Edgar Brofman/Warner Music

I have never met Mr. Brofman and as a strong advocate for Israel and Jews I have a great admiration for what he has done and what he stands for in his ‘personal life’. However, as it relates to business – it is as if we are from two different planets. I am an entrepreneur – I try to come up with ideas that are better, faster, more interesting, very quickly and efficently for one purpose – to carve out value for myself and my company.

Mr. Brofman just recently made a statement that Warner needs to get paid more from the Rock Band/Guitar Hero franchises of the world. He is not interested in helping people build the next iTunes or MTV without getting what is ‘theirs’. This ludicrous statement is Mr. Brofman begging for government or legislative involvement. The game makers do NOT need the music labels and the music labels better figure out where they actually add value. They can not force people, companies and industries to believe they offer value or they will sue you for much longer.

Edgar – what is it that your company does? Why did you not come up with iTunes or imeem or last.fm or MTV or Guitar Hero? Why are you demanding money when none is due to you. Doug Morris is supposed to be the dinosaur and your supposed to be the younger blood – but both of you have no idea what the digital medium has done to your business.

it’s over for you guys. The business model is BROKEN and the labels will continue to suffer. Investors – I would prefer putting my money in my mattress and taking the hit on inflation then own any major right now. Good luck kids – you will need it!

iPhone 3g the best and worst phone I ever used

I was excited for the 3G – not excited enough to wait in a 4+ hour line, but excited enough to call 3 different stores every couple days to see what inventory and crowd control looked like.

I ended up getting an 8GB version after waiting for about 45 minutes 5 days ago. My first impressions were VERY positive. I am a power user of a blackberry for 7 years+ (when it used to look like a pager) and I have been in wireless for over 10 years so I have seen every phone imaginable.

The iPhone bests them ALL – hands down. The interface, the intelligence of where things are and how they work together, the great screen and how everything seems optimized to work with the screen real estate and the interface. The keyboard worries me a bit, but I think I can get comfortable with it. The battery life is mediocre at best (for the regular consumer, they will have no problem) but for a power user – expect to be charging it at lunch). The GPS needs an update – it is not turn by turn and there is no copy and paste (WTF?).

But all of those – did not remove my excitement for my phone. This was the first phone I was excited to buy since the Tilt – (HSPDA, GPS, wifi, keyboard) – but that was a turd.

But then – I started really using the phone and I realized that this phone is just not ready for prime time. It feels like Apple rushed the product out the door. They should have held onto this for another couple months – still made the holiday rush and come out with a better product. I expect most of the issues can and will be fixed with a firmware upgrade – but this is Apple, not Microsoft. Since when did Apple start playing in the ‘beta economy’.

No A2DP – meaning, I can use a bluetooth headset to talk but NOT listen to music. This should be standard with an iPhone – hello – people like listening to music on their iPhone. This is shocking to me.

Exchange Support – The set-up process was very easy and sync was incredibly fast – but there are some serious issues. My contact ‘note fields’ which I use extensively seems to have a word limit on them – so when I was traveling I did not have my frequent flyer numbers that I keep at the bottom of my contact info’. I can not seem to highlight a number when I am invited to a calendar entry and dial from within the application (which is a selling point in the Apple literature – dial a number from almost anywhere…. accept when you have a conf call scheduled and the number is in your calendar; something a businessman is apt to do at least a couple times a day. The big issue though is speed. Granted I have 3800 contacts (I know people with much more) but my blackberry – and I have an OLD ONE – has no issue while the iPhone crawls. With no exaggeration – from home screen to finding a number (clicking on the phonebook, the search box, and dialing in the first 5-8 letters) takes at 30 seconds. At each step the application hangs for a bit – this is horrendous.

I am finding lots of crashes – My device has reset itself 4 times in 5 days. Unacceptable – it’s a phone not a PC.

Within applications, they seem to crash. True story – I am driving using GPS and the screen flickers and then goes to my home screen – by the time I get back to GPS I missed my turn.
Safari crashes on me at least a couple of times a day.

I emailed a bunch of friends (power users) and unfortunately they are experiencing the same issues. I think Apple needs to get back to basics and fix this phone fast if they want to make inroads into the corporate market. If they can’t keep me as a customer – and I REALLY LOVE APPLE PRODUCTS – they will have problems keeping other power users happy.

It’s almost that time, maybe

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???

The last nail in DRMs coffin

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.

Kudos to Bessemer

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.

Gracenote + Sony

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.

Funny – but maybe offensive

Sorry if this offends some – but this is just funny!

A must watch!

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.

A Hypothesis tested

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.

Zune and Uni

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…