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Comcast will sell its one-third stake in Hulu to Disney starting in 2024 for a minimum of $5.8 billion, giving Disney full ownership over Hulu. Until then, Comcast will be a silent investor. Both Disney and Hulu are looking to launch their own streaming services soon in response to declining cable subscriptions on traditional TV. More big media companies that own TV networks are also planning to join in on these efforts, leading some to believe that content will be more fragmented in the future. Users will additionally need to pay more to continue watching the same content.

YouTube Premium and YouTube Music are now available in more than 50 countries. Users will pay for the two services at a cost adjusted to each country’s particular economic situation. For example, YouTube Premium costs about $2 per month and YouTube Music costs about $1 per month in India. Currently, US subscribers pay $11.99 per month for YouTube Premium and $9.99 per month for YouTube Music.

A recent US Supreme Court ruling this week allowed Apple customers to file an antitrust lawsuit against Apple over the company’s alleged app store monopoly. The case is similar to a European complaint filed by Spotify over Apple’s app store policies in March. In a 5-4 decision by the Supreme Court, customers can now proceed to sue Apple for anti-competitive behavior by allowing apps to be sold for iOS devices via its own store, and then charging a 30% commission on sales. App makers usually pass this fee on to users, thereby creating higher-than-competitive prices. This has, in turn, affected in-app subscriptions for services like Spotify, who argued that “consumers should have a real choice of payment systems, and not be ‘locked in’ or forced to use systems with discriminatory tariffs.”

Now, the details...
Compiled by Heidi Seo

Exploration Weekly - May 17, 2019

Disney Takes Full Ownership of Hulu From Comcast

Previously owned by Comcast, Hulu is now fully taken over by Disney. Both companies are preparing to launch their own streaming services in response to declining audiences for traditional TV. The announcement was made on Tuesday, adding that Comcast, which owns a third of Hulu, can sell its stake to Disney starting in 2024, for a minimum of $5.8 billion. Until then, Comcast will be a silent investor. Hulu launched more than a decade ago, and it continues to show network TV episodes and original series for $6 a month. It also offers a newer, cable-like service with live TV channels for $45 a month. In the past few years, a number of other streaming services have emerged, leading to a drop in cable subscriptions. Some include ones from AT&T, Google, and HBO. However, big media companies that own TV networks are planning to launch still more streaming services to make up for declining revenue from fewer cable subscriptions. Disney’s deal with Comcast is not a surprise, because it had already become the majority owner of Hulu when it absorbed Fox’s stake as part of its purchase of Fox’s entertainment businesses. The total control of Hulu gives Disney more power to support its own streaming efforts in, for example, Disney Plus, which is likely to offer discounted bundles with Hulu and its sports service, ESPN Plus. With the launch of more new services, users may see an increase in fragmentation of content, as well as having to pay more to keep watching the same stuff. The agreement with Disney and Comcast values Hulu at a minimum of $27.5 billion in 2024.

YouTube Premium and YouTube Music Now Available in More Than 50 Countries

Both services, YouTube Premium and YouTube Music, are now available in more than 50 countries, including a variety of regions in Europe like Bulgaria, Cyprus, the Czech Republic, Hungary, North Macedonia, Poland, and Romania. The company announced that the services now officially have 10 times the reach they did when YouTube Red relaunched as YouTube Premium in May 2018. Each country will offer the two services at a cost adjusted to each country’s particular economic situation. In India, customers pay about $2 per month for YouTube Premium (which includes YouTube Music), or about $1 for YouTube Music by itself. According to 9to5Google, YouTube Premium costs about $7 per month and YouTube Music costs about $6.50 per month in the Czech Republic territory. In the US, YouTube Premium is $11.99 per month, and YouTube Music is $9.99 per month.

US Supreme Court Allows Antitrust Lawsuit Against Apple to Proceed

Apple customers can file an antitrust lawsuit against Apple over the company’s alleged app store monopoly, confirms a recent US Supreme Court ruling this week. The case is similar to a complaint that was filed by Spotify in Europe over app store policies. A group of iPhone users in the US have accused Apple of anti-competitive behavior by only allowing apps to be sold for iOS devices via its own store, and then charging a 30% commission on sales, which most app makers pass on to users. The Supreme Court ruled that these customers can sue Apple in a 5-4 decision, even though the tech giant argued that app transactions are with the app developer, not Apple itself. The court responded, “If a retailer has engaged in unlawful monopolistic conduct that has caused consumers to pay higher-than-competitive prices, it does not matter how the retailer structured its relationship with an upstream manufacturer or supplier.” These policies apply to in-app subscriptions as well, which causes problems for services like Spotify. In Europe, Spotify demanded that “consumers should have a real choice of payment systems, and not be ‘locked in’ or forced to use systems with discriminatory tariffs.” Now that the US Supreme Court has decided to proceed with the American case, the arguments relating to anti-competitive behavior will begin to be properly assessed.

