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Thought Starters: Facebook grows, software as the new oil and the music industry evolves

The following is a look through articles, research and opinion pieces highlighting interesting trends, developments and changes in the world you and I live in, with an emphasis on technology.

Facebook’s release of quarterly financials point to strong growth in mobile users and video although costs grew at as faster rate than revenue. This seen a reshuffling of the S&P 500 in the US with the social networking overtaking a still healthy General Electric and Amazon.

Biggest S&P 500 Companies by Market Cap

Venture capitalist Fred Wilson points to software as taking the place of oil in securing a disproportionate share of the global economy’s economic surplus going forward:

“Companies that control the software infrastructure of the information revolution will sit back and collect the economic surplus of the information revolution and that will be a path to vast wealth and economic power. It has already happened but I think we are just beginning to see the operating leverage of these software based business models.”

We’ve seen a growing number of startups pass the $1bn valuation mark in recent years but a much smaller number have chosen to expose themselves to closer scrutiny and take themselves public. One of the enablers of this has been the availability of venture capital which is looking more and more like traditional debt financing:

“This is hardly an equity instrument at all,” says Altman. “Investors are buying debt but dressing it up close enough to equity to maintain their venture capital fund exemption status. In a world of 0 percent interest rates, people become pretty focused on finding new sources for fixed income.”

Consumers’ media consumption habits are inevitably changing when faced with a growing array of choices. Traditional television channels have up until recently managed to hold its own but Liam Boluk’s analysis points a substantial drop in viewing habits among younger consumers in the US:

Change in Time Spent Watching Television in the US

Content marketing appeared to provide an obvious choice for many brands looking to engage with their audiences providing relevant content in return for consumers’ attention. As Greg Satell points out, it’s not quite that easy as a growing glut of content is making it harder for companies to get their brand noticed unless your content really stands out:

“Yet despite these scattered successes, there is mounting evidence that most marketers’ content efforts are failing.  The Content Marketing Institute reports that although the majority of B2B and B2C marketers have some kind of content marketing program, less than 40% find those efforts effective.  Clearly, things need to improve.”

Songkick’s Ian Hogarth points to the convergence of radio, on-demand music and concert ticketing as reshaping the music industry, with data enabling musicians to foster a closer connections with their audiences:

“The integration of these three, previously distinct industries will produce a richer experience for artists and fans, unlock a ton of additional subscription, ticketing and advertising revenue for artists and create a better experience for fans. It will resolve the central tension between fans, artists and technology companies that so much ink has been spilled about.”

David Pakman argues strongly that as the automotive sector evolves with the introduction of electrification, software and data, traditional manufacturers will be poorly placed to fend off competition from new entrants:

“I am confident many of the existing automotive companies will produce cars with autonomous features. And some of them will be quite good. And eventually they will produce some fully autonomous electric cars too. In the meantime, there are many super-strong, thoughtful entrepreneurs with lots of incredible hardware and software experience working to fundamentally redefine what consumers should expect from cars.”

Chrissie Giles provides a fascinating look at Britain’s changing relationship with alcohol as the industry adapted to changing societal norms and trends which saw UK reach ‘peak booze’ in 2004:

“As the new century began, alcohol was easier to access, cheaper to buy and more enthusiastically marketed than it had been for decades. By 2004, Brits were drinking well over twice as much as they had been half a century earlier. The nation stood atop Peak Booze, and my generation was drinking the most.”

There’s a general expectation that we should see health statistics improve over time with advancements in healthcare seeing many problems either addressed or mitigated.  So it’s rather shocking to see research from Anne Case and Angus Deaton point to growing mortality among non-hispanic middle aged males in the US:

America's middle-aged mortality

The featured image is by Argentinean artist Pastel in Playa del Carmen, México published in StreetArtNews.

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Thought Starters

A mixed collection of materials looking at societal trends and the impact of technology on the way we live.

Slate looks at separatist movements in Europe in light of the recent decision by Scotland to maintain its ties with the United Kingdom:

Separatist

McKinsey’s forecast for the luxury market points to the growing role of emerging economies. Luxury brands shouldn’t count on a free ride though with Chinese consumers proving less receptive to Western luxury brands than in the past according to a report in The Guardian:

Luxury

In an interview with the Wall Street Journal, venture capitalist Bill Gurley has raised concerns about the ‘burn rate’ of startups and the potential risks of a tech bubble  bursting. We may not see this happen in the immediate future but a correction does look increasingly inevitable.

