(#86) META's AI roadmap; Spotify's road to becoming a profitable aggregator; on Japan
Tyler Cowen (from Bloomberg) on creating a Federal Bitcoin Reserve
Summer is upon us, but business events don’t stop. On the contrary, the recent market trends triggered by Japan showed how many things can happen in a usually boring August.
Onto update:
Strategy
Spotify showed the first profit, ever.
For those who read this newsletter know that Spotify is an aggregator. However, aggregators are not created equal.
Spotify & others from this industry are ‘prisoners’ to the record labels who have the music rights for most artists. That’s why the wave of initiatives to move away from this model towards podcasts, creative studios, and more. Mixed results so far.
Other key insights from their financials:
1/ They have increased the prices in some key markets.
2/ Added over 250,000 audiobook titles for Premium subscribers in selected markets
3/ Launched a Basic plan in Australia, the United Kingdom, and the United States, providing eligible users with the choice of ad-free music listening while excluding audiobook listening time.
4/ Launched Creative Lab, a new internal ad creative agency, along with Quick Audio, a generative AI tool designed for advertisers.
5/ Europe is the largest Premium subscribers market, making a bullish case for the Americas and S-E Asia. FT, Financials
Logitech considers 'Forever Mouse' with subscription fee
I think that’s a bad idea because people are fed up with subscriptions.
But here is Logitech’s CEO Hanneke Faber:
“The other day, in Ireland, in our innovation center there, one of our team members showed me a forever mouse with the comparison to a watch. This is a nice watch, not a super expensive watch, but I'm not planning to throw that watch away ever. So why would I be throwing my mouse or my keyboard away if it's a fantastic-quality, well-designed, software-enabled mouse. The forever mouse is one of the things that we'd like to get to”
Time will tell. LINK
META it’s All in on AI
Some comments on the last updates from the investor’s call:
1/ Paid subscriptions (ie. blue check) in the EU account for 1% of the total revenue generated here.
2/ In the last quarter, the company generated over $39 billion in revenue, a 22% increase from the previous year, and approximately $13.5 billion in profit, up 73% (!).
3/ At least one of Meta’s apps is used daily by 3.27 billion people. This scale and revenue enable significant investments, a practice for which Zuckerberg is well-known.
4/ Meta is investing billions in Nvidia hardware and other infrastructure in anticipation of future returns.
5/ Meta's AI assistant is on track to become the world's most used by the end of the year.
6/ AI Agents are being introduced in WhatsApp.
7/ Meta is already preparing to train Llama 4, scheduled for release next year.
8/ Although AI has taken precedence over the metaverse at Meta in recent quarters, Zuckerberg noted that Quest 3 sales are surpassing company expectations, though he did not specify what those expectations were.
9/ Threads has exceeded 200 million monthly users.
10/ Facebook is experiencing renewed growth among young adults, reportedly.
I am super bullish about META. LINK
Apple’s streaming strategy with Apple+
Bloomberg has a long piece on what’s happening with Apple’s streaming strategy. Here top 3 insights:
1/ Apple is shifting towards more stringent budget management for its Hollywood projects. This involves regular budget meetings with studio chiefs and exerting more control over production costs. Apple aims to make its streaming business more sustainable by reducing upfront payments for shows, quickly canceling underperforming series, and ensuring productions stay within budget constraints.
2/ Despite previously investing heavily in big-name projects and high-profile directors, Apple is now more cautious about greenlighting expensive productions. The company has faced disappointments with high-cost projects that did not perform well, leading to a more selective approach in choosing which projects to fund. This includes delaying or adjusting productions like "Foundation" to manage costs effectively.
3/ To complement its original programming and reduce costs, Apple is increasing its licensing of content from other studios. This strategy is intended to balance the content offering on Apple TV+ without heavily relying on costly original series. The focus on licensing is part of a broader effort to create a more financially viable streaming service amid tough competition from industry giants like Netflix and Disney+. LINK
Artificial Intelligence
a16z: Why AI will transform the next generation of Sales Tech
Interesting insights from one of the most appreciated VC firms in the world. LINK
[Academic paper] GPTs are GPTs: Labor market impact potential of LLMs
Abstract
“We propose a framework for evaluating the potential impacts of large-language models (LLMs) and associated technologies on work by considering their relevance to the tasks workers perform in their jobs. By applying this framework (with both humans and using an LLM), we estimate that roughly 1.8% of jobs could have over half their tasks affected by LLMs with simple interfaces and general training. When accounting for current and likely future software developments that complement LLM capabilities, this share jumps to just over 46% of jobs. The collective attributes of LLMs such as generative pretrained transformers (GPTs) strongly suggest that they possess key characteristics of other “GPTs,” general-purpose technologies (1, 2). Our research highlights the need for robust societal evaluations and policy measures to address potential effects of LLMs and complementary technologies on labor markets.” LINK
Investment Case for GenAI Apps in Financial and Professional Services. LINK
Things Happen
A thread on what’s happening with Japan. LINK
Tyler Cowen (from Bloomberg) on creating a Federal Bitcoin Reserve. LINK
How India is starting its chip industry from scratch. LINK
Adani family succession plan (ie. $213 billion). LINK
David Heinemer Hansson: “Cookie banners show everything that's wrong with the EU”. LINK
Palantir CEO Alex Karp's latest letter to shareholders. LINK
Samsung unveiled a 965-KM solid-state EV battery, that charges in 9 minutes. LINK
Data
Rolls-Royce’s extraordinary recovery. LINK
Demand for "Made in America" products remains robust. LINK
Outside Interest
Summarized Sam Altman’s guide on productivity. LINK
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Thanks for the newsletter. Great insights. As always. Still in shock after reading this: "At least one of Meta’s apps is used daily by 3.27 billion people."