Spotify Rolls Out Soundtrap for Storytellers, a New Subscription Service for Podcasters

Earlier this year, Spotify shelled out over $340 million and acquired both Gimlet Media and Anchor, and spent an additional $55.8 million to acquire Parcast to strengthen its podcast division. The acquisitions spurred the company to create Soundtrap for Storytellers, a variety of new tools for podcasters. The new subscription platform is currently priced at $14.99 per month, with an annual plan costing $11.99 per month, aiming to reduce the time and investment needed to make podcasts sound professional. Features include recording, remote multi-track interviewing with video chat, smart editing of audio as a text document, full audio production, direct-to-Spotify publishing of the podcast, and transcript publishing to optimize SEO. The tools can be accessed on desktops, and a limited set of recording and editing services on Android and iOS devices. On average, Spotify users consume 4.4 hours of content per week, beating Apple Music’s 3.7 hours. Amazon Music Unlimited’s users only consume 1.7 hours of podcast content, according to estimates shared.

Revenues Increase by 39.4% in Tencent Music Entertainment Q1 Financials

The Q1 financials were posted this week by Tencent Music Entertainment (TME), owner of the biggest digital music platforms in China. TME, which trades on the New York Stock Exchange, saw total revenues rise 39.4% year-on-year in Q1, to RMB 5.74 billion ($855 million). RMB 1.61 billion ($239 million) of that figure derived from TME’s online music services, covering subscriptions, album sales, and sub-licensing music to competitors’ platforms. That was up 28% year-on-year and 28% of TME’s total revenue amount. “Social entertainment services” made up the majority of TME’s Q1 revenues, which were up 44.3% year-on-year to RMB 4.13 billion ($616 million) in the quarter. The company’s paying online music subscriber base in Q1 also grew to 28.4 million, up 27.4% year-on-year. In order to drive more paying subscriber growth in the future, Tencent is planning to place premium music content behind a paywall on its services by “windowing” music by certain artists. TME’s Chief Strategy Officer, Tony Yip, reported the paywall’s success in a post-earnings conference call on May 13, stating, “We are seeing encouraging results so far, which gives us the confidence that this is the right strategy that can generate significant value for the company over the long-term.”

YouTube Launches Two New Ad Products, Discovery Ads and Bumper Machine

YouTube announced two new tools, dubbed Discovery ads and Bumper Machine, to help marketers who do not want to incur the time and expense of producing their own ads. Discovery ads are YouTube ads that do not require video content. Marketers can upload their best images from a social campaign, which Google will then optimize across Gmail, Google Discover, and the YouTube homepage. Google explained that watch time derived from content discovered on YouTube’s homepage has grown by a factor of 10 over the last three years, making it an increasingly pivotal hub for brands. The second tool, called Bumper Machine, builds on the six-second bumper ad format that YouTube first unveiled in 2016, which are unskippable and predominantly target mobile viewers. It will be able to harness machine learning technology to auto-generate six-second spots from longer video assets, saving marketers time and money. The machine identifies interesting and well-structured moments in longer video, such as those that contain product or brand info, human faces, motion, and contrast, says VP of product management Vishal Sharma. Bumper Machine will then organize those scenes into several final ad variations for users to pick from. Marketers can also make simple edits before publishing. The announcement for the two new tools were made at the company’s annual Google Marketing Live showcase, where the search giant unveils new ad products.

Spotify Unveils “Lite” App in India

Spotify recently made its Spotify Lite app available in India after testing it out in various countries like Indonesia, the Philippines, and Brazil. The stripped-down version of the smartphone app is only 11MB in file-size and is designed to be used in “slow network conditions”. The company has amassed more than two million users in India after its recent launch there. Spotify India MD Amarjit Batra chimed in, “When Spotify launched in India two months ago, we had committed to localising the app so that more and more people can listen to music...Spotify Lite Beta is a step in that direction as it enables users to play millions of songs for free, takes up less space on phones, and saves data when used on the go.” Back in September 2016, YouTube Go was also released in India, a “lite” version of the YouTube service, which grew the Indian user-base to more than 265 million people.

Macklemore and Ryan Lewis Demand $149,000 in Legal Fees Over Copyright Infringement Lawsuit in Louisiana

Back in May, New Orleans jazz musician Paul Batiste filed a lawsuit against artists Macklemore (real name Benjamin Hammond Haggerty) and Ryan Lewis for sampling his works on the duo’s biggest songs like “Thrift Shop” without permission. Batiste served as a member of The Batiste Band founded in 1976. The copyright infringement lawsuit was filed in the US District Court for the Eastern District of Louisiana. A federal judge last month ruled in favor of Haggerty and Lewis, reporting that Batiste had failed to produce sufficient evidence proving that the duo’s songs showed a “striking similarity” to his own works. Three musicology experts, Brian Seeger, Lawrence Ferrara, and Paul Geluso, submitted reports which led to the court’s decision. Batiste also produced a report from alleged “musicology expert” Archie Milton. However, Haggerty and Lewis told the court that the jazz musician had ghostwritten the document. Now, the duo has demanded payment over Batiste’s failed lawsuit, amounting to $149,358 in attorneys’ fees and costs.

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