The Financial Times profiles the emerging FinTech sector and the challenges it poses to the incumbents in the banking and financial services sector.

Bitcoin is one of the technologies that is providing a disruptive force in the financial services sector, with Fred Ehrsam from  Bitcoin wallet provider Coinbase giving an introduction to the cryptocurrency:

GlobalWebIndex figures confirm the commonly held view  that tablets are frequently shared whilst mobile phones are more closely associated with the individual:

Devices

Comscore research points to mobile apps taking a dominant role in the time  American’s spend with their smartphones with pointers on the when where and why of app usage:

Mobile App Usage

Results from Shopify points to  50.3% of traffic coming from mobile and just 49.7% from computers among customers using their eCommerce solution. Whilst this doesn’t purport to represent a  statistically sound sample of all eCommerce transactions, it does provide another data point supporting the need for companies to adopt a mobile first strategy:

Mobile Commerce

Code and Theory’s Dan Gardener and Mike Treff call for an approach to responsive design that goes beyond the screen size of device use, encompassing factors such as location, time of day and duration:

Responsive

The social network Ello launched in March of this year but is now beginning to reach critical mass, with consumers attracted by the promise of a system that isn’t based on pervasive tracking and surveillance. That’s not to say it doesn’t have its critics with Andy Baio pointing out the funding provided by venture capital which may see its more ethical policies watered down with time.

Ello

eMarketer figures point to social media taking a growing overall figure and share of UK’s advertising spend, with Facebook dominating brand’s spend on social networks:

UK Social Ad Spending

 GlobalWebIndex figures on Instagram users doesn’t provide any great surprises with steady growth, younger audience and strong indexing among middle and higher income earners:

Instagram

GlobalWebIndex also provide figures for the often overlooked Viber with 12% of the mobile audience use Viber each month,  providing a valuable reminder of  the diversity in the mobile messaging space.

ReadWrite looks at which countries have the fastest internet with South Korea, Japan and Hong Kong taking the top three places:

Fastest Broadband

Ezekiel J. Emanuel provides a fascinating opinion piece arguing that we should be placing more emphasis on quality rather than quantity of  life. Putting this into a more personal context, he stresses that we would like only palliative rather than curative care after the age of 75:

But here is a simple truth that many of us seem to resist: living too long is also a loss. It renders many of us, if not disabled, then faltering and declining, a state that may not be worse than death but is nonetheless deprived. It robs us of our creativity and ability to contribute to work, society, the world. It transforms how people experience us, relate to us, and, most important, remember us. We are no longer remembered as vibrant and engaged but as feeble, ineffectual, even pathetic.

Mark Buchanan, drawing on Jaron Lanier’s Who Owns the Future, warns of societal problems associated with the internet with the concentrations of power and the disenfranchising of large sectors of society. Another book to add to the reading list.

We’re seeing telecommuting increasingly promoted as providing flexibility to employees with the potential to better combine the demands of work and home, but it’s not a one sided coin. Lenika Cruz provides a personal account of how working from home aggravated her agoraphobia:

To be clear: Working from home didn’t cause my agoraphobia, it just enabled it. As someone who already had latent anxiety issues, I lacked incentive to prove myself wrong about all the imagined catastrophes that could occur if I were “trapped” somewhere. Telecommuting offered me the retreat I craved, but it helped to reinforce my avoidance patterns. And so the agoraphobia blossomed.

The featured image is a DALeast piece that was created as part of the Dunedin Mural Project and found on Arrested Motion.

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Thought Starters

Thought Starters

A mixed collection of materials looking at societal trends and the impact of technology on the way we live.

We’re seeing a rapid growth in some of the developing world’s major cities as rural populations migrate in search of better economic opportunities. Joel Kotkin takes a critical look at this phenomenon, pointing out that there in many cases isn’t the necessary demand needed for unskilled labour that will lift these populations out of poverty:

Here’s the difficult truth: Most emerging megacities, particularly outside of China, face bleak prospects. Emerging megacities like Kinshasa or Lima do not command important global niches. Their problems are often ignored or minimized by those who inhabit what commentator Rajiv Desai has described as “the VIP zone of cities,” where there is “reliable electric power, adequate water supply, and any sanitation at all.” Outside the zone, Desai notes, even much of the middle class have to “endure inhuman conditions” of congested, cratered roads, unreliable energy, and undrinkable water.

