Tuesday, June 23, 2015

(The Big Disrupt) Interview: This Week In Startups Talks to 3D Robotics Founder Chris Anderson

Check out this great interview by This Week In Start Ups as founder and host Jason Calacanis talks to former WIRED Editor-in-Chief and 3D Robotics Founder and CEO Chris Anderson about his company, drones, and much more. 

(The Big Disrupt) Apple: Why Apple can bend the knee to Taylor Swift and still win

So Apple, the big Cupertino based leviathan that permeates modern culture almost as much as it does the consumer electronics market is brought to its knees by Taylor Swift is the prevailing narrative you’ll read just about everywhere on the internet but, as in most cases, the truth is much more complex and interesting than meets the eye.

While Taylor Swift’s public objection to Apple’s plan to not pay royalties to artists for three months was the straw that rather large and intimidating camel’s back, it was the public outcry small indie and labels artists registering that brought it to a fever pitch where Apple would have no choice but to address the shortcomings of a plan that might have put some indie labels out of business.

While it’s quite a feat that one of the most powerful companies on the planet backpedaled so quickly and publicly on its plan because of a Tumblr blog from a prominent artist, the sad truth is that Apple can afford can back down from challenges from artists and indie labels as, for them, the stakes are not high enough given the sobering fact that the company comfortably makes in a quarter what the music industry makes in a year.

This large disparity between the scale of Apple and entire music industry gives a certain whiff about Apple Music’s launch that suggests that Apple’s only taking on the music industry just to see if they can be as dominant as they was with iTunes back in the early 2000’s and, given Apple’s ridiculous cash and talent advantage over just about every player in the music streaming market, only a fool or a clairvoyant would bet against them.

The only real reason Apple were able to make music executives kill the album and give birth to the singles driven music market we have today back in 2003 and are very likely to dictate terms to industry once again is that the music industry has never truly been able to control or own the means of how music was distributed or disseminated which has left the industry ripe for disruption since Thomas Edison invented the phonograph in 1877. The problem of how music was distributed and/or disseminated became more pronounced in the download era and now with streaming which has made this long term industry problem even harder to ignore. Say what you want about Tidal but the artist owned streaming service represents the best step the music industry has taken to control how music is distributed or disseminated for decades which, unfortunately for the music industry, too little, too late.

Because of this lack of control over how music distributed or disseminated, music fans, writers, artists, insiders and executives have had to dine on steady diet of books and articles that wonder out loud as to what new company, app, software, device and/or visionary will save the music industry or gives us culprits to vilify (usually major labels or naïve ambitious tech companies like Spotify who make the mistake of thinking they can save an entire industry) every time the industry contracts in record sales but not in the demand for great music.

With every generation this long term industry problem gets worse and doesn’t look like it’s going to get better and as long as it persists, innovative last mover companies like Apple with the deep pockets and talent to capture markets will always be able to control how we get to listen the music we love.

The real losers in this equation is almost always going to be artists who find themselves getting screwed by their labels who license their music to Apple for large fees and are nickeled and dimed by streaming companies who, in most cases, are forced to do so because of the large licensing fees they have cough up to labels to host their music.

In sum, while Taylor Swift, indie labels and other indie artists can take heart that Apple backed down under pressure but, in the end, Apple can bow down to every artist in the Billboard top 100 and still come up trumps because they have the ultimate ace in the hole: the music industry short termism which has given innovative companies from Edison Speaking Phonograph Company onwards a chance to dominate an industry that can’t see the blood on the leaves and realize that it’s theirs. 

(The Big Disrupt) Interview: Stanford Business School talks to former NYTimes Executive Editor Jill Abramson

Check out this great interview by Stanford Business School with former New York Times Executive Editor Jill Abramson as she talks about her experiences at the newspaper and gives her take on the future of journalism

Friday, June 12, 2015

(The Big Disrupt) Interview: This Week In Startups talks to Helen Greiner, Founder CyPhyWorks

Check out this great interview by This Week In Startups as founder and host Jason Calacanis talks to Helen Griener, inventor and founder and CEO of drone robotics company CyPhyWorks.

