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#Facebook and the New Frontier


As we all should have heard by now, Facebook is going public. If you are not sure what that means, pieces or “shares” of the company can be bought and sold on the open stock market by anyone in the world – hopefully for a profit. The valuation – amount of money a company is estimated to be worth when it hits the stock market – has been speculated to be as high as $100 Billion dollars. Needless to say, that’s a lot of money folks. People all across the globe believe in Mr. Zuckerberg‘s vision of creating a more “connected” world. He is certainly doing that at an unprecedented pace that will truthfully, never be matched again in our lifetime – perhaps in any lifetime. The advertising revenues have grown exponentially, and this could be the biggest initial public offering a private company’s stock in the history of our modern capitalist society.

Still, it could be stated that Facebook’s entire business model is based off of perception, or what investors would called “perceived ROI” – return on investment. This means basically the business model that has been making a few people lots of money over a very short period of time, may not give the shareholders the same type of return over a long period of time. Without a subscription price model, Facebook’s business could eventually regress and see a decline in revenue sales dollars and ultimately profits, because what is to stop some other Zuckerberg from coming up with another new innovative way of sharing information and connecting the world over the next 10 to 20 years – a model that could redefine the way we seek out and digest products and services as consumers just as Facebook has done?

Facebook will be best served to mimic the success of some of it’s peers in regards to overcoming the pending plateau of their business model growth – an issue that all businesses face at some point. Amazon, Barnes & Noble, and even Google, have stepped outside of their traditional business models to pursue the frontier that technology consumers seem to always embrace – hardware. The success of the Kindle, the Nook, and Google’s newly developing hardware platform that will support seamless integration between Android and Motorola phones architecture is an idea Facebook should consider exploiting. Imagine a Facebook Tablet, one that supports it’s own browser and apps designed to integrate with your current Facebook account and applications. We already know Facebook has millions of applications. We can read the news on Facebook, chat with friends, video conference, play poker – what else could be next? A Facebook tablet would provide the revenue dollars and profit margin to support the advertising income from the company’s original business model as the transition through an IPO and into the next decade continues. It would also help cut into the profits of companies who are making millions of dollars indirectly, because of Facebook. Imagine if Facebook was unavailable on the iPhone, Android, Kindle, or Nook, and only available on a 6.5 inch Quad-Core powered tablet that would compete with all of the devices above as far as media content, apps, and communication capability. The Facebook Faithful might consider a switch, and the companies mentioned above to some degree, would have to play ball to satisfy the new desires of the consumer.

Some of you may say, “the next decade? 2012 just started!” What you must understand, is that when your company is private, you can follow whatever timeline you see fit to a certain extent. But when your company is owned by the public, institutional investors, private equity firms and the like, you have a lot more questions to answer in regards to where the company is going, where is the vision taking us, and why should we keep our money around during that process.

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What to do about Yahoo!


Image representing Yahoo! as depicted in Crunc...

Some of you may have been reading about Yahoo! in recent weeks. C0-founder Jerry Yang stepped down, citing he wants “to pursue other interests”. That isn’t too unreasonable. He is worth over $1 Billion dollars in a down global economy, and he is a smart guy, so getting into other things after being with a company for 17 years should be allowed. But how has he left that company to fair for itself?

It seems the greatest gift Mr. Yang gave to Yahoo! in recent memory has been his departure. Often battle-worn CEOs stay around their companies for too long, and can lose the fresh, innovative and dynamic fervor that launched them into Fortune 500 power and in this case, “Internet Immortality”. He certainly gets credit for being one of the main creators of the world’s first major, monetized and profitable internet search directory – that’s what they were called in 1999. Though, it can also be stated that his rejection of a $50 Billion offer from Microsoft was a tad, ridiculous. It is documented that he was adamantly opposed to the takeover bid, but might that have been something good for the shareholders? (Yes)

In the capitalist society that we live in, as a CEO, you have got to have the awareness that time is of the essence, windows of opportunity come and go faster than new designs for Intel chips, and when a company comes around offering to double your price, and leave all of those invested with a overwhelming feeling of satisfaction and certainty that they made the right decision to invest, it is your job to make it happen! Funny thing is, Mr. Yang stated that he is “enthusiastic” that Yahoo! will be guided into an “exciting and successful future”. Do you think he realizes that if they return to their massive market share of the early 2000s, that his successor will probably just pull a dump and run himself? Perhaps he left because he knows the sale of his internet love-child was inevitable.

