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Bullshit taxes and Icelanders abroad

The following post is from The Northstack Memo, our weekly commentary newsletter on everything startups and tech in Iceland. You can sign up here.

Bullshit taxes incoming

It continues to amaze me how politicians can be bullied by lobby groups that are at the brink of total irrelevancy. The newest death-spasm by music rightsholders is interesting to say the least. The ministry for education and culture put forward a law bill that requires the state to pay upward of $2 million every year to rightsholders. These taxes were already there, but outdated, and paid around $70K to rightsholders in 2015. So they’re basically increasing it by a magnitude of ~30x.

The state will pay 1% of the tollprice (CIF: cost, insurance, and freight) of all computers and smartphones imported to Iceland, and 4% of USB memory, datastorages and SD cards. (mbl.is)

Basically, smartphone users and photographers, will be paying music rightsholding organisations, because they’re using these devices.

We’re witnessing a clash of world views. Rightsholders think they should be compansated (through taxes, no less) because technology has allowed people to copy everything, all the time.

The world, however, is changing. Music and entertainment is no longer a limited good. Through the internet, it’s unlimited, and things that are unlimited will always approach zero cost to the user.

In the appendix to the bill, the lawmaker notes:

Due to this, a reduction in “damages” of rightsholders because of copying of music and movies is foreseeable in the future. It’s therefore unavoidable that the payments of compensation for copying will be revisited. (Althingi.is)

It’s good to see that the state is looking to the future. However, I think they’re underestimating how far we’ve come already, at least according to the data.

The RIAA (Record Industry Association of America) released a report on music industry sales for the first half of 2016. Paid subscriptions in the US have doubled in one year (from ~9 million to 18 million). More importantly, the report states:

The revenue growth from subscriptions alone more than offset the declines from physical sales and permanent digital downloads. (RIAA report)

Basically, the times where the record industry can hide behind declining sales are over. Everyone in the industry should know this (if not, they’re probably in denial). Selling copies of music or movies isn’t how these industries will make money. They’ll find other ways, and many already have.

All this will die soon. It’s just annoying that they’re picking death by a thousand cuts, instead of just realising their demise and calling it quits.

Icelanders abroad

To end the Memo on a high note: Last week Google shipped its new AI driven messaging app Allo. Most of the big tech media wrote about the app and how Google assistant is integrated into the messenger to assist people at the tap of a button.

Fewer might know that one of the drivers behind this product is Guðmundur Hafsteinsson, formerly of Siri (acquired by Apple) and Emu Messenger (acquired by Google). His role is Product Management Director.

Although he might not be very well known outside of Iceland’s (tiny) techy group, he’s probably one of Iceland’s most successful technologists. Acquisitions and stints following them, at both Apple and Google, are feats few (if any) Icelanders can tout.

A heartfelt congratulations from Northstack to Gummi & his team for shipping Allo!

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Autodesk in Iceland closing down: Is 2016 the year of “Closing-up-shop”?

Autodesk in Iceland (previously Modio) has laid off all its employees and is closing up shop.

Modio was founded in 2014 by Hilmar Gunnarsson, and sold less than 18 months later to 3D printing giant Autodesk. The company created a smartdevice app to build 3D printable toys that was later rebranded to join the Tinkercad family as Tinkerplay.

The team in Iceland was working on a consumer 3D printer called Thingmaker with toy company Mattel set to launch this fall. The layoffs were announced in late August this year, and includes everyone in Iceland and people working on the same project in San Francisco and Toronto. Keen Reddit users have pointed out that theThingmaker website has been closed down, and pre-orders of the printer have been stopped on Amazon.

The reason I bring this up is that it’s an interesting fate. Three fairly prominent tech companies in Iceland laid off all their employees in the same year. Oz began by laying everyone off in May (in what I coined as Black Friday). Oz still has some operations and might get back on track, but it suggest turbulence anyway. Plain Vanilla announced a wind-down several weeks ago, laying off the 38 that were left at the company, and while Autodesk (Modio) hasn’t sent out a specific press release, the operations in Iceland are closing down.

Will 2015 be known as the year of unprecedented VC investment in Iceland, and 2016 the year of closing-up-shop?

takumi

Influencer marketing platform Takumi announces $1.4m (£1.1m) funding round

Influencer marketing platform Takumi just announced a $1.4m (£1.1m) funding round from a number of UK angel investors. This brings total investment in the company to $3.3m (£2.6m) in three rounds.

“We’re excited to bring the Takumi offering to new markets,” said CEO Mats Stigzelius in a written statement. “We have seen an incredible 60% MoM sales increase in Q2 and Q3 this year and our list of 4,000 actively engaged users is growing every week.”

The investment will be used to fuel the companies international expansion. Takumi, which until now has only been available in the UK, is planning on expanding to Germany later this fall and the U.S. early next year. According to the statement, the company has $130k (£100k) in monthly revenue, and clients including Domino’s, Nickolodeon and Socialyse.

Takumi, product

The company has operations in both Iceland and the UK. The Iceland office is responsible for product development, and sales are located in the UK. Jökull Sólberg, co-founder of Takumi, said in the statement: “The funding will allow us to further innovate and continue to drive forward the influencer marketing industry.” Jökull has previously written a post on their experience starting Takumi here on Northstack.

Takumi allows brands to connect with micro-influencers (anyone with more than 1,000 followers) on Instagram. The companies post campaigns on the platform, that influencers can choose to work on, by posting pictures to Instagram, and then get paid by the brand. The app is available on iOS and Android, currently only in the UK.

A photo by Gian-Reto Tarnutzer. unsplash.com/photos/rZsqmXfM3qQ

Seven companies chosen for Startup Energy Reykjavik

The third batch of Startup Energy Reykjavik companies has been announced. The companies will receive $40,000 in seed funding from backers Arion Bank, Landsvirkjun, Innovation Center Iceland, and GEORG. The accelerator is operated by Icelandic Startups and The Geothermal Cluster (Gekon).

The following companies will participate:

  • Arctic Sea Minerals: Salt that is healthier and includes less sodium.
  • Health Snacks: Makes snacks from fishskin.
  • Ískristallar: Are working towards marketing proteins that reduce the formation of ice crystals, leading to longer shelf life for frozen foods.
  • Kjarni: Utilising insects for waste removal.
  • ELF Tech: Develops technology that makes it possible to look under the surface of the earth and listen to the northern lights.
  • Mýsköpun: Using geothermal energy to grow and utilise algae in Mývatn.
  • Zeto: Soap and skincare procuts where algae extract is used instead of water, without filling or added chemicals.

Two previous Startup Energy Reykjavik companies have received further equity funding: DTEquipment and Key Natura.

 

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We need your help to gauge the status of Icelandic tech scene

Northstack is working with London based VC fund Atomico on their annual State of European Tech report. You can find their 2015 edition here.

Click here to take the State of European Tech survey.

A part of the report analyses the local tech communities based on a survey of founders, entrepreneurs, investors and tech employees, and Northstack is helping Atomico by distributing the survey.

The reason you should participate is twofold:

a) The Icelandic tech and startup community needs to be properly represented in big reports like this one.

b) If we get enough participants, we’ll be able to get the Icelandic data and analyse the results, which will help us gauge the health of the Icelandic tech and startup community.

Simply follow this link to take the survey. Our partners at Atomico promised that it shouldn’t take long.

Thanks!

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