Taipanway’s Weblog

So I am one of the many waiting for the next iPhone - though, I have my doubts if I will really like it and am ready to go towards the Bold as well. Doesn’t matter - I have and will always have a smart phone.

I am going away for July 4th and since I am a workaholic I figure I will be taking my laptop. But then I got to thinking about how having a computer in my pocket could really help. Through this, my prediction of computing in general.

Best case scenario (and I know the iPhone won’t be out by then), I could bring an iPhone (type device) use a bluetooth keyboard (collapsible), wand with an HDMI plug, connect my from iPhone to a TV. Of course the iPhone would be smart enough to know I was using alternative inputs (possibly even use a mouse) and a different output and would adjust my experience appropriately. When I travel, all I need is quality email, Internet and some light word processing and spreadsheet work. I don’t need a laptop and this solution would give me everything I need when I travel.

Take this a little further, and this is my prediction for the future of computing. We will start seeing this in the next 3-5 years. My ‘phone’ will be my computer. It will house a combination of local storage, a processor and the ‘guts’ of my computing experience. It will have a service (like Apple’s mobileme service) that has access to all my data where ever I am with no fear of ‘losing my data’. My phone will have biometric security so losing it is irrelevant. now here is the kicker. When I drop my phone into my car dock, it will know where it is and it will act as my GPS, my entertainment center, etc.. When I drop it into my office environment it will know that I am focused on work productivity and when I bring it home it will manage my home entertainment center. With 3G (and 4g and wimax coming), local data storage is becoming far less important. Processor speeds for non bloated applications are pretty much already here in phones (notice how much faster your blackberry is in looking up names then outlook is), and people are comfortable with ‘portable computing’.

When you think of it this way, Apple getting into the phone business is not so much that they are getting into the phone business as them extending the mobile computing business in a way we have not yet thought of. I wonder if Apple (and others) are already building this???

I have (as well as the whole industry at this point) rallying against DRM. I have NEVER bought a DRM track other then for test purposes. The logic, as my friend Elizabeth Brooks said eloquently years ago; ‘I can buy a CD, rip it, and have no DRM for the same price or less then a an album of music with crippled functionality (DRM).”

Today MSN announced that customers who bought music through their service will no longer be supported. What does that mean? After August 31st you will be able to have your songs playing on 5 devices and if you change devices, you can not take your music with you. So if you upgrade your operating system, change laptops/pc, get a new mp3 player, at some point (after 5 devices) you lose access to that music. If I got the details wrong my apologies. Regardless of the details - think abut the concept and what this means to the consumer (all 12 people that bought from MSN). I bought something, I am following the ridiculous rules that DRM forces on me and I still get screwed.

I assume MSN has the rights under there terms of service to do this - but I would be surprised if there is not a class action law-suit brewing. I almost wish I bought a track so I could participate.

Bessemer Venture Partners released the ‘Anti Portfolio’ listing - which are the deals that they did not do but should have. The list can be found at http://www.bvp.com/Portfolio/AntiPortfolio.aspx. I have tremendous respect for Bessemer for rolling this out (not sure exactly when it went live). It is certainly in the ‘web 2.0′ perspective where information flow can not be stopped - but they took it a step further and named names and made fun of themselves.

Besides Bessemer though, there is a great lesson for entrepreneurs everywhere. The best deals have been turned down by the best VCs. That is a powerful statement and concept. When you are pitching a company and you get turned down - let it roll off your back - more people/VCs will say no then yes. It is the nature of the business.

I like the purchase by Sony though I am surprised it was not Sony music. Gracenote has a solid team - good technology, a commanding market share and is the only company I can think of that is at the absolute top of the value chain. That does not mean Gracenote was a good investment for their investors (they raised north of 50 million I believe) so maybe a 2 or 3x for them (guessing here).

As a company Gracenote has the opportunity to continue to push forward with some new tech (I like their ‘geo-locating feature) - I wonder if the Ps3 has some further designs on music that we are unaware of.