Research from  Betsey Stevenson and Justin Wolfers points to money being able to help buy happiness, with this correlation appearing not to even tail off for more wealthy consumers:

Life satisfaction and income

There has been a lot of talk about disruption, particularly from Silicon Valley with commentators pointing to the threat this process poses to market incumbents. Research from Ian Hathaway and Robert Litan looks to pour some cold water on this view. Among the research’s finding are  that the US is seeing a declining number of start ups which are faced with growing failure rates whilst older enterprises are taking up a growing share of the overall number of businesses:

Companies by Age

Jamil Anderlini reports on growing property prices in China with warnings of a property bubble.  This could have serious negative effects on the country’s economy. A frightening prospect given the size of the country’s population and economy and the role on effect for the rest of the world:

Property Price Comparison

Benedict Evans looks at the impact that mobile is likely to have on the World’s population, with its impact reaching well beyond the developed world consumers associated with the PC driven internet:

Global Adult Population

There’s been a fair bit of noise recently about the declining role of the tablet with lacklustre sales and phablets arguably providing a good enough solution for many consumers. In response, Walt Mossberg jumps to the tablets defence, arguing that there are enough use cases to ensure that the format will see continuing success in the coming years:

I believed then, and now, that the success of the iPad depended not on whether it would wholly replace the laptop, but on whether it could be the best, or most convenient, computer in enough common scenarios for which the laptop (and, to a lesser extent, the smartphone) had been the go-to choice.

Android continues to be the dominant mobile operating system among global consumers market share. Despite this, Semil Shah argues that the development of an Android mobile app should run a distant second for the majority of startup businesses:

The common wisdom used to be iOS first, Android second — but I think it needs to be amended right now to the following: “With the caveat there may be a small handful of apps which need to be on Android early, mobile startups should be iOS first (of course) and resist the urge to make Android second too soon.” For a product early in its life cycle, the return on investment often can’t be justified.

Pew Research’s work points to consumers as being less willing to discuss serious issues via social media when compared to other social channels leading to what they’ve dubbed the ‘Spiral of Silence.’

Social Debates

Competition is hotting up in the ride sharing business with Uber recruiting drivers from its competitor Lyft – a not unusual practice in a competitive market. What Farhad Manjoo points out is that despite the best effortsof Uber and Lyft, there’s little in the way of differentiation between the two which face serious risk of commodification.

 The Atlantic profiles Google’s experiments with drone delivery suggesting that Amazon’s well publicised forays into this area weren’t simply a publicity stunt. Whilst the technology is interesting, what I found most interesting was the argument that this would enable a move towards a more access based society

Those ideas, in turn, became key planks in the original conception of the “sharing economy,” imagined as one in which the world could make much less stuff because efficient, digital logistics would let each asset be used by more people.

“It would help move us from an ownership society to an access society. We would have more of a community feel to the things in our lives,” Teller preached.

In the ‘something to look forward to’ basket is Juno director Jason Reitman’s Men, Women and Children which looks like taking a less than flattering look at the role of technology on the way we live our lives.

The featured image at the top of the page is a piece by by Paulo Arraiano in Djerba, Tunisia and found on StreetArtNews.

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A lot of noise is being made about the rapid growth of ecommerce and the  effect this is having on bricks and mortar retail. Forrester analyst Sucharita Mulpuru provides an alternative view,  pointing to the continuing growth in the traditional retail sector and the need to distinguish between retailers making the right (and wrong) decisions.

Geoffrey Moore gives a rather sobering view on the effect that technology is having on America’s middle class and suggests some potential avenues to address this.

Marc Andreessen is interviewed in the Washington Post providing commentary on the impact of revelations on NSA surveillance, net neutrality and bitcoin. His commentary on the latter is particularly interesting and marks out why Andreessen Horowitz are investing heavily in the sector.

E-commerce would’ve gotten built on top of this, instead of getting built on top of the credit card network. We knew we were missing this; we just didn’t know what it was. There is no reason on earth for anybody to be on the Internet today to be typing in a credit card number to buy something. It’s insane, because — which is why you have all these security problems, the Target hack and all this crazy…. And these high fees, this high fraud rate. It doesn’t make sense online to have a payment mechanism that requires you to hand over your credentials to make a payment. That’s just an invitation to fraud and identity theft. It’s just stupid.

But we didn’t have the better way of doing it. So we didn’t know what else to do, and now we have the better way of doing it. Now, it’s going to take time. We’re quite confident that when we’re sitting here in 20 years, we’ll be talking about Bitcoin the way we talk about the Internet today. We just need time for it to play out.