(The Big Disrupt) Apple: Prediction - Apple Is Going To Bring The Music Industry To Heel, Again

Everybody knew at some point Apple would get into music streaming business when they bought beats music last year thanks to the decline of the download market and the rise in use of music streaming services such as Spotify and Pandora and with the release of Apple Music at the end of this month, Apple is in a great position to quickly gain a dominant market position.

While there are some unattractive elements of Apple's music streaming offering such as its social media offering for artists to connect with fans (need we run through the gamut of alternatives where artists can and already do this?), Apple can fix these kinks quite quickly thanks to the cash and talent advantage it has over just about every player in the music streaming landscape.

While the current players in the music streaming market have reacted rather positively to Apple getting into music streaming, you can't shake the nagging feeling that music streaming executives across the board are racking their as to how they’re going to tackle a company that has the money, prestige, talent and intent to dominate their music streaming in a relatively short space of time

Rivals like Spotify has a big head start with its 60 million subscribers (15 million of them paying subscribers) and, unlike Apple's new offering, has an ad supported free tier which gives them the chance to convert free users into paying ones. However, given the cash and talent advantage Apple has over all its music streaming competitors it can quickly make up for lost time as while Spotify can raise a lot of money to help generate growth or at least combat its current inability to make money, Apple can eat initial losses accrued from its new music service longer than Spotify can. Apple can do this because they have cash to burn and, crucially, music streaming isn't their core business so the stakes aren't as high for Apple as they are for Spotify.

Apple also, worryingly for competitors, have the ability to be the last mover in the music streaming market much like Amazon was for online book selling and Google was for search engines. This is more than likely to happen as Apple's cash advantage means that they can offer larger royalties for artists and a much larger licensing checks for record labels who own their artist's music.

However, the biggest advantage Apple has out the gate is its ridiculously large customer base which could make Apple the kings of music streaming in one fell swoop as Pandoras' David Holmes pointed out "Apple alone already has 800 million credit cards on file. And if it convinces just 4 percent of these cardholders to pay $9.99 a month, the company would singlehandedly double the total amount of streaming revenue made in the US last year"

All this might not frighten music executives as so far they have negotiated the music streaming market an awful lot better than they did the download market when then Apple CEO Steve Jobs virtually browbeat the entire industry into killing the album and fostering the single driven digital music market that's still prevalent today.

As content owners, Labels this time round are in a better position than they were in back in the early 2000's when the industry as a whole was pretty much clueless as to how to deal with online piracy and, to some degree, still are. The rise of music streaming services has given record labels serious leverage over how music is distributed as streaming services weakened the need for consumers to download music illegally as they, much like iTunes did a decade ago, provided a much better experience than the "illegal" alternative. 

Labels have ruthlessly used this leverage to, for the lack of a better word, extort money out of music streaming services (particularly Spotify) to the point that their music licensing costs outstrip their other costs combined. Their leverage is also why most music streaming services don't make money despite reporting double digital revenue growth group year on year and Spotify, who pay more than most, gets their name dragged through the mud in the press with stories about low artist payouts.

Labels even used their advantage against Apple as they're the reason why Apple Music is priced at $9.99 a month instead of the $5.00 a month Apple planned to enter the market with and made negotiations run as close as they could to Apple's big announcement. However, labels may come to rue how they have used their leverage as content owners as explained earlier, Apple can quickly become their biggest licencee of its content and maybe five years down the road, might be the only game in town or at least the only game worth entertaining.

Tech companies are notorious for aggressively negotiating prices with content owners and creators when they have leverage over how content is distributed as Amazon's infamous clashes with book publishers and Apple's famous negotiations in the early 2000's with music executives have shown and should Apple dominate the music streaming market, expect more of the same. Apple, surely none too pleased that their plans to compete in the music streaming market were leaked twice leading up Tuesday' release, would surely love to get payback after music executives were  damn near dismissive about Apple Music and patting themselves on the back for driving a hard bargain.

However, despite the efforts of labels, the music industry looks like it's going to be one of the few industries in the world to disrupted twice by same company as Apple are determined regain their position as the kings of the digital music market once again and with their vast resources, you can only pity the fool stupid enough to bet against them.