Honestly, in the world of Tech Business, mergers and acquisitions happen more often than in Finance. If the price plummets anymore, any number of companies with better balance sheets and more cash stand to make a solid claim for a stake – or all – of Yahoo! before it fades into the archives of Wikipedia. Microsoft, Google, even Amazon, Ebay, or perhaps Facebook, are all headed by pretty smart executives who could easily make good use of Yahoo! and it’s assets and market share, though it may be minimal at this point. And if it’s pennies on the dollar, anything could happen. 3 months ago, it was reported that Microsoft might be bringing another proposal to the table, and Mr. Yang will not be seated for dinner.

Are you ready to completely abandon CDs? The choice has been made for you.


Today, Side-Line Music Magazine published an article, outlining the plans of major  worldwide record labels to completely abandon the CD format as we know it. The  reasons seem to be quite obvious: low demand for the traditional “album” outside of  limited edition releases and labels will spend less money distributing the album. But  does the digital download devalue the music? Does the CD, and the tape, and the 12  inch vinyl before it, offer a quality that is unmatched by simply digital consumption?  Will we further devalue music because of the ability to instantaneously access it?

One party stated that a possible upside might be the label will spend less money on  the album in total, thus allowing for less money to be recouped from the artist, and  therefore allowing the artist to generate more income from the album’s release –  wrong. The label will just allocate the “costs” to some other phantom expense on the balance sheet, probably into marketing as this fascination with the juxtaposition between social media and music continues to climb at an unprecedented pace.

Many business around the world will become defunct, with the consolidation of music distribution becoming more and more concentrated into the hands of the few, to be rationed out to the masses. These “hands” will more than likely iTunes, Spotify, Amazon, and Facebook, who has recently been inking deals with several music streaming services in order to add integration into its user account architecture. Amazon is the most interesting of the bunch, as it is currently the world’s largest CD distributor, and probably in the top 5 globally ranked online streaming services as well. This is going to put a lot of pop into this stock, for those of you interested in that sort of thing.

This transition is supposed to occur over the next 5 years, and Amazon is poised to be the basket that will hold all limited edition releases of CD albums in the not to distant future. So it seems that with the devaluation of the album, it will find itself resurrected in other forms. Clearly the labels expect to increase their profit margin on their musical product. But who is to stay the world’s heavyweight digital music companies won’t jack up the prices on the labels over time…food for thought.

Netflix to split itself in 2…DVD and Streaming services to separate.


Netflix – Qwikster

The CEO thinks that he would be foolish to keep the businesses as one, given the fact that the DVD business is in noticeable decline. He would rather focus on the opportunities for growth, and thereby separate the emerging dead weight from the profitable and growing balance sheet of “Netflix”. This is an interesting move to say the least. Qwikster is also a horrible name. Could have done better. Read and comment on what you think!

Internet Radio and Automotive Integration


If you haven’t heard, many of the world’s leading car manufacturers are planning to incorporate cloud-based music streaming services directly into their vehicles…talk about CDs being dead. Imagine having Spotify or Pandora built into your head unit, and having unlimited access to it in your vehicle? This is where things are headed.

Surprisingly, the United States is the current market leader for this type of technological integration, with Europe being second and China being third. Ford, Scion, Hyundai, Buick, BMW, Lincoln, Chevrolet, and Mercedes-Benz all currently offer music applications in their vehicles. We would like to take this opportunity to highlight a company whose product has infiltrated the scene as the standout choice for this new type of product service – Pandora.