Moving customers over to a subscription model of payments may provide companies with a valuable regular income stream but Brian S Hall points out that this is   not necessarily in the consumer’s best interests.

Timothy B Lee looks at the New York Times’s Innovation report which identifies new disruptive players, but also suggests that the organisation like many incumbents is poorly placed to meet the challenge of new entrants.

Game Oven recently wrote a piece looking at the difficulties in writing software for Android given the fragmented hardware and software environment. Benedict Evans built on this post , pointing to the problems of Android fragmentation but also suggesting that the movement to a more cloud based environment may alleviate many of the current problems associated with developing for Android.

Deloitte has released its latest Media Consumer report looking at changes in media consumption patterns in the UK. Among the areas covered are device ownership, television consumption, trust in journalism, use of social media, cinema viewing, gaming and streaming of music.

Percentage of households that have at least one of these devices

 Julie Ask looks at the role of disintermediaries in an increasingly mobile centred environment, with social media, mapping, entertainment, commerce and payments growing in strategic importance.

Today, a third crop of platforms are laying the groundwork to step into the powerful position of “owning the customer,” by serving them in mobile moments. Consumers expect to be able to get what they want in their immediate context and moment of need. They will reach for their phone for information and services. The issue is, most brands aren’’t yet there for their customers in this moment, challenged to even get customers to visit their mobile website or download the brand’s mobile app.

That’s where the platforms that dominate minutes of use, such as popular messaging and social media apps, come into play. It’s not hard to imagine a future where a small set of highly contextual and curated disintermediaries offer consumers a portal to the universe of services on mobile devices. Companies should consider the possibility of a future where their access to consumers is through this small set of disintermediaries

JWT Intelligence has a look at the mobile payments sector which is encumbered by the chicken and egg scenario. Consumers won’t use a service if they’re not familiar with it but retailers won’t invest in a platform if it’s not widely adopted. Efforts are being made to increase adoption and Apple is a potentially disruptive player waiting in the wings.

A growing amount of attention has been given to the mobile messaging sector lately, particularly in light of Facebook’s recent acquisition of WhatsApp. Line and WeChat are similar (provide text and photo messaging but different from the more traditional mobile messaging players  with Mark Bivens and Jerry Yang comparing the two Asian powerhouses on Bivens’ blog.

I am a strong believer that we will see some version of enhanced eyewear make inroads in the future  but Matt Lake’s review points to  Google Glass being some way from the medium’s end goal.

There’s been a lot of talk lately of a cooling in tablet sales with commentators suggesting that the smartphone can more than adequately fulfill many of the use cases. Providing a counterpoint to these suggestions is research from Flurry which point to growing usage by tablet owners.

Tablet usage

Matthew Yglesias looks critically at the content that Facebook looks to share among its users following Director of Product at Facebook’s recent rant about the state of the media.

Relationship status is one of those sensitive areas that users aren’t always willing to make public on Facebook. In an attempt to overcome consumers’ reluctance (and provide another data source), Facebook is providing consumers with the opportunity to directly ask fellow users what their current relationship status is.

Relationship Status

Facebook has added song and television show identification (à la Shazam) to its iOS and Android app, providing the opportunity to further enrich its collection of consumer data.

Facebook Music and TV Id

Whilst digital technologies such as HTML5 and WebGL are enabling a richer array of experiences online, the majority of online spend is still very much on direct response advertising in the US according to eMarketer figures.

Digital Ad Spending ShareThe featured image is Reliefs by Evgeniy Dikson

 

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The following infographic provides a valuable illustration of trends in the business world as companies go up and down.

S&P 500 Churn Over the Past DecadeThomas Piketty’s book Capital in the Twenty-First Century has raised some important questions in terms of income inequality. The following graph suggests flattening income growth for the majority of Western consumers although the counterbalance to this is the emergence of the middle class in many emerging markets.

Growth in Real Average Income

Whilst on the subject of income, NPR in the US has looked at what professions are likely to put you above (or below) the incomes of your parents.

Household income during Childhood vs Income during Adulthood

Nemo looks at the winners and losers when services like Uber disrupt markets and how regulators can maximise benefits for consumers.

Jason Jacobs from Runkeeper argues that dedicated fitness trackers are likely to go the way of many other devices that have been subsumed within the smartphone.

Steven Sinofsky looks at how many digital services start with a focused offering but see their functionality expand sprawl over time and argues that this shouldn’t necessarily be seen as a bad thing.