I typically TRY to keep my politics to myself (unless you are at our Shabbat table) - but sometimes things have to be said. As all of you know I care a great deal about Israel and American Foreign Policy (don’t worry - this is not a Democrat vs. Republican - they are all equally as good or bad - depending on perspective). What is going on in the world today is sickening and scaring me. Yes, I think of this on a daily basis. The brutality of Islam as a religion is scary and more importantly it is being swept under the rug. A great Rabbi (Rabbi Solovetchic -sp?) said of the Holocaust that the miracle was that the world finally started to believe what Hitler was saying.

The Muslim world is telling us what they want. They are laying out a roadmap but yet the world wants to believe it is hyperbole. When Iran says they want to ‘wipe Israel off the map’ why do we not believe them? Why is it so hard to accept that there is evil in this world? Some of you might say - but it is not all muslims it is the leadership. I call bullshit. The attached video is one of the hot topics in the world today. Read their words - forget the music and the visuals - Islam is a violent religion that thinks Jews and Christians are pigs and monkeys - THIS IS THEIR DOGMA.

American’s are soft - and the problem with liberal Jews (no disrespect to MANY of my friends) is that the word liberal comes before the word Jew. When will we be rightly scared that Spain has already fallen, that England is struggling and France is being crushed under the weight of their muslim community. For those of you who do not believe we are in a ‘war’ this will not resonate - but the reason we can never win the war on terror is because terror is not an enemy, terror is a tactic. Just like we could not fight a war on kamikaze pilots, we can not fight a war against terror. Terror is not our enemie - those who perpetrate and utilize terror as a tool is our enemy. I readily accept that not every muslim is a terrorist - there are some wonderful people I am sure who follow the Islamic faith (though I am not sure how they can consider themselves good muslims and not consider me a pig or monkey) - but virtually all terrorists are muslims. There is no denying this. My friends - be afraid - be very afraid. In 1938 the Jewish community did not believe what Hitler was saying - 70 years later 1.3 billion people are followers of a religion that’s own text demands our death. Wake up and listen to their words. The two movies are different files - part 1 and 2. The irony is that this movie will give the Muslim population ‘permission’ to be angry and they will riot in some form or another - the IRONY! Rioting and using violence as a response tn an accusation that you are violent. If it wasn’t so sick it would be funny.

Mobile Music Firm Hurray Buys 30% Stake in Chinese Indie Label

Beijing - Hurray Holding Co., a Chinese wireless music distributor, announced on Thursday that it has invested $2.25 million for a 30% stake in Chinese independent record label Beijing New Run Entertainment. Artists on the label include popular singers who have charted hits across ringtones, ringback tones and full-track downloads to mobile phones in China.

This little deal got glossed over by pretty much everyone – and to some extent it should.  However, this is a rally interesting concept that I think I have written about before (and if I have not, I definitely have spoken about it quite a bit).  The expertise of what a record label does and what a technology or portal company does is getting blurred.

In general, a record label finds talent, funds talent, markets talent, helps improve talent (though this is debatable) and helps get exposure and distribution.  I have argued that it makes sense for an Apple a Yahoo, etc.. to sign artists to their own labels.  Why promote 50 Cent where Apple makes 28 cents (compared to 71 cents from the label) when Apple can promote X and make the whole 99 cents.  Of course Apple will have to pay the artists, but maybe there is a new model (actually a very old model) where artists are more like employees that have salaries (of sorts – though this is a bit of a tangent).

An Apple could easily find talent – maybe more efficiently then the labels because they are selling the music direct.  They are a retailer – they know the customers.  Where as the labels are wholesalers – they have no idea who their customers are.  Apple could watch the numbers and see an independent with traction, swoop in and sign them.  They could hire A&R, they could buy small (or even big labels if they wanted) – etc..

They obviously can market talent: They could bundle on their devices, run TV spots but include these artists instead of Eminem, they could promote off of iTunes, etc..

Improve talent – leave it to management and production

And most easily they could get the exposure and distribution locked up

The deal I quote above is a good test of this hypothesis.  I am assuming, and I could be very wrong, that Hurray Holding saw that they could make more money by owning the content then by reselling the content.  True it is very likely that ‘tech’ companies are bad at content but this is a new world.  Apple is as much a brand and marketing company as anyone and probably more so then a label.I   am very interested to see who else tries this strategy and if it works.