Friday, June 5, 2015

(Sports) UFC: Why The UFC's Deal With Reebok Might Bring Them To Their Knees

If the true measure of a company is how it treats its workers then the UFC is seriously lacking as the MMA organization fails to address its chronic problem of making major decisions with, it seems, very little input or notification of the 600 plus fighters under its banner

The UFC is great at a number of things including marketing itself better than about every combat sport or organization and actually being able put on fights people want to see but the announcement of the sponsorship deal with Reebok and the recently announced introduction of a drug testing program has shown that the interest of fighters aren't considered.

The UFC's six year apparel deal with Reebok that will see UFC fighters wearing Reebok apparel during fight week. Fighters will be paid according to five tiered system based on fights fought with the organization which may benefit seasoned UFC campaigners such as Joe Lauzon, former WEC champ Urijah Faber and Donald Cerrone (all of whom could probably earn much more in sponsorship but it may screw 90% percent of the MMA organization's female roster and as well as new up and coming talent who are likely to populate the lower tiers.

Even those who may stand to benefit most from the deal have reservations as while they might be in the higher tiers and therefore earn more sponsorship money, many of them could earn more through securing their own sponsors than they would get when the Reebok deal takes effect next month.

Fighters are already losing money with sponsors ending deals with fighters because the Reebook deal ensures fighters can't promote other brands on their training or fight apparel. This means that regardless of where a fighter ends up in the five tier payment system, they lose money before and after the deal takes effect.

This has led to a public outbursts from a number of UFC stars who have revealed the earnings they'll lose out on because of the Reebok deal. Heavyweight Matt Mitirone, a 13 fight UFC veteran took to twitter to register his disdain for the Reebok deal quipping that the sports and fitness apparel brand secured a great bargain according to him "at the cost of the fighters".

In his interview with MMA Fighting, UFC fighter James Krause revealed that he lost $20,000 in canceled sponsorship deals and with the loss of income could find himself struggling to meet his commitments as he points to the fact that the fighters life is riddled with insecurity as every fight you have could be your last no matter how good you are. The insecurity is made worse as the UFC is not shy to cut a fighter from their roster that, in the words of UFC president Dana White, fails to "move the needle" even when they're a top ten contender as former UFC fighter Jon Fitch found out to his chagrin.

The UFC can cut a fighter as and when they please as technically, fighters under the UFC Banner aren't employed by the UFC as they're recognized as "independent contractors" which means they have little to none of the rights an employee would have. This also means that fighter contracts are ridiculously one sided in the favor of the UFC and gives the organization the power to literally make or break a fighter's career because of it. Under these conditions, can you blame the onslaught of fighters who are not sold on the Reebok deal? Krause, like you would expect from a UFC fighter, describes the situation pretty bluntly as he points out that "In the UFC, our contracts don't mean sh*t. For us, anyway. For them, they do. There's no security behind it"

The insecurity of the fighter's life in the UFC is why there has been talk about fighters banding together to setup a union but with none of the top stars (maybe with the exception of UFC champion Joe Aldo) or even a good deal of the mid carders in the mood to unionize, fighters collectively bargaining with the UFC over pay is a distant reality to say the least.

This is a shame as if fighters under the UFC banner unionized, it would instantly remedy the UFC's chronic problem of announcing initiatives, deals and policies with little to no consultation with the fighters, especially when it affects them directly. It's a smart bet that there wouldn't be this much public uproar on the part of the fighters if the UFC sat the fighters down and talked them through deal but, time and again, the UFC has pretty much streamlined changes that affected fighters with little to no opposition as fighters have no leverage or even representation to make demands.   

However, if fighters did set up a union to represent their interests, the UFC would have no choice but to listen to the demands and concerns of fighters as the UFC's worst nightmare are their fighters going on strike given its relentless fight schedule, sponsorship deals and TV commitments. A union would ensure that fighters have a seat at the table when moves are made that affect them but as things stand, the UFC will continue to have its way.

How the UFC runs its business is not necessarily wrong as they can run their business however they please under the purview of the law but with the Reebok deal set to take effect next month, the UFC may just find itself in a real pickle as the MMA organization could miss out on new talent as fighters realize that the UFC's Reebok deal will drastically effect their earning power when it comes to securing sponsorships and even cause them to lose money if they had fight apparel deals of their own.

