Facebook adds to project F.A.I.L.

Thursday, February 13, 2020 by Robinhood Snacks | Disclosures

Realizing you're no longer as edgy SoundCloud, but also not as mainstream as Spotify

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Hey Snackers,

"Birds of Prey: And the Fantabulous Emancipation of One Harley Quinn." Sounds more bad Cards Against Humanity game than DC Comics movie. So Warner Bros. changed the title of the Margot Robbie superhero flick after it flopped at the box office.

All 3 major US market indexes closed at record highs Wednesday as coronavirus fears eased. That could reverse today on overnight news of a spike in the death toll.

1. SoundCloud just got a $75M investment — but it's going through an awkward phase

Before Spotify and Apple Music... You turned to Pandora for "stations" that matched your mood, fiercely skipping to find that one song. But when you tired of Michael Bublé-ish, you'd turn to edgier SoundCloud — your go-to for mashups and 50-minute tropical house mixes. The Berlin-based startup has been out of the limelight for years, but it just got a $75M investment from Sirius XM (which, coincidentally, owns Pandora):

  • Street Cred: Described as "the YouTube of music," SoundCloud embraced user-generated tunes and became a place for up-and-coming creators to share their songs. It helped launch Chance the Rapper, Billie Eilish... and Elon Musk's EDM career).
  • Growing Pains: Due to difficult licensing and monetization issues, SoundCloud almost went bankrupt. In 2017, it laid off nearly 200 employees and raised emergency funding.
  • Identity Crisis: As other streamers struck deals with the big record labels, SoundCloud started favoring ad-revenue-generating music from big stars at the expense of lesser-known artists, introducing paid subscriptions and licensed music.

Still around... SoundCloud made $127M revenue in 2018. But it's moved further from the DIY roots that made it popular, while still lagging on the mainstream/money-making front. FYI, both Twitter and Spotify tried to acquire SoundCloud — and both deals fell apart.


SoundCloud was late to the 'License Game'... Its early biz was more like users uploading songs to YouTube without copyright licenses. Now, record labels insist on licenses to use their artists' music (they can get paid on streams). Spotify was quick to strike these license deals, letting it to offer many more songs/artists (and draw more subscribers). By the time SoundCloud made its 1st label deal in 2014, Spotify and Apple Music were already leaders.


What's a Deepfake, again?... Facebook, with its 2.5B users sharing billions of posts, just made a new addition to its fact-checking army: a whopping 4 journalists. The 4 Reuters journalists will join a US fact-checking team that includes the Associated Press, PolitiFact, Factcheck.org, and thousands of FB-employed contractors. Oh, and don't forget machine-taught AI bots that spot potentially false news and flag ALL-CAPS!!! posts.

  • 'Tis the Season: Political ads season. Presidential primary elections are happening — and the outflow of political ads and posts is just gonna increase. FB's been in hot water for misinformation on its platform — and the jacuzzi is getting hotter.
  • Cue the Fact Squad: We're calling it: Factual Accuracy Investigation League (or F.A.I.L., for short). This crew of moderators, journalists, and bots has a lot on its plate (billions of posts per day, including generous servings of misleading, false, and manipulative information).
  • Blog About It: Reuters' 4 journalists will review user-generated vids, pics, and headlines that were flagged or submitted for review. Then, they'll blog about whether something is true, false, or partially true. FB will use those conclusions to label bad info and limit its spread in the News Feed algorithm (by up to 80%).

It would really take an army... to actually fact-check and verify every single Facebook post for misinformation, since most is user-generated content. Even with its F.A.I.L. army, Facebook has become nearly too big to moderate. And Zuck still insists that it's a social network — not an editorial operation like The Wall Street Journal. Since Facebook is failing to keep up, you'll need to stay vigilent.

What else we’re Snackin’
  • Sup: WhatsApp hits 2B users — it added 500M chatters in just 2 years — but it still doesn't make money (bet you've never seen an ad on WhatsApp)
  • Psych: Companies that develop medical treatments out of psychedelic drugs (like LSD and ketamine) are going public on Canadian stock exchanges
  • Designer: Gucci-owner Kering temporarily shuts half its stores in China (because coronavirus), despite posting better-than-expected sales for the quarter
  • Spend: Apple Pay accounts for 5% of global card transactions, according to recent research — it's on pace to reach 10% of card transactions by 2025

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Snacks Daily Podcast

Doordash is the leader of the Delivery Wars (40% of America's chicken gyros are delivered via DoorDash).

Why? Because its CEO thinks the 'First Mover' advantage is a myth. Today's 15 minute Snacks Daily podcast dives in.


Disclosure: Authors of this Snacks own shares of Spotify and Alibaba

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