how Nielsen’s system could be so shoddy that they completely missed this error. Yikes . . . or should I say Yites!
Have a great Friday (and weekend) guys!