While the UFC has the best talent and is so dominant in the MMA promotion business that the sport itself and the UFC brand is damn near synonymous, fighters in MMA and other combat sports are all too aware of the short space of time they have to capitalize on their talents and how one false move could end their career which means fighters will have to make a choice between joining other MMA organizations such as Bellator and the World Series of Fighting who have no apparel deals or join the UFC and lose out financially even if they succeed against the best talent the UFC has to offer.

In sum, The UFC is truly playing with fire forcing fighters to make this decision knowing full well sponsors is how fighters really make money and in some cases can triple their fight purse just from sponsorship income per fight. With the Reebok deal set to run for at least six years, the UFC could be brought to its knees in this time as competitors could be the real beneficiaries as far as we can see, the fighters hate the deal, new prospects will hate his deal and/or may avoid joining the UFC because of it, and, if they're not careful, the UFC will hate this deal when fans divert to other MMA organizations who will attract more sponsors and better talent than the UFC over time because of one deal they might live to regret.

Wednesday, June 3, 2015

(Sports) Blatter: Blatter Resigns – What’s Next for FIFA?

While Blatter suddenly resigning and ending his 17 year reign at FIFA shocked football, no one was in need of a Kleenex for sorrowful tears as the swiss mountain goat (as Blatter strangely compared himself to in an interview in New Zealand) has run his course.

After handily winning an election everybody knew he was going win and his tone deaf victory speech, you would have thought the mountain goat was really going to stick around for four years despite a growing number of current and former members of FIFA’s executive committee are under investigation for bribery in relation to FIFA’s bidding process.

However, knowing that he is easily the most unpopular man in the sport he runs, Blatter, for once, did the right thing and step down for the good of the game. But in truth, we won’t really know why he stepped down but various reports suggest that Blatter has been implicated in a $10m payment to the South African FA currently being investigated by the FBI that ended up in an account, according to the Telegraph, “controlled by the disgraced former vice president Jack Warner”[1].

While we’re not entirely sure that Blatter is implicated in any of the scandals or is being investigated by the FBI or Swiss authorities, the abrupt nature of his departure suggests that the walls were closing in fast on a man who has for 17 years appeared unflappable despite FIFA being known worldwide as the most corrupt sporting organization on the planet

US authorities, like much of the footballing world, aren’t fans of now former FIFA president and not so long ago issued thinly veiled threats that they may arrest Blatter should he step foot on US soil. No one really knows or cares what Blatter does as yesterday Blatter did the only thing fans and insiders wanted from him – resign from the presidency and let somebody else in to reform a truly rotten organization that’s been corrupt for decades.

With the departure of Blatter, the only question that seems to matter is who’s going to take over FIFA and are they capable of reforming the organization. Former Blatter presidential rival Prince Ali bin Hussein looks to be the main frontrunner at the moment as he had strong support in Europe and with Blatter gone, his voting bloc in Asia and Africa is now up for grabs. Prince Ali proved himself a smart pragmatist as he tried to appease both sides of long established divide between European countries in FIFA and just about everywhere else when he promised to limit presidential terms to two terms and increase the places in the World Cup from 32 to 36 which appeal to both factions.

He represents the safest vote as far as Blatter’s former Asian and African voting bloc is concerned as he was the only presidential candidate who stayed in the race until the end and was particular cautious about criticizing Blatter’s reign despite the growing controversy surrounding the election.

However, with Blatter gone, there will be a number of suitors for the presidency with former Manchester United Chief Executive David Gill rumored to launch a bid and former presidential candidates Michael Van Praag and Luis Figo sure to get back in the running. Current UEFA president Michel Platini has been tipped to be FIFA president and was seen to be Blatter’s heir apparent until they fell out with each other when Blatter promised to stand down after his fourth term only to stand and win re-election a few months later.

In sum, whatever happens in the next few months, FIFA and whoever ends up taking on the FIFA presidency has a real opportunity to change the organization for the better as the mood for change among football fans and insiders is high but given neither fans or insider can vote for FIFA president, the real challenge is going be whether the new FIFA president can bring an organization impervious to change. The answer we hope for is a resounding yes as the integrity of the sport depends on it.

[1] The Telegraph, 2015, Sepp Blatter stands down as FIFA president – the life, times and controversies which damaged his career, http://www.telegraph.co.uk/sport/football/sepp-blatter/11647385/Sepp-Blatter-stands-down-as-Fifa-president-the-life-times-and-controversies-which-damaged-his-career.html


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