Posts Tagged ‘NetFlix’

Is Spotify Going To End Up As Netflix?

November 18th, 2011

A couple of weeks ago I wrote the following blog post which I forgot to actually publish. Today I woke up to an article in Wired stating that more than 200 small music labels have taken their music out of Spotify and Rdio. It reminded me of this post, so here it is, late but never more relevant:

I’m a big fan of music subscription services. While they became all the rage in the US just recently, Iv’e been using a few of them for years now.
But this week I got a few big disappointments.  A few of my favorite artists came out with new albums and to my surprise I couldn’t find them in any of the services including Spotify and Rdio. The artists I’m talking about are Coldplay, Kaskade and Florence + The Machine.
Now, it’s true that it might be just a coincidence and I hope it is. Because the other option might suggest a change that will make services like Spotify end up like Netflix – The “Rewind” service for music.

But if Spotify is growing like crazy, why we even talk about such an option?
Because under this growth, there are still some big problems and questions that the streaming services and the music industry as a all need to solve. Some examples are:
If you are not a very big name artist, you are simply not going to make money from people playing your music with these services. And if you are a big name like Coldplay, you can actually decide to put your new album on iTunes only for a few months, get the big money there, and than push it to streaming and hope to get some more.
And what if you are a small band? Well, the big point that the streaming services are fighting for is that they allow for people to discover your music. That people won’t buy your albums, but if they can listen to them for free they might discover you and you will make money on touring. The problem with this is the statistics behind the service. For example, on Spotify, more than 90% of the songs played are the same 10% of songs mostly coming from big artists (Worth to note that this is the exact opposite from the stats behind Pandora).
Now, this might change a bit now that Spotify is integrated with the new Facebook Open Graph which allows for better music discovery, but we will need to wait and see.

So will we see more artists and labels take their music off the platform or will subscription will become the main way we consume music int he future? Tell me what you think.

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Posted in Internet, Music, Uncategorized

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The Big Music Business Opportunity

April 28th, 2011

As many of you already know, I’m working now on my next venture. And as some of you know, this one is going to take a deep dive into the music industry.
What? Music? Am I serious?
Yes. Like you, I also read the hundreds of blog post and articles that details why trying to do anything with this industry is a suicide. I also saw the presentation of Dalton Caldwell (Imeem founder) warning everyone to stay away from music like from fire.
So why do I decided to do just the opposite? Put aside the fact that music is simply one of my biggest passions, I also believe that  these exact difficulties that everyone are talking about are also the core of a huge opportunity. Let me try to explain:

First, let’s start with the obvious. The Music industry is a multi billion dollars industry that is shrinking every year. But what’s important to note is that it is shrinking not because the product (the music) is less loved, but because the business around it is rapidly changing. This in itself is a sign of a great opportunity. Any changing industry is an industry ripe for innovation. People are passionate about music now more than ever. People are actually extremely passionate about music. And anything that people are passionate about is something that they are willing to pay for. You just need to find the right way to let them do so.
Just look at how Netflix changed the movie streaming industry. For years everyone talked about the end of the film industry as everyone are just pirating movies and suddenly the all picture looks different. Netflix managed to build a product that is simply good enough to convince everyone to pay for it. Their growth was so big that now everyone from Amazon to Google is going after them, trying to replicate their model.

The second reason I think there is a huge opportunity in music is the industry structure itself. Like many other industries, much of the way the music business is handled  is still rooted in the way business was done years ago. I just finished reading Donald Passman book “All You Need To Know About The Music Business”. In it, Donald breaks down a guide for the new artists on how the business works and how an artist should build his contracts, career, etc. A couple of things really amazed me:
- How complex the all thing is. You need to be a MBA graduate to understand how much money you need to get paid. I really have no idea how a young artist suppose to control his career and destiny.
- How little does the artists actually getting paid. If you are not a real star you are not going to see any money and most likely you will actually lose some.

As an entrepreneur coming from the outside all of this is actually exciting. Old complex industry that still stuck in the dark ages with much bureaucracy and many players between the consumer and the product. And all of that around a multi billion, international market? Are you kidding me? It’s the dream for every tech entrepreneur.

Now don’t get me wrong. I’m not naive. Every major disruption for such a big industry is going to get tons of push back. It’s not just that people don’t like change. With such a big change, there will be many people who might lose their jobs or need to fight for their place in the new world. Trying to shift an all industry can probably be painful like a root canal. It’s also not a quick and easy exit. It’s a process. A long one. But in its end lies a really big opportunity and a chance to really change the world.

 

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Posted in Music, Start ups, Uncategorized

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Art of Dying Industries

November 25th, 2008

In the last few weeks I had some meetings with people from the print industry. There were a very depressing meetings. We that lives the Internet every day can easily forget how fast the Internet is changing complete industries and people lives. Reflecting back, I can still remember that just 10 years ago I was probably subscribed to 5 different magazines, and names like PC Mag and Mac World were creating the standards in our industry.

The Internet is not the first technology to kill and shift complete industries, but it is unique in the rapid fast pace it did it. Print was probably the first big victim, but music, TV and movies are just examples for other industries we already know will never be the same.
In fact, the pace of change today is so fast that we even see businesses who were born in the internet that have to already adopt to a new reality. Take Netflix as an example. The direct mail company changed the dvd industry, displacing giants like Blockbuster. But now Netflix themselves need to adopt to the new reality of video on demand, Tivo and online video streaming.

The big challenge of a dying business is not to figure out what you need to do next, but it is how to do the change soon enough. Most print magazines knew that the Internet requires them to change, and still they didn't move fast enough. What killed them was their inability to deliberately forgo their current money making machines in order to save their long term future. Instead of doing experiments with the web, while still maintaining focus on their print business that was still making tons of money, they should have moved all their focus into digital and kill the print business themselves, instead of waiting for all of us to do it for them.
By waiting and trying to milk their current business model to the end, they let new businesses born into the digital world to take their place as the leaders of the new medium.

Today we are on the verge of another big change that potentially will displace many businesses. The evolution of mobile computing is changing how people consume and use information. This time, the threat is not just for the old traditional businesses, but even to digital businesses which were born jut a couple of years ago.
Every big change has a tipping point. A point of no return. A point in which the pace of change becomes so rapid, that there is no way to stop it anymore. It took the Internet a lot of years to become what it is. There were many factors that got us to the tipping point, but probably one of the bigger ones was when broadband became a commodity.
It seems that the tipping point for mobile computing was around the introduction of the iPhone and also here, the large availability of 3G networks.

It's still too early to know how exactly the mobile revolution will change the way we do things on a day to day basis. It's still hard to guess who will be the new kings of this era. Companies like Google, Apple and Microsoft have their full attention and resources, trying to make sure that no one will take their place in this new world. And still, it seems that the mobile landscape is still open enough for a new king to come and rule.

Like before, it's easy to say that we have been talking about mobile for years but it never really happened. It's easy to think that you still have time and you don't have to change things today. And this is the fetal mistake that most of us do. The best businesses knows to take the hard decision and displace themselves, instead of waiting for the market to do so.

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Posted in Apple, Internet, iPhone, Music

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