Pandora went public a few months ago as you all know, and it was blessed with a quick spike around noon of it’s first day on the market, only to fall well below its opening price to settle at 12. We have found some interesting information about this company in an article posted on 4-traders.com:

“Pandora makes its service available through a variety of distribution channels. In addition to streaming its service to PCs, Pandora has developed applications for smartphones and has partnered with the makers of more than 200 consumer electronics devices, including Alpine, Panasonic, Pioneer, Samsung and Sony.

Pandora also has developed relationships with major automobile manufacturers—including Ford, Mercedes-Benz and Mini—and with suppliers to major automobile manufacturers in order to integrate the service into current and future automotive sound systems. Furthermore, General Motors, Hyundai and Toyota have announced plans for future Pandora integrations.”

This poses to be a good way for Pandora to pay back it’s debt, as many people have written it off as a smart and revolutionary way to interact with music media, that will eventually bankrupt itself because of the unprofitable business model that it is based on. Only time will tell. Personally, we would prefer Spotify to take over the app-cloud based music software integration in these vehicles with complete syncing capabilities between your tablet, or smartphone. $9.99 per month for unlimited access to 14 million songs?

 

That would be nuts…For the record, this is a PERFECT example of MUSIONology.

Stay tuned.

Top 5 Reasons to get #Spotify | Top Reasons #Spotify > #iTunes


 

This will be a simple, straight forward learning session. As technology continues to grow expontially, we are continually presented with fascinating product developments. Spotify is it for the music lovers. $10 unlimited monthly access worldwide, to 15 million songs. Besides that ridiculously awesome fact, the following are the top 5 reasons why you should get #Spotify today:

5. No MP3s – You will no longer have to use up memory for your music. Everything is stored on a cloud, and streamed to your device – whether it’s your phone, tablet, or computer.

4. Integration with Social Media – You can log into your FB account, and share your play-lists. If you don’t want them public, that’s fine, but if you allow them to be open to the public, then we can share your musical tastes and play them from any of the devices listed above, anywhere I want! Anywhere in the world!

3. Song Artwork – Spotify recognizes MP3s and automatically gets the artwork for you. Remember when #iTunes only got artwork for MP3s purchased using iTunes? No more. Spotify will place artwork on MP3s that you downloaded from “3rd parties” or imported from CDs. It doesn’t matter.

2. Instant Access to New Releases – You can here the new albums the very day they drop. No waiting in line or running from the RIAA, only legal, high quality streaming of the entire album for you.

1. “Share To” – This is our favorite feature. You can share your music…on Facebook, Twitter, Windows Messenger, or between Spotify users all within the program interface. That means that if I have 4 or 5 songs I want you to hear instantly, I can send them directly to your Spotify library instantly, and you can listen to them anywhere in the world, on the device lists above.

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Now it goes without saying, that this new product will undoubtedly add more fuel to the battle between these new emerging DRM music streaming services and traditional radio as well as CDs and physical album sales. Truthfully, it is still unclear as to why the RIAA continues to battle to heavily against the transformation of this musical technology age, because it will only benefit from the progression of this technology as time marches on. Stay tuned…

#Spotify, #Pandora, #Facebook. More Digital and Social Media Convergence


So apparently Facebook is going to offer Spotify streaming music service on its web based platform which most of the world uses on a daily basis. Forbes says that Spotify may prove as a testing ground for Facebook to decide on whether or not to include other streaming services. Unfortunately, only certain european users will be able to use the exciting new integration feature, because Spotify has yet to seal agreements with major US music labels and publishers on the rights to stream their active and back music catalogs, which was recently stated to be gravely “undervalued” by Sean Parker – who is famously mistaken to have been a co-founder of Napster, but was merely an early employee.

As Spotify is seeking acceptance in the west, Pandora is seeking to get its IPO off the ground – we would unofficially encourage strong consideration of investing in this opportunity. Long story short, Pandora is continuing to post increased revenues but considerable profit losses, which kind of comes with the territory of being a web based music service that has more than half of its base use the service for free – not to mention the obscene music royalties they must pay which seem to increase as piracy roams rampant. Get ready, the next two quarters should be very interesting. Stay in touch friends.

Categories: Digital, Internet, Media, Music, Pandora