Tech Mediums

A little bit ago, I wrote a blog on why video games are recession proof.  The theory is that people want a nice form of entertainment that, in a recession, is extremely low cost.  Think about it.  For about $50 for a brand new game, you get unlimited play for the LIFE of the game.  The means the cost/play or cost/hour of play is as close to zero as you can get.  Compare that to the movies.  That cost is $9/play or maybe $4.50/hour.  It’s off the chain for most popular concerts.

So why would movies do well in a recession?  I have a couple of thoughts…

1.      People like going out.  In a recession, this truth still holds.  And in an environment when there are so many reasons to stay home, it’s still true.  For example, the ungodly number of social networks, video chat, AIM and other ways (like the phone) to maintain contact with friends, in addition to movies on demand and the old tried and true, TV, are some of these reasons to stay home.  These should not be underestimated.

2.      Compared to other forms of entertainment, going to the movies is relatively cheap (assuming that you eat before/after the movies and avoid the concessions, which can eat a whole in your pocket).  It always gives you something to talk about afterwards too.

3.      The reason to go out to a movie is because something is good.  There were so many movies I wanted to see this summer it’s ridiculous (The Hulk and Batman being two of them).   This is very crucial.  If there were horrid movies at the box office, theatres would not be doing well at all.

What’s interesting is that some theatre chains (the industry is coming off of a period of consolidation) are doing okay.  Theoretically, consolidations should be good since you can squeeze synergies out of most of them.  With the theatre consolidations, initially, I was wondering whether it would good, since the industry wasn’t doing that well.  I kept myself in check, because you can never scold good companies in a bad industry (don’t throw the baby out with the bathwater – type of thing).

Here’s a wonderful blog from Wired.com that gives some stats on the matter.

Valleywag had a piece on The 4 Worst Athlete-Backed Startups of All Time.  In short, they name:

1. WePlay, a youth sports-related social network social.
2. Dunk.net, focused on promoting Shaq’s shoes and other wears, with backers, Shaq, Mike Piazza and DeLisha Milton
3. MVP.com, an e-tailer, with backers John Elway, Michael Jordan and Wayne Gretzky.
4. Chatwithastar.com, a celebrity blog portal, with backers bestselling author Burton Rocks and Billy Wagner

The article made me think about athlete’s and their money. 

It’s interesting in what and how some of the guys put their money in. 

The What

If I had a dime for everytime I heard an athlete wants to do a clothing line or a restaurant, I’d have so much seed money to start two ventures.  One financial advisor, who works closely with Venus and Serena, Donovan McNabb, and a few more, told me he advises his clients that if they’re thinking about investing in a restaurant, they’re better of throwing away the money…it’ll be easier and lot less stress.

The How

Now, this is fascinating…

Many athletes don’t know too much about business so they have advisors (smart move).  But many of them have their friend from around the way as their businesss guy (stupid move).  It’s classic “the blind leading the blind”.  Decisions aren’t made on hard data (like financials, reputation/experience of management team and size/sustainability of the market…you know, the usual cast of characters. 

Instead, it’s how confident does the guy pitching them seem, or how cool does the idea sound, or how can it boost their ego (of either the athlete or the advisor).

Very fascinating…

To their credit, some are getting wiser…thinking about things as a business, and getting the right people in place to help them make decisions.  Look at Jay-Z!

So there’s a service called slydial.  It’s kinda cool.  Basically, you can go straight to voice mail. 

So the kinds of people you want to use the service on…

This “Issues” Chick

So if you met that chick at the club that looked hot, but then you found out she has some “issues” and you wanna break it off…

The “Investment Banker” Dude (or Ass depending on the depth of annoyance)

What about that dude, same club (it’s a weird club), who said he was an investment banker, but you wonder why he’s ALWAYS home, break it off.

Here are some more situations to use the service.  Hilarious. 

These can be done drama free.

I can see this service doing well.  Too nervous to ask the VP of business development for a job, you can leave a voicemail.  But whoever is sitting at their desk and the voicemail light blinks, he/she might just think you’re a punk because you couldn’t actually call.  So the service will be limited.

I would’ve used the service, but I like the people I’m around.  Seriously, I’m reluctant to give out my cell number b/c it might get sold to telemarketers.

The company behind slydial is MobileSphere.  They have a couple of more cool services including Joopz, which allows you to send/receive text messages b/t website and cell phones.

This is hilarious.  What’s funny is that my wife and I just passed a sign promoting Kenny Loggins in concert yesterday. 

