Apple Music Streaming Into China

Taken from Bloomberg article's
"Apple Expands Music Streaming Service Into China for First Time"

by Edwin Chan, Bloomberg
September 30, 2015

Apple Music, the iPhone maker’s answer to streaming services Spotify and Pandora, will kick off with a three-month trial before charging 10 yuan ($1.57) a month.

☆ Company wants content curated for its second-largest market
☆ Movies and books on iTunes now also available for China

Apple Inc. began offering its three-month-old music streaming service as well as movies and electronic books in China, promising a library of content geared toward its most important market outside of the U.S.

Apple Music, will kick off with a three-month trial before charging 10 yuan ($1.57) a month, the Cupertino, California-based company said in a statement. That’s a fraction of the $10 to $14 the company charges in the U.S. In China, the service will carry regional artists like Eason Chan and Li Ronghao in addition to international stars like Taylor Swift.

Users there can now also rent Chinese- and English-language movies from 5 yuan a piece, and books including Stephenie Meyer’s “Twilight” series and local titles such as Zheng Chunhua’s “Big Head Son & Little Head Dad.”

Customers in China with a foreign Apple ID, such as from the U.S., have been able to download music from the company’s online store. Songs and albums remain off-limits to iPhone and iPad users with a local Chinese Apple ID.

“For the first time, customers in China will have access to Apple’s entertainment ecosystem with music, movies and books right at their fingertips”

China Growth

Apple Music will compete in China with numerous local services offering free access to songs.

Apple sold a record 13 million iPhones during the debut weekend of its latest handsets, boosted by launch-day availability in China, which now accounts for more than a quarter of its revenue. Executives have expressed confidence in the market even as the world’s second-largest economy faces its slowest pace of growth in a quarter-century.

The company is rushing to double the number of retail stores in the country by the middle of next year. Apple said Wednesday it remains focused also on tailoring its online services for the world’s largest population of smartphone users.

“One of the top requests has been more great content and we’re thrilled to bring music, movies and books to China, curated by a local team of experts,”.

Use Split-Tests to Optimize Product

When developing and improving a product, start-ups have to distinguish between value and waste: they must find out which features are valuable for their customers and which aren’t.

Valuable features are those that help the company attract more customers or increase its revenue.

Features that don’t do either are wasteful – even if the founders or engineers think they’re the greatest thing ever.

A clever way of distinguishing between value and waste is split-testing. Whenever you consider adding a feature or changing an existing one, create two versions of your product: one with the new feature and one without it. By testing both versions, you’ll soon see which one is more appealing to customers.

The first companies that used this technique were mail-order businesses. For example, to find out whether a new catalogue layout would increase orders, they printed two versions of it: 50% of their customers got the old design, and 50% got a new one. The catalogues were identical in every other way and the customers were split randomly, so the companies simply had to compare how many orders were placed by each group. These data answered the question of whether the new design was an improvement or not.

In the same spirit, any start-up can test every possible change before actually implementing it. Want to know whether your website works better in red than in blue? Why not create two test versions of it and track customer click-rates for a couple of days?

Any change you wish to make to your product should be tested with this semi-scientific approach before you actually implement it.

Build-Measure-Learn Loop

Build, measure, learn – as fast and as often as possible.

In the search for a sustainable business model, the top priority is learning: every start-up has to learn which products to build and how to earn money from them.

This can’t happen if you’re out of touch with the real world. You need to get out there, show your product to customers, gather their feedback and then learn from it.

To facilitate this, set up so-called BML loops. BML signifies the cycle build-measure-learn:

First you build a simple version of your product, like a prototype or a smoke-test.

Second, you take this product to its actual market and gather customer feedback. By collecting quantitative data from this experiment, you measure interest in the product; for instance, how many people clicked the purchase button and tried to buy shoes from your fake web shop.

When measuring, make sure you don’t just look at the numbers but also talk to your customers. If you want to understand your data, you should learn about the individual impressions and opinions of your customers as well.

What you learn in one cycle should then be used to conceptualize and build a new, optimized product, which brings you into the next BML cycle. This process is then repeated until you find a sustainable business model.

It’s important to be fast here. Each BML loop helps you improve your product and gives you valuable insights about what your customers want. The more loops you can go through, the more likely it is you will find your sustainable business model.

Develop a Minimal Viable Product

Develop a minimal viable product to test your idea in the market.

Many founders spend too much time working on a product in isolation, without knowing whether there are actually any real customers for the product.

If you want to create a sustainable business, you must find out as quickly as possible whether there is any demand for your product.

The quickest and easiest way to get real-world customer feedback on your idea is to create a minimal version of the product. This minimal viable product (MVP) should be as simple as possible and should contain only what is needed to give the customers a realistic experience of how your product would work – just enough to draw useful feedback from them.

