We Analyzed TechCrunch Disrupt Winner RecordGram

Watch out Musical.ly, here comes RecordGram, that will now allow users to not only lip dub along famous songs but also record original songs and share them with the world.

RecordGram is the freshest TechCrunch Disrupt winner. It is an iPhone app that vertically combines three different businesses: An online marketplace for music producers who sell their beats, a mobile recording studio that allows to record and video an original song, based on a downloadable beat, and a curation and discovery platform for artists, matching the best of them with producers.

RecordGram turns to the same user base: teenagers amateur artists with a dream to become professional artists or just turn more popular. For such an audience, Musical.ly is not enough. It lets them sing along other people’s songs and focusing on video qualities. RecodGram offers the same audience, the opportunity to download free or charge or $5 at the maximum (Producers are used to selling beats for hundreds or thousands dollars in average), record their song over the beat (Instead of paying hundreds of dollars to professional studios), video it, and share it in social networks.

Read Zirra’s analysis report here

Source: RecordGram

Bringing down the price of recording a song, either by offering free or cheap beats or by saving the cost of studio sessions can appeal to teenagers around the world. Selling beats on a large scale, even for a lower price, can be an additional stream of revenue for music producers.

Business Model: RecordGram’s main business model is charging a monthly fee of $10 (or a yearly fee of $90) from producers that want to upload their beats to the platform. When those beats are leased by artists, RecordGram takes 20% of the in-app purchase and provide.

Marketing Strategy: The company has an affiliate network of ten music distribution companies, works with eight music marketing experts that cut deals with shows, concerts, and conferences,  as well as with celebrities that engage with their audience through the app, such as Pitbull and Flo Rida. The company added so far more than 700 beats by top producers including Co-Founders Winston “BlackOut” Thomas, and MIMS, well as StreetRunner and Jason Derulo. The app was launched only at the beginning of May 2017, so it is too early to measure its usage and popularity. The company is a part of the only music technology accelerator in the U.S, Project Music, funded by Universal, Warner Music, Maverick, Landscape, and more. It is self fuded, probably by the co-founders and their friends and family.

Exit Strategy: According to the company, acquiring RecordGram could be a market differentiator for Apple, Google or Amazon. Beats CEO Jimmy Iovine is now working on a TV show production, and Amazon is already producing a bunch of successful TV series such as Mozart in the Jungle and Transparent.

Competitors: ReordGram competes with online downloadable beats services such as Beatstars, recording studios as well as apps such as Musical.ly and Smule’s Autorap. RecordGram actually vertically integrated all of the competitors offering combined. Beatstars allows beats download but you have to take it to a studio. Musical.ly doesn’t allow to create original music. Smule’s Autorap is solely a mobile recording studio. In addition, the app is not leaning on any major label.

SoundBetter is also considered an indirect competitor. The company has already an established market, targeting serious independent musicians, connecting them with top music production professionals. So far, SoundBetter delivered million of dollars to its members.

Source: Zirra.com

Risk factors:

1.RecordGram doesn’t have any proprietary technology. However, the company filed a provisional patent based on its business model that integrates three services: mobile production marketplace, mobile recording studio and a social network that curates and distributes RecordGrams’ artists.

2.As a user-generated content platform, RecordGram does not filter producers or artists, thus creating a richness of content with only marginal curation.

3. Although its name has similarity with Instagram, RecordGram does not offer a variety of sound effects, that could improve the quality of the production or just make the app more playful. This advantage is kept for professional studios in the meantime.

4.According to the founders, the app will appeal to “Musical.ly’s 8-12 years old users”. It remains to be seen how serious is its privacy policy and abuse prevention mechanisms, considering RecordGram allows users to connect via its social network layer.

5. The platform is not yet ready to sell songs or sign artists at labels. It is impossible to sell a song that is based on one of the platform’s producer’s beats without resolving digital rights protection first, which could be done manually.

6. Copyright infringement is still a threat although the company claims it has off the shelf technology to prevent it from happening.

Read Zirra’s analysis report here

Featured Image: TechCrunch.com

 

 

 

 

5 Startups That Snapchat Should Buy

Snap has worked its way wisely through small and medium acquisitions. In fact, the company had its largest growth recently in 2015, thanks to the acquisition of Looksery, the AR company that’s behind Snap’s animated lenses. Now, armed with at least $3.4 billion dollars that they raised during their IPO a week ago, Snap can indulge itself and buy more and larger companies. To benchmark that assertion, consider that Looksery was Snap’s biggest M&A so far, costing it $150.6 million.

 

Snap’s acquisitions. Source: Crunchbase

Musical.ly

The teen-focused lip-syncing app Musical.ly seems like a natural acquisition target for Snap. It is one of the fastest growing social networks apps which engages users with the phone’s camera, just what Snap is looking for. The Shanghai-based company boasted some 100 million users last fall and is growing rapidly, particularly since last May when there were not more than 60 million users.