One notable remark from “America’s Finest News Service”:

Analysts speculate that the sector-wide layoff was a result of multiple factors, including redundancies in the singing-songwriting division, rising rehab fees that have cost the group millions, and a 34 percent decline in jump-kicks since 2003. In addition, some of Aerosmith’s younger, more ambitious employees, such as Joe Perry, 57, are willing to sing and play an instrument at the same time, often for half the salary.

 Come on!  Gems, I tell you, these are gems.

Here’s the link to the article.

Well, this isn’t the kind of tech news that I was thinking about writing about, but it is, technically, a technology (chainsaws) being used to power a motorcycle (a form of entertainment).

I don’t know if this actually runs. The video below didn’t cover that :(. But I’m into sport bikes…came across this one when looking at sport bike crashes (I already crashed on a dirt bike, so I think I got my first crash out the way - 100% dislocation of right ankle).

Here it is.

Btw - here are some tricked out bikes..these are HOT!!!

Yahoo is using viral marketing to push its search engine past Google.

Before I go there, I gotta admit, while I’m a free market kind of guy, I also don’t some companies that absolutely dominate a space (errr…unless I own stock in them at a good buy-in price). 

So when I see Google killing the competition in search, I want to see someone else to temper them (I don’t own stock in Google).

So Yahoo’s latest idea is to have other companies build search engines using Yahoo’s search technology, thereby saving these companies the cash necessary to build from scratch (Yahoo estimate: $300 million).  In return, Yahoo will sell ads on through those search engines.

I think it’s brilliant (barring a few possibly filled holes).  You have other developers customizing, and more importantly, marketing your technology, while you generate money through that method.  What it does is instantly make Yahoo bigger without the time, people and money to do it otherwise.

Classic viral marketing, in another form.

 The possible whole are the kinds of financial deals Yahoo would work the companies.  The NYTimes mentions Me.dium as an example of a partner-company that Yahoo has signed up (financial terms are uncertain).  Me.dium is a search engine (not yet fully released) that allows users to see what other websites their friends are going too.  The theory is that people place more weight on what their friends say than through other means.  This is true, for good or bad (if my friends are looking at ill-informed sites, then those are the ones that will probably pop up first in the search).

Seth MacFarlane and Google

If you haven’t heard by now on NYTimes.com, Seth MacFarlane, creator of the Family Guy (I’m watching Blue Harvest on DVD as I type, btw) and American Dad is having his new creation, Seth MacFarlane’s Calvacade of Comedy, distributed over the internet, freeing up his creative juices and avoiding censorship from the FCC. 

MacFarlane has two key partners, Google and Media Rights Capital (MRC).  But instead of Google being used to distribute advertising, it’s being used distribute the actual show through its Google Content Network.  Using its algorithms, Google will identify the kinds of people who will be interested in the show.  It’s the same model as advertising, targeted with an enormous amount of metrics/data to refine the targeting.

Currently, TV can not provide this level of targeting. 

MRC, a niche production company that is also working with Raven-Symone through its Digital Rights arm, will take the lead on corralling advertisers or the show.  It can, thus, provide them with the same level of exacting ROI that the net offers and that TV can not.

I think this is an incredibly smart move on Seth and Google’s part.  Certainly Google, in using this as further proof of concept that its model can be applicable to ALL media, not just advertising.

 JibJab

This made me think of Jib Jab’s move to further develop its revenue model and how new media companies are continuing to figure out best ways to monetize the net.

So one product, Sendables, JibJab’s e-Card business, allows users to add themselves to videos.  Gregg Spiridellis, co-Founder/CEO of JibJab Media says the premise is that “Its all about personal expression.”  Users can put their face on someone else’s body for free, but then pay to share it with friends.  I did this Snoop Dogg video with my son’s baby picture to test it out (I would post it here, but I gotta admit, I was kinda sick seeing my son in a Snoop Dogg video - word to the wise…don’t do it).  I also didn’t want to pay the $3 to share the video.

Snoop’s got an interesting thing going…be everywhere his fans are and expand the JibJab brand.  Some fans use JibJab.

EA is yet another company who continued to get spurned by a smaller, high-profile company.  The other, of course, being Microsoft.

It’s like the rich dude who keeps begging the cute chick to go out with him, thinking that with all his wealth and star-power, she should just say yes.  In this case, EA is the rich dude, and Take-Two Interactive (TTWO) is the cute chick. 

Well, she’s ridiculously hot because she’s got one of the best bodies - the enormously popular Grand Theft Auto franchise. 

But after extending its offer for Take-Two, again (4^th time), EA’s offer was rejected, again.  Still too low for Take-Two. 

Initially, Take-Two wanted to wait until GTA had been officially released to see if it could drive increased sales and value. 