JWT Intelligence identify what they see as the ten key mobile trends for 2014.

Felix Salmon argues eloquently for salaries being public, arguing that it is likely to lead to fairer compensation and avoids fueling some of the nastier aspects of  organisational politics.

Harvard Institute of Politics research points to Facebook’s penetration growing among young adults in the US but usage is declining.

Facebook's Reach Among Young Adults is Still Unmatched

Research from the e-tailing group points to social media as only providing a limited contribution towards sales when compared to other digital channels…That’s not to say it doesn’t provide valuable support to other valuable business metrics.

Digital Marketing Channels that Generated Orders for US Ecommerce Sites

A valuable overview of how Facebook is positioning its digital offering can be found in Facebook for Direct Response Marketing presentation produced following recent announcements at the F8 Developers Conference.

Facebook for Direct Response Marketing

Facebook has launched Context Cards on their redesigned iOS app which will look to serve more contextual information based on user location and activities.

Research from RJMetrics points to women dominating among active Pinterest users with 84% staying active after four years.

Pinterest users remain almost exclusively female, 84 stay active after 4 years

Moz looks at how events can be leveraged to grow an organisation’s digital profile.

Are you running low on ideas? Mark Johnstone looks at ways of kickstarting your creative thinking.

The featured image is by German artist MadC in Tahiti where she was invited to paint for the Ono’U Street Art Festival and coverage was found on StreetArtNews.

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The Next Web charts the inexorable rise of HTML5 as Flash becomes increasingly marginalised in a multi device world.

Jean-Louis Gassée looks at the role of the iPad as its growth slows and a role which is arguably stuck in the no mans land between smartphone and PC.

No longer charmingly simple, but not powerful enough for real productivity tasks. But if the iPad wants to cannibalize more of the PC market, it will have to remove a few walls.

Juan Pablo Vazquez Sampere argues that high-end disruption has a much lower chance of success than low-end disruption, and lays out some preconditions for where its more likely to be successful.

Drawing on the topic of disruption is Benedict Evans’ where he explores  situations where innovations and changes in market conditions enable ‘unfair’ competition.

An unfair comparison generally means an unfair advantage, and this isn’t the Olympics – unfair is good. Customers don’t care if a company’s advantage is unfair. Investors don’t care. Unfair advantages are often the best kind. 

Sameer Singh looks at the changes that Project Ara‘s modular view of smartphone could bring to the smartphone sector, providing a disruptive force within the smartphone market.

Project Ara scattered parts

Horace Dediu explores the concept of innovation, contrasting it with novelty, creation and invention.

The Atlantic explores changes to employment in the American retail sector which is being turned on its head by the movement to large format retail stores and the growth of ecommerce.

For consumers, there’s never been a better time to buy stuff. It’s not such a happy story for the people on the shopping floor and behind the counters.

Simply Business provides an interactive infographic looking at Apple, Amazon, Google, Yahoo and Facebook’s acquisitions over the the last ten years.

Hungry Tech Giants

Needing to polish up your social media guidelines? The UK’s Government Digital Service has just released their Social Media Playbook, which should make a good starting point.

Robert Newman in conjunction with other commentators looks at the mixed performance of app based digital magazines and the opportunities provided by digital magazines in the future.

Mindy McAdams explores emerging forms of digital journalism online, that includes reference to examples from the Council on Foreign RelationsDigital First Media, NPR and National Geographic.

Whilst we are on the subject of digital journalism, it is worth exploring Bloomberg’s How Americans Die which uses interactive infographics to explore mortality and its causes in the USA.

How Americans Die

Vision Critical and Crowd Companies infographic looking at the collaborative economy. You can find more detailed coverage in their report Sharing is the New Buying.

A Taxonomy of the Collaborative EconomyDavid Hepworth argues that the power is shifting from content creators to digital distribution platforms in the news, music and entertainment industry.

In responding to this traditional media owners are having to recognise that content in itself is not enough.

GfK looks at the newspaper industries exploration of different strategic options as audiences move increasingly online. The Blizzard, The Sun and the Financial Times are held up as interesting examples of brands adapting to new environments.

Angus Steakhouses are seemingly imprevious to London’s culinary renaissance. The Independent explores their continuing success despite the increasingly refined tastes of London residents.

George & Jonathan provide a data visualisation of a different kind, bringing their music to life.

George & jonathanThe featured image is a Stohead mural in Linz, Austria found on StreetArtNews.