One more extension to this – I have argued for quite sometime that music as a primary driver is a bad business.  I have also argued that one of the main problems in the music business is that there is a misalignment of interests.  In the scenario I touch on above, music does not have to be the primary driver and there are no alignment issues.  Time will tell.

Now this is an interesting bit of news.  I am assuming you read the concept so to jump right in.

Does this really matter?  Apple has sold 70 million iPod’s - so if Uni had this deal with Apple, that’s 70 million to Uni and if reports are true, 35 million will be paid to artists (not sure how they will calculate but…).  35 Million is no game changer.  don’t get me wrong, I would like 35 million - but change the landscape for the industry, unlikely.  There are a couple interesting things to focus on for the future:

1) Will Apple in the next round buy into this concept?

2) This is some Pandora’s box MSFT opened up - now they will have to pay the other majors, the indies(?) - but what about the MPAA, TV, Producers - where does it stop?  Future versions of the Zune will not be about ‘music’ it will be about content.

3) How will mobile phone makers respond.  With 600+ mobile phones sold a year (give or take), there real money can be made by the music business by getting their fee on Mp3 phones (as they take market share). problem is that the industry tried to get the carrier/handsets to pay for DRM licensing (at the tune of a $1 a unit) and the industry said no f-ing way.

4) Should MSFT pay Uni for this.  Now I think it is a win for Uni (short term at the very least) but from a ‘moral’ perspective - Should Uni be paid for an MP3 player?  Does Panasonic pay Universal Home Video for a DVD player?

This is a fascinating topic and one where I have to say kudos to Universal and too bad for MSFT - I can’t wait to see how Apple deals with this…

(from Fierce Wireless):

5. Activefone, Bango bow user-generated D2C service

Marrying two emerging trends in the mobile content space, Activefone has unveiled a network that allows mobile subscribers to upload pictures and video to a sort of mobile blog site, and subsequently, to sell them to other community members using Bango’s direct-to-consumer platform. Users selling content keep 20 percent of each sale made through the service, dubbed momo.

20% to the user?  How come the little guy keeps getting screwed?  You all know I don’t use my blog to push Xingtone products - but for the love of G-d… we have been offering our self-help service as a fully launched platform since March of this year and we offer 50% of gross revenue (no deductions).  There is no excuse in the world where distribution is available, no cost of physical goods, etc.. to keep screwing the little guy.  The promise of the internet/mobile internet is opportunity - direct relationship with your fans, etc.. Why does the industry, in various ways and form give 50% to the majors and 20% to the little guy?  It makes no sense - and if you think it does go read the long tail!

I have posted on my blog and have expressed strongly, many times, that companies that use music as a secondary driver (MTV, WalMart, Apple, etc..) will be far more successful then those that use music as its primary driver (Napster, Rhapsody, etc..).

Spiralfrog and it’s ilk, seem to fall into the former category.  Use music to generate enough traffic and ad inventory to create real-estate to generate more money then they need to pay out.  So in that sense I like the strategy.  I would say, as an aside, it amazes me that the record labels insist on upfront fees and guarantees on revenue.  Yes there are administrative headaches in dealing with small companies, reporting, etc… But IF (and that’s a big IF) Spiralfrog will succeed, they could probably use that money for better purposes – like marketing.

But back to the topic at hand.  Anytime I review a business idea I look closely to see if it is a real business or just a product line extension or a marketing move. Someone once came to me with an idea for a BUSINESS to double the size of the little ketchup packets you get at fast food restaurants.  Now granted, I love ketchup and yes I would LOVE bigger packets – but would I really want to compete with Heinz on this one issue.  OR is this just an idea that Heinz should take under advisement.

In a previous blog I suggested that Yahoo would/should go free.  They already generate most of their money from advertising – they have millions upon millions of users – they have everything one would need to put this strategy to play – in other words – this would be just a marketing concept they have all the other parts of the equation locked down.  But Yahoo has not done this yet – why?

1)       They do not believe they can make enough money in advertising to make up for the licensing, marketing, services, etc..

2)       Advertising within a music store would be to invasive for the user to care

3)       This must be a WMA deployment – no iPod support so who cares

4)       Etc…

The most important issue is obviously #1.  So, if Yahoo can’t do it, why do we think Spiral Frog can?  I know I don’t.