Digital Music Trends – Episode 40

This Week: an interview with David Maher Roberts, CEO of the Filter – a company that since 2004 has been developing online recommendation technology in the UK. A slow week in terms of news: the iPad went on sale this weekend and could boost the development of interactive music, Guvera launched its public beta in the US but kept a low profile, Spotify launched an e-book section and Michael Robertson started a personalized online radio service BYO.fm.

And now here is the transcript of this week’s interview with David Roberts from the Filter. The filter was started back in 2004 by Peter Gabriel and Martin Hopkins and since then it has grown to develop a very successful recommendation technology whilst also shifting its focus from B2C to B2B . David Roberts, the company’s CEO since 2007, talks about its evolution both as a technology and as a business and about the Sounds Digital conference.

www.thefilter.com

AL: Well, I’m really happy to welcome to the show David Roberts, CEO of the Filter, a UK based recommendation engine. Hello David and thanks for coming on the show.

DR: You’re very welcome, hello.

AL: So, first of all, what is The Filter?

DR: Well, The Filter is a recommendation and relevance engine for digital entertainment contents, so music movies, web-videos etc, so it basically it finds the most relevant content that somebody wants to consume. And we do that on music sites, video sites, DVD rental sites.

AL: The company was created by Peter Gabriel and Martin Hopkins back in 2004,  and since then you have made huge leaps in the recommendation technology, you have been CEO at The Filter since 2007, looking back to the history of the company, what do you think are the most important milestones that spurred its development?

DR: Well, several stages. In the first they validated the power of the technology by building music playlists way before Apple Genius was around – it was using technology  to build great music playlists, so actually getting that done and out as a consumer piece of technology was the first milestone. I think after that one of the next milestones was probably getting Nokia to use our technology on their music store – that was the first B2b deal we ever did and it was pretty major. And I think that a final point was a leap into video. we have been working with Daily Motion now for over a year, we only announced the deal a few weeks ago but we have been working with them for ages and being able to use the technology for web video, for a library of 100 million videos was a massive milestone for us.

AL: Music Recommendation services are absolutely vital in today’s increasingly all you can eat subscription model, consumers are kind of confused as to what they should listen to and when presented with a blank page they sometimes don’t know what they want to find. But still, it seems strange that a company like Spotify for example didn’t launch with a full-blown recommendation service from the beginning and it’s not just Spotify, there are many other services that are lagging behind in this area. Why do you think that often the creation of a recommendation infrastructure comes as an afterthought to many companies?

DR: Well, there are probably two main reasons. The first is that these sort of companies  focus first on the content itself and on how they may deliver that and the deals they have to do – in the case of Spotify the deals they have to do with the record labels. So they focus on the UI and they focus on the deals and that takes up 99.9% of their time. So that’s one of the reasons. And it’s a problem across all media companies, they focus on the supply of content rather than on the demand for it. The second reason is that people is that people think it’s easy – they think ‘we’ll do it later” and it’s not – it’s been proven again and again that whether you are Netflix, Google, Youtube it is really hard to get quality personalization in place and it takes many years to be able to do that.

AL: The bulk of your business at the moment is in the B2B licensing of your technology for use by clients such as Nokia as you mentioned earlier and Sony Music for example. But you started out as a B2C service, and you still have that embedded within The Filter, how do you separate thses two units and how do you go about developing them?

DR: Well, the B2C side of it – so our website, our downloadable playlist generator and other things that we do like the iPhone app Bandstalker – all of those things are showcases for the B2B part of the business so we don’t actually separate them. When some of our engineers have some spare time they will develop new features on the B2C side of things but they are very much there to show what we can do and 95% of our time is focused on licensing.

AL: And Data is at the core of filter’s experience naturally. Your services, more than just providing great recommendations to your clients are also complemented with a great set of metrics and analytics that help your clients gauge the impact that you have on their business. How did you go about building the infrastructure to provide this sort of data?

DR: Well, the good thing is that to provide really deep recommendations you have to capture a great deal of very detailed  granular data around the content. Since we were capturing all of this data anyway to feed to the recommendation engine we didn’t have to  build anything separate for the analytics. What we did have to do is start  understanding what information was important and start showing it in dashboards to customers. We understood it was important  when people started realizing that from Omniture and from other existing packages they could not get the same level of detail that we could provide about the content. So it’s now become a bigger and bigger part in the future of what we offer. We actually have 2 services – we have software as a service and data as a service because it’s becoming huge for us.