So far, not-so-good.  Sales are high, but since the debut of GTA on April 29, Take-Two’s stock has actually gone slightly down -.5%.  In the last three months, Take-Two’s stock is only up 4%, having fallen off quite a bit in the last few weeks.

So maybe EA is saying, “Look babe, I know you’re hot.  You know you have a killer body.  But you can’t pull any other dudes with my looks, intelligence and wealth.  So I’ll wait, but let’s stop fooling around and make it happen.”

Take-Two is giving EA the “It’s not you.  It’s me.”, routine.

It’s actually kinda funny. 

So, Guy Hands, the CEO of private equity firm, Terra Firma, which purchased EMI in 2007 for $6.4 billion is having a hard time making EMI work.   

There were two things that stood out from the NY Times piece on the deal.

1. How bad recorded music is and how profitable music catalog is
2. How difficult it can be for a private equity guy to handle highly nuanced businesses like music

 What’s more profitable, Recorded Music or Publishing?

So Hands points out that he paid about 80% of the $6.4B for publishing and the rest for recorded music – the music side he says he feels like he overpaid for. 

I’ve heard this so many times before - recorded music is horrible and the only profitable line is publishing.

But it makes me think…isn’t publishing’s value partly (or predominantly) derived from the recorded side. 

Think about it.  If you have a go-nowhere artist, the value of the publishing is nil.  But if you a multi-platinum artist like the Notorious B.I.G., then the value is exponentially more.

So the cost a company puts into recorded music will ideally be recovered by the stream of revenue from publishing.  Economically, the costs are shared, since the value is shared.

There needs to be a model that will help predict this, especially since there’s so much historical data.  Something like an algorithm that factors in popularity of the artist and number of records (or downloads) sold/acquired.

 Private Equity and Entertainment, eh?

Stereotypically, business types and creative types haven’t mixed well.  That’s what partly explains why the EMI deal isn’t going over well.  An analogy is AOL and Time Warner…young, tech folks, mingling w/ old media.  It also reminds me of how superficially ludicrous Carl Icahn’s interest in Yahoo is (superficial because he seems more suited to bothering ExxonMobil or Chrysler, not new media companies).

I can see what Hands wants to do – should be able to wring out cost, although growing top line revenue is more difficult.  Just that music isn’t a business for finance types, not yet at least.  It doesn’t run like a creative tech company (which can be very querky and moody…like me), nor a typical non-tech company.  In other words, it relies HEAVILY on intuition. 

I don’t particular like music for this reason.  I like a more predictable business model - one that uses a little intuition and a lot of hard core facts to build a sustainable business.  That’s why I wrote about the potential for using predictive models in developing a business model for entertainment companies.

 What’s Funny?

What’s funny is that if people were still buying music like they did in the 90s, I don’t think this would be a problem.  It’s just that, now, the business model has to change and no one has figured it out yet.

It makes me think of stocks.  So, in a bull market, the average stock picker looks great.  Many use intuition and it works (like in the late 90s).  After the crash, you saw the great pickers do well.  They used a methodology, a system, that works when the market is more rationale. 

Well, in the never ending saga of the XM/Sirius merger, the FCC Chief, Kevin Martin, said he’s cool with the deal, especially after Sirius/XM proposed to freeze rate increases for three years. 

One of the commissoners, Michael Copps, said that he didn’t see how the merger would benefit consumers.

Well, I think that’s one of the reasons that explains why this deal has been held up.  Both companies, on their own, are not profitable (cash basis and GAAP), and there appears to be no reason to expect them to be profitable in the near future.

As a result, they will cease to exist. 

In my mind, that is worse for consumers…there will be no satellite radio at all if the merger doesn’t happen. 

Here are the other items that XM and Sirius have proposed (from Washington Post).

· Place price caps on programming and offer a la carte programming so that subscribers could pick programs they want and not have to subscribe to all channels or certain packages. Officials with XM and Sirius said they would offer radios configured for a la carte programming within three months of the merger.

· Open their technology standards to any radio-device manufacturer, paving the way for consumers to buy radio transmitters from retail stores. Currently, subscribers must buy directly from XM and Sirius, or through car manufacturers that have installed the devices in new cars.

· Provide interoperable radios. Current subscribers have radios that deliver programming from either XM or Sirius. Within one year of the merger, these listeners will receive radios that could access programming from both providers.

· Each set aside 4 percent of their radio spectrums, or 12 channels, for noncommercial services such as educational and public safety programming. They would lease another 12 channels for programming run by minorities and women, groups that are underrepresented in entertainment broadcasting.