Musical.ly is what Vine wanted to be but failed to achieve. It allows users to share videos of themselves lip-syncing to 15 seconds of a famous song or a familiar scene from a movie. Unlike Vine, the app plays the song for you and makes sure you can sing in your tempo and style. Musical.ly allows users the freedom to move and dance in a cool way and matches it with famous songs, making for some very viral video clips, turning a few of the users into online superstars.

The Chinese company behind it launched a few more apps, such as video streaming app Live.ly, which has become more popular than Twitter’s Periscope but still competes with Facebook Live. The have also released Ping Pong, a video messaging app, and Squad, a group video chat app that competes with Houseparty.

Nevertheless, If Snap chooses to buy Musical.ly, it will need pay not only for 100 million users but also to cover the total investment in the company that sums up to about $120 million. Undoubtedly, if executed Musical.ly would be Snap’s biggest acquisition so far.

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Blippar

UK-based Blippar has turned out to be one of the largest and most promising AR tech and content companies around the globe, raising almost $100 million and serving dozens of brands, publishers, and agencies. In addition to augmented reality and computer vision technology, Blippar’s strategy was commercial from the beginning, offering a platform that allows its customers to create AR content themselves. The company has counted Coca-Cola, Pepsi, McDonald’s, and Walt Disney as clients and, in that manner, Blippar can bring assets such as advertisers, technology, and users while being in line with Snap’s camera company strategy. [Read here for the full Company Analysis report on Blippar].

The company has seen better days regarding valuation, which could entice Snap to offer a deal good for both sides. In 2015, the company was rumored to have been valued at $1.5 billion following a takeover by US-based mobile chip maker Qualcomm. Zirra, a company that analyzes startups using data from 85 public sources, estimates Blippar’s valuation at no more than $700 million. According to a report published by Bippars’ accountants, the company is in need for another financing round, after raising about $100 million from two rounds, the last one a year ago.

Blippar is unique in its computer vision and deep learning technology that allows its app to recognize objects immediately and efficiently. The company had created the “Wikipedia” of the visual world, a byproduct of its technology that allows getting recommendations, definitions and more features about each object scanned.

Facetune

Jerusalem-based Lightricks, the company behind Facetune, is another smaller and cheaper candidate for being snapped up by Snap.  The Facetune app makes it easier to take selfies and then make them look awesome. The app enables users to perform high-quality edits to their photographs without the need of desktop software. The company currently offers three iOS apps: Facetune (also available on Android), Facetune 2.0, and Enlight. The first two enable users to quickly adjust their portraits, while the latter is aimed to editing any kind of photograph. Recently, Lightricks added automatic 3D meshing capabilities, making it the closest thing to having a professional photo retoucher in your pocket.  Zirra values the company at about $60-$70 million. [Read here for Zirra full Company Analysis Report on Lightricks]

Fitfully

Snap’s long term camera strategy has the potential to accelerate AR commercial applications, such as measuring physical items and transforming them into virtual objects inside the app. An application that scans the user’s foot and then recommends several shoe models would then make sense down the road.

Fitfully launched an app that takes a 3D scan of the user’s foot and produces an accurate model which is then used by the fitting engine they have developed. This fitting engine places and aligns the user’s 3D virtual foot “inside” a shoe to ensure its fit and accuracy, helping them buy shoes online with confidence. Users can share their 3D foot with others, which allows people to accurately buy shoes for friends and family.

In addition, online stores can also integrate with Fitfully’s mobile scanner and technology which offers a dashboard that can track inventory and generate shoe or user specific data. Fitfully’s potential market is huge: 35% of total online purchases of shoes are returned to the store, 90% of those because of poor fit, costing online stores an average of $4.90 per return for restocking. [Read here for the full Company Analysis Report on Fitfully]

Pinterest

Pinterest is, first and foremost, the biggest database of curated photos, but now it would also like to brand itself as the visual search engine for objects in the real world, a very similar quest to that of the UK-based Blippar. This can place Pinterest in an exciting position as a candidate for acquisition by a Snap that wants to be a “camera company.” Think of a Snap user taking a photo of an armchair, which Pinterest then identifies using Lens, a company acquired recently by them.  Cimagine, another acquisition of Snap, could then embed the virtual armchair in the room the user would like to preview it in before purchasing.  Pinterest, which already has e-commerce capabilities, is now pushing itself into search advertising, making this an interesting pairing.

Pinterest is considered as one of the dozen tech unicorns most likely waiting in the pipeline to go public after Snap. Now valued as low as $4.3 billion by Zirra, after being previously valued at about $11 billion, Snap may find the company more attractive to take over, along with their $300 million in revenue.

Post-IPO Optimism

After the hype tied with the first days of the IPO, the stock went down from $27 to about $21 today, back to the natural valuation of the company: around $24 billion. Yet, Oren Bar-On, senior partner at accounting firm EY thinks that Snap’s IPO is a good sign to the market. “The public likes to hold stocks of well-known brands and is willing to take risks after years of ‘drought’ in the IPO market. These are great expectations for additional yield over the market yield. Within two years we’ll have to see if Snap doubles its revenue on a year-on-year basis. 2017 will keep challenging growth startups with a blurry business model or without the elite technology that promotes growing platform such as VR, autonomous cars, AI, and bot. ”

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