AL: And although you started with a focus on music you mentioned before that you also create movie and web video recommendations. Is music still the bulk of your business or are online video and movie rental businesses becoming an increasingly important part of you client base?

DR: Well the video and movie rental is defiantly increasingly important. In terms of volumes – the amount of recommendation calls we put out every month i’d say that 75% are now on video, but in terms of revenue 65% of it is still coming from music, so the volume and the revenue are not necessarily connected.

AL: And your client base spans from organization such as video distributor Daily Motion which is pretty huge going all the way down to small start-ups like Evolver.net. How do you deal with working with businesses that have such varied requirements in terms of both the type of recommendation and the scaling of it?

DR: Well we have a very easy start point for recommendations so we can actually set up small businesses without costing much money or time, so it’s a very easy start point. What tends to happen with larger businesses is that they have many more bespoke requirements as to how we need to adapt our recommendation model to them. So that’s when we get much more involved with the teams, how we integrate the APIs etc… Integrating the core technology is fairly straightforward on any system and so we can work with very small businesses all the way to the Daily Motions, the Nokias and the Sony’s of this world.

AL: The Filter is based in Bath, which is a city that is not widely known for its tech community. Did you find it harder to develop the company from there, or would you say that today location has minimal impact on businesses that operate mainly online?

DR: The good thing about Bath is that it’s 10 miles away from Bristol. Bristol has a very strong tech community – there are a lot of digital agencies and a lot of technical resources and creative people that you can access to build up a company in Bath – and since it’s only 10 minutes by train that’s quite easy. Having said that it’s not San Francisco and you have to work quite hard to find the right people to come and join you. But it’s a great place to live and once you attract the right people they love living and working here.

AL: You’ll be one of the speakers at the Sounds Digital event hosted by the Music Void and the XMediaLabs in London between the 16th and 18th of April. What will be the focus of your keynote there?

DR: Well my keynote is all going to be about how to make content more relevant to individuals based on their taste, location, time of the day,  the device they are on – so I’m going to explore what is important to making things more relevant to individuals when it comes to music.

AL: And talking about the Sounds Digital event – you will also be taking part in the Labs sessions as a mentor – what are you planning to bring to the table to help these new digital projects get of the ground?

DR: I guess in my background I’ve been lucky enough to be involved with very large media companies, so I ran all of Future Publishing’s web operations for several years, I set up a lot of magazines, international operations, so I come to the table with that experience. But actually what’s even more relevant is the last three years at the filter where we have gone from a B2C model and strategy and changing that to one that makes a lot more money and is a lot more successful. So I can talk about how you need to be flexible, you need to understand the strengths of you technology and your people  and how you can be flexible to deliver a better business model and a sounder return on investment for the people that are involved.

AL: Well that’s fantastic, thank you very much or joining me on the show and I look forward to meeting you at Sounds Digital.

DR: Thank you very much, take care.

And thanks again to David for joining me on the show.

And now for the news:

– The iPad was released this week-end, what will be the repercussions on the music and music interactivity world?

http://www.wired.com/epicenter/2010/04/ipad-interactive-music/

So the iPad finally went on sale this week-end and Wired dedicated an article to Michael Breinderbruecker’s new app called RJ Voyager as an example of what’s to come for interactive music. The app allows you to tweak and modify music based on very accurate tactile controls that take full advantage of the iPad’s large screen real estate. Michael is one of the founders of Last.fm and is also the head of Reality Jockey which is the company behind RJDJ, so he knows a thing or two about interactive music. It’s no surprise then to see him take full advantage of the iPad’s hardware to allow full control of instruments, effects, patterns in a way that can make the average Joe feel a lot closer to an accomplished producer. This is a great way to show that a new type of technology needs to be developed that can really showcase the iPad’s creative potential – whilst most of the press in the past week has been focusing on the iPad as a consumption device only. If the technology and the licensing of great music come together on this platform there is a great deal more that developers can do to keep the public entertained than there is on the iPhone. In the meantime, I’m sure that interactive music tech companies like MXP4 are already developing for this platform just like most probably the guys at RjDj are. The key here is not in rushing out an app that has been scaled up from the iPhone but to take some time in figuring out how people are interacting with this new device, how they’re holding it, if they are able to hold it in a certain way for a long time before getting tired – i’m already hearing reports that extended reading sessions may require a stand. So there’s a huge amount of unexplored territory and simply scaling up the iPhone experience would really be a bad call at this point. But I already have Michael and the rest of the RJDJ team booked in for an interview in a few weeks’ time so I’m sure that you’ll be hearing more about their strategy towards the iPad then.

