Bootstrapper.com - Confessions of Serial Entrepreneurs

Fan-Funded Space Starts to Grow, Slicethepie Rumbles.

Once in a while the Onion nails it.  Enjoy: It Only Tuesday | The Onion - America’s Finest News Source.

I’m pleased to report that Kiva.org received a $300,000 grant from the Rockefeller Foundation.  Back in March, I organized a small get-together for Kiva. See Tipping Points: You, Too, Can Be a Banker to the Poor - New York Times.  My friend Joan Shigekawa from the Rockefeller Foundation brought along one of her colleagues, the person responsible for micro-finance.  Brad Burnham hosted.  A good time was had.  And now Kiva has an additional $300K to further their mission.  Congrats to Kiva and the Rockefeller Foundation.

On a separate note, We are really honored and pleased to be working with the Annie E. Casey Foundation, a $3 billion charitable foundation that is focusing on the problems of our child welfare system.  Kathleen Feely’s vision is to create a social networking platform that can ease the burdens on the caseworkers and help make them more effective in accomplishing their mission - helping children. 

I’m going to be really brief here.  My dear friend and outstanding talent manager Rick Siegel has been pursuing a case called Marathon Entertainment vs. Rosa Blasi through the California courts at tremendous financial and personal cost to him and his extraordinary wife.  Rick finally won a landmark ruling from the Court of Appeals that even if there was a violation of the procurement provisions of the California Talent Agents Act, that the remainder of a manager’s contract may still be valid.  Today Rick learned that the California State Supreme Court will  hear the case, scheduled to begin on November 6. 

$10 apparently makes me the median Radiohead fan.  CDs typically retail for $16, cost $6.30.  Without EMI in the middle, Radiohead will sell the album for $10, cost $3.40 in physical form and far less in digital.  Link: What Price a Download? - WSJ.com.

"Our democracy is built on basic freedoms not being left to
individuals, or individual companies. And there is special cause for
worry in our business. American newspapers can resist government
intimidation because the Constitution is on our side, but also because
we control the presses. That is the real meaning behind “freedom of the
press,” and authoritarian societies know it. In the 1980s in the Soviet
Union, you had to have a license from the Communist Party to own a
Xerox machine; the Soviets understood that it was a printing press.

If newspapers were delivered over mobile phones, a company could simply
cut them off because it did not like a particular article. This is not
the stuff of a futurist essay. Freedom of speech must be guaranteed,
right now, in a digital world just as it has been protected in a world
of paper and ink."

From the New York Times Editorial Section, The Verizon Warning, October 3, 2007.

 Based on the market close yesterday, Google’s market cap of $190.28 billion is greater than Time Warner, Disney, and News Corp, which total $188.73 billion.  Google’s market cap is 3.6x WPP, Omnicom, Publicis, Interpublic, Aegis, Havas and MDC combined.  Google Hits New High, Valued At More Than Time Warner, Disney, News Corp. Combined. 

Among the factors driving Google’s appeal to investors is its relentless drive for a greater share of the overall media pie.   Google’s Adsense Content Network begins to hint at a strategy of distributing video content across the Internet to enable Google to move upmarket into the very rich rich media advertising segment.  It’s advertising driving new content distribution channels.  And players hungry to break out of second-tier status (not those in the previous paragraph) are eager to participate.   

Techcrunch: MySpace Platform To Launch Next Week. 

The new developer platform, like Facebook Platform
which was announced in May, will essentially be a set of APIs and a new
markup language that will allow third party developers to create
applications that run within MySpace. Developers will be able to
include Flash applets, iFrame elements and Javascript snippets in their
applications, and access most of the core MySpace resources (profile
information, friend list, activity history, etc.). Applications will
need to be hosted on MySpace servers.

And in a big change in strategy for MySpace, developers will be able
to serve their own advertising within their applications, and keep 100%
of the revenue (Facebook also allows this).

As published by blog Creative Capital, citing Comscore data.

It’s Official: U.S. Social Networking Sites See Slow Down « Creative Capital.

Mobile communications companies seeking entry into the carrier walled gardens have long complained about the actions of the carriers in restricting that access.  Now it becomes revealed that Verizon actively restricts private free speech, even between people and organizations that they have proactively elected to communicate with.  Truly un-democratic and reprehensible.  Link: Verizon Rejects Messages of Abortion Rights Group - New York Times.

Kudos to Jed Alpert and Nancy Keenan, who won an important skirmish in the fight to retain free speech across our public IP and telecommunications networks.  The 1st Amendment only applies to speech in the public.  IP and wireless networks are considered private, since they are privately owned and, in the case of text messaging, not regulated.  Therefore, companies like Verizon have the right to choose which speech they will permit and which they will prevent.  This is unacceptable.  Link: Verizon Reverses Itself on Abortion Messages - New York Times.

What’s music worth?  Radiohead apparently believes that it’s anything a fan is willing to pay - or not pay.  They’re right.  Fans recognize implicitly that the value of a single digital song file is something more than the marginal cost to make it - i.e. zero.  We live in a world where anyone with a Powerbook, Garageband, some high-quality microphones and a quiet room can create CD-quality music - for the cost of their time.  Distribution via email is at the same cost - free.  It’s no surprise that fans of P2P generally see their activities as un-legal, maybe not legal by the definition of the law, but non illegal either according to their sense of the value of what they’re taking. 

Where’s the economic value if the traditional music asset has no value?  After all, an artist has got to eat. 

I believe that the value is in the emotional connection between the band and each fan.  Online marketing means that each fan is a market of one.  Value can be derived from that relationship, through the voluntary support of the artist by the fans, the willingness to pay more than zero for music, buying tickets to performances, buying merchandise licensed and/or endorsed by the artist.  Just ask the Rolling Stones what’s more valuable, their music or the proceeds from their reunion concerts.  The Grateful Dead must have been laughing all the way to the bank; they were living the digital model in an analog era.

The valuable asset is no longer the music file but the email address that represents the passionate relationship of the artist to the fan.  It’s the means by which the artist can capture and then maintain a stream of economic value that can give even a small artist the ability to maintain a workaday living through music.  Radiohead obviously recognizes this.  Check out their registration to purchase music.  The information requested will not only allow them to maintain these relationships, but also to understand the demographics of their most passionate fans.  As any savvy marketer knows, that’s invaluable.  But it’s a simple lesson music folks still ignore.  When’s the last time you went to a concert and the venue or band asked for your email address?

The one throwback to the pre-digital age that does mystify me is Radiohead’s adherence to the full-album model.  I had a eureka moment last week when a well-known VC revealed his theory that one of the causes of the demise of music was the CD - more than twice the music as compared to a vinyl LP.  The relative brevity of the LP, he argues, forced the artist and producer to make hard choices about song inclusion, leading to a more carefully considered and higher quality album.  More is not necessarily better.  When Radiohead releases my download to me, I’ll let you know. 

By the way, I’m