Sonos will never be like Roku
Good morning, and welcome to Protocol Next Up. I am taking a few days off this week, so I've been writing this slightly abbreviated version of Next Up a few days in advance, and am crossing my fingers that Quibi won't rise from the dead by Thursday. Still, stay around for my take on the Sonos Roam and what it tells us about the company's business, as well as a story about lizard DJs.
The Big Story
For Sonos, making smart home speakers was the easy part
Sonos will start selling its new compact and ultra-portable Sonos Roam speaker later this month. I have been playing with one for a week or two, but I'll spare you my musings about sound quality (the review embargo was lifted on Tuesday, so you'll find plenty of other good reviews out there).
Instead, I'm going to tell you a bit about what using the Roam has taught me about the challenges and opportunities Sonos faces as it prepares to go beyond the home, partner with automakers and perhaps even build its own headphones.
Sonos is having a bit of a moment right now. The company's executives have long said that they want to go beyond the home. In 2021, that's finally happening.
- The Roam is the company's first truly portable speaker, priced and sized for road trips, beach days and more.
- Then there is that partnership with Audi, which will bring Sonos-powered speakers to the car maker's 2022 Q4 e-tron model.
And Sonos is also continuing to build out its services business, with CEO Patrick Spence telling me last month that the goal was to attract 500,000 paying customers to its Sonos Radio HD tier; the free, ad-supported Sonos radio is already the third most-listened-to music service on Sonos speakers, according to Spence.
However, there's a catch. As Sonos expands into new areas, it has to tread carefully to not leave existing customers behind.
- The company has long prided itself on supporting hardware much longer than other consumer electronics companies, and upset many early adopters when last year it announced plans to end updates for legacy hardware.
- Sonos backpedaled from that snafu, but it's undeniable that some of the company's older speakers have their limits when it comes to playing with new products and services.
Case in point: The new Sonos Roam offers a handover feature. Walk up to your living room speaker with it, press a button, and the song you were playing on the Roam gets passed on to the other speaker. It's a neat trick, but it doesn't work with the Play:3, Play:1, Port, Connect and Connect:Amp products. That may not matter as much for the Roam — how often are you really going to hold up a speaker to another speaker? — but it could be a big deal for the still-unannounced Sonos headphones, which will rely on easy music swapping as a major selling point.
Services are just as much of a minefield for Sonos. I took the Roam on the road this week. As soon as I was out of reach of my home Wi-Fi network, the Sonos app stopped working. I could still use the speaker via Bluetooth, but without the app, there was no way for me to access Sonos Radio — not an ideal situation if you are trying to get people to pay for your services.
But Sonos has a reason for why Sonos Radio is (for now) reliant on Wi-Fi: The company doesn't want to stream to non-Sonos devices, and Spence told me that this may not change anytime soon.
- Ultimately, Sonos is different from companies like Roku that use cheap hardware as a loss leader to monetize their user base via services.
- Sure, Sonos would love to generate some recurring revenue, too, but the company's primary business is in hardware.
There are some possible work-arounds that could help Sonos make its hardware and services work better together. The Roam, for instance, already uses NFC during setup. Tap the speaker with your phone, and it automatically gets your Wi-Fi credentials. One could imagine the same procedure to unlock the Sonos app on the go. However, the fact that I have to speculate on ways Sonos could solve some of these hiccups shows how challenging it can be for a company to embrace new devices, use cases and revenue streams without abandoning its existing business and customer base.
- On Protocol: Google acquires 3D audio startup Dysonics. This could be a sign that spatial audio is coming to Pixel Buds. Or maybe it's for a future AR device?
- Roku's Scott Rosenberg on the company's content plans. Engadget spoke to Roku's content boss after the company acquired "This Old House."
- Also on Protocol: Venture Reality Fund GP Tipatat Chennavasin on VR unicorns, Apple's headset and his secrets for tracking startups.
- The Minions may disappear from Netflix. Comcast is considering removing Universal movies from third-party streaming services to prop up its own Peacock venture.
- Speaking of: When Netflix lost "The Office," piracy went up. Turns out those kinds of separations have side effects.
- ILM on how it helped make "The Mandalorian." The Disney+ show was produced with a new version of Stagecraft, ILM's real-time production environment.
A MESSAGE FROM SLACK
Business leaders who understand that success rests on superior customer experience are always seeking better ways to unite their teams in order to best serve the customer. That means weaving support and service teams throughout the entire organization rather than pushing customer care into its own silo.
Authentic Artists is launching AI-driven DJs for the metaverse
The internet's next breakout star may be part iguana. DJ Dragoon, as the up-and-coming artist with lizard DNA is called, did a few gigs on Twitch late last year. Now, he is getting ready to turn up the volume and go live again, accompanied by a gang of equally surreal friends that include a female DJ with a cyborg eye and a pint-sized bunny who likes to spin trap beats.
This crew of unlikely characters was conceived by Authentic Artists, a startup that came out of stealth Wednesday with an intriguing proposition: Authentic Artists develops virtual beings that can perform live and interactive music sets online. In the coming weeks, the company wants to unleash Dragoon and his friends onto audiences on Twitch, with plans to eventually bring them to metaverse platforms like Roblox and Fortnite as well.
"Virtual entertainment is the new cultural center of gravity," Authentic Artists founder and CEO Chris McGarry told Protocol.
Authentic Artists has developed a dozen such virtual DJs thus far, and is powering their performances with a custom-built AI music engine that uses a catalog of 130,000 MIDI files to generate performances in real time. The resulting music is being fed into the company's animation pipeline, and there's a feedback mechanism for Twitch audiences to change the course of a set. "Our AI-driven artists have musical superpowers," McGarry said.
- Each of the performances is completely unique, and McGarry said that he is discouraging his team from taking too much inspiration from real-life artists. "Our mandate is to imagine a new frontier in music," he said. "We are not trying to create a digital facsimile of what already exists."
- Authentic Artists has been able to attract a number of high-profile backers, including James Murdoch and his investment arm Lupa Systems, Roblox Chief Business Officer Craig Donato and hip-hop producer Young Guru. McGarry didn't want to talk about business models just yet, but suggested that there were a range of opportunities to monetize virtual artists down the line.
- The company is coming out of stealth just as musical performances on platforms traditionally thought of as online games are getting increasingly popular. When Lil Nas X took to Roblox in November, his performance was watched by 30 million users from all around the world, prompting Donato to tell Protocol that Roblox was planning to host a lot more concerts.
"They see the power of music in those environments," McGarry said. And to audiences who are already comfortable with esports and metaverse environments, it may not matter all that much whether those artists are real or AI-powered.
And who is to say a half-lizard isn't as compelling as any other public persona? Authentic Artists is already planning to launch Instagram and SoundCloud profiles for Dragoon and his friends. "They do have backstories, origin stories," McGarry said. "We are creating fully three-dimensional artists."
A version of this story was first published on Protocol.com.
Thanks for reading — see you next week!