– Guvera Launches in public beta in the US.

http://www.musicweek.com/story.asp?sectioncode=1&storycode=1040636&c=1

http://www.billboard.biz/bbbiz/content_display/industry/e3i539277d81ea4a9b116d25c6d60e21c64

Guvera, the Australian start-up offering ad-funded free Mp3 downloads went in to public beta in the US – although the launch was kept low-key and functionality was limited. Out of Music week, Hypebot and Billboard business it was definitely the latter that made the actual process clearer and I suggest you check out their article from the link in the show-notes of you want to have a sneak peek at the screenshots of the service. Guvera at the moment is operating in a limited fashion – probably because they don’t want to end up giving away too much free music too soon and apparently even registered users are not allowed to start downloading tracks straight away. At the moment there are two services operating in the US offering licensed free music – Guvera and Freeallmusic, but their approach is quite different. On Guvera, users have to choose the brands they want to be involved with from the very start and the whole process incorporates that – you could say that the exposure that the brand gets in this way is much greater although their presence could be felt as more intrusive by the user. FreeAllMusic, the Georgia-based start-up, works instead in a more immediate way, which is possibly less memorable to the end users who are made to watch a fairly long advert before being allowed to download the MP3s, without having prior introduction or involvement with the brand. Guvera is now able to give away selected tracks from Universal Music, EMI and IODA and although as usual we have no idea as to what their financial arrangements may be it’s a safe bet to say that if the service catches on they will have to be fairly strict regarding the number of tracks each user gets to download and as to if and how much money they are prepared to lose at the start of this venture. If they are able to cover the cost of the music with the sponsorship money already then great, otherwise as usual it’ll be a race against time to prove that the model works before the VC funds run out.

– Spotify and e-books?

http://musically.com/blog/2010/04/01/spotify-makes-its-move-into-e-books/

It looks like Spotify is really aiming at becoming a home entertainment hub. After their first successful foray into video streaming with the Amy MacDonald event the company launched an e-book section available both on its desktop and mobile clients. The new venture launched with 20,000 books which means that they must have been working on this for quite a while, and it proves the company’s ambitions to really take on iTunes and steal customers away from them whilst Apple is still tinkering with its 1 billion dollars data centre and pushing back the launch of its streaming service. If Spotify was able to 1) add videos and movies successfully 2) team up in a considerable way and across many devices with Android 3) garner enough interest in the US to really get the public’s attention – then it could really have a stab at taking – if not iTunes’ crown – at least a few million of its customers. Naturally adding all these media would cost the company considerably more in terms of licenses, a cost that could either be compensated by scale if the service is popular enough or by extra charges to access the movie and e-book sections in the future. In any case, I think that Spotify is making a really decent case for its future and I look forward to multi-tasking on the iPhone to re-start my premium subscription.

– Michael Robertson launches BYO.com

http://news.cnet.com/8301-31001_3-20001334-261.html

Michael Robertson, who is no stranger to stirring the waters of digital consumption with sites like MP3.com, has now directed his attention to online radio to try and create the prefect service. The new platform is called BYO.fm or Bring Your Own, and merges the concept of the digital locker as a cloud service that matches your own music library and resembles the likes of Tunesbag.com with the idea of personalized radio that is created with text-to-speech technology and is inserted within the playlist. So you could ask for playlist X to run and to intersperse it with the latest news on US politics or the latest Baseball coverage from your favorite minor league team that would probably never be covered on your normal radio. This is a very intriguing idea, especially if the text-to-speech works as promised – but it could be hindered by the fact that content providers are increasingly turning to subscriptions in order to ensure their profitability. The service would then have to make deals with the likes of the New York Times or CNN in order to use their material, which could hinder its development. In the CNET article about this new service there was no mention of monetization although I assume this would have to be a subscription or an ad-based model – also there was no mention as to whether the digital lockers were created with the license of content owners or not – but I guess that since MP3.com eventually closed down due to to multiple lawsuits by content owners Mr Robertson probably has a less litigation-prone plan to guarantee BYO’s future.

Well, that’s all for this week, thanks a lot for tuning in and remember that you can access all of Digital Music Trends’ content on www.digitalmusictrends.com. To follow me on twitter the handle is digimusictrends and if you’d like to post any feedback or news items or if you know or work for a company that I should feature on the show the email is digitalmusictrends@gmail.com.

Have a great week and ’till next time!

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