The MVP can be a simple bare-bones prototype of your product, or even a smoke test: pretend to sell a fake product.

Take the founders of Dropbox. They knew that developing their idea into a product would take a lot of time, so they chose a simple and creative way to validate their hypothesis that there was demand for a new and user-friendly data-synchronising service: they created a video presenting their idea.

The founders had assumed there was a demand for such a product, and they were right: within one night, 75,000 people had signed up to their waiting list, and the Dropbox team concluded they were on the right track. Thus, they could confidently start developing the actual product.

Similarly, every start-up should first find out whether there’s an actual demand for their product before they start building it.

Test Your Value and Growth Hypotheses

The leap-of-faith assumptions: test your value and growth hypotheses.

Part of developing a product is the leap of faith: a founder believes in the future success of the product she wants to create, even though there’s no proof for this yet.

To quickly close the gap between believing and knowing, every founder should formulate and test two fundamental assumptions:

The value hypothesis assumes that a product will deliver value to its customers, i.e. that early adopters will find and embrace the product.

The growth hypothesis states that the product will not only appeal to the small group of early adopters but will also find a bigger market later.

Both assumptions must be tested as soon as possible. Only if they can be validated is it worth investing the time and effort into developing the product.

Take a look at Facebook: they managed to validate both the value and growth hypothesis at a very early stage when the social network had only a few users.

First of all, the registered users were very active in the network. More than half logged in at least once a day – impressive proof for the value hypothesis.

Second, Facebook had sensational user-activation rates, meaning it gained market penetration very quickly. In colleges where Facebook had been introduced, three quarters of all students signed up within one month – without the company having spent a penny on marketing. Thus, the growth hypothesis was proven as well.

Such impressive data made investors strong believers in the future success of this new social network, leading them to invest millions at a very early stage.

Validated Learning

Find your sustainable business model through validated learning.

In order to find a sustainable business model, start-ups have to discover what their customers want and how to make money from it. They have to find the right product for the right people and understand how to sell it to them.

This doesn’t mean coming up with a great plan from the start. Rather, it requires a process of constant learning: ideally validated learning, meaning learning through a scientific approach.

To begin the process of validated learning, you must come up with hypotheses about whether and how certain products will be successful in a given market. For example, “US customers will be willing to purchase shoes online.”

Such fundamental hypotheses have to be tested, and only if they are validated by talking to customers can the start-up know it’s on the right track towards finding a sustainable business model.

Don’t use questionnaires or fictional customers though; instead, talk to real customers in a realistic environment. The most reliable way to find out whether people will buy your product is to offer it to them and see how they respond.

Take the success story of Zappos: it started with the simple hypothesis that people would be willing to buy shoes online. To test this idea, the company took photographs of shoes in shoe stores and displayed the photographs in a fake web shop. When people actually tried to buy the shoes online, Zappos saw that their hypothesis was valid.

Through this approach, the foundation was laid for one of the most successful business models of the last decade.

The Goal for Start-Up

The purpose and main goal of a start-up is to find a sustainable and profitable business model.

The  company need to be more than just a temporary pet project that will sooner or later dwindle and die, you must find a way to acquire customers and earn money by serving them including find something that people do want and will be willing to pay for.

Thus, the sustainable business model is the one that works today and can work in the future as well.

The main responsibility of any start-up’s management should be to focus the whole company, including everything being done on a day-to-day basis, on reaching this one main goal. The faster a start-up finds its way to a sustainable business model, the likelier it is to succeed.

Start-ups need to be managed differently

Taken from blinks insight of "The Lean Startup" 

Traditional management consists of two components:

- developing plans,
- overseeing the people executing them.

A manager creates a plan, sets milestones, and delegates tasks to her employees, guiding them to ensure they hit their milestones on time.

This management strategy works in established companies that have been around long enough to know what worked in the past and therefore what could work in the future.

Start-ups are different though: They can’t predict their own future because they have no past, don’t know what their customers want, and don’t know which approaches are best for finding customers or creating a sustainable business. To find out what could work, they must stay flexible. To adopt fixed plans with set milestones or rely on long-term market forecasts would be to delude themselves.

Nevertheless, many founders do use corporate-management tools such as milestone plans and long-term market forecasts. They act as if they are preparing a space rocket for liftoff, tinkering with it for years and only launching it when they think it’s perfect. In reality, managing a start-up is more like driving a jeep across unstable and shifting terrain, where the founders must constantly change direction and respond quickly to unexpected obstacles and dead ends.

However, start-ups shouldn’t abandon planning completely to adopt a chaotic “just do it” mindset either. Driving chaotically is not going to get you anywhere; someone has to be at the wheel to make intelligent decisions about which way to go.

A start-up’s management team should try to maintain an overview of their situation and keep their company steered toward its overall goal. Hence, they need to find the right metrics to measure whether their journey is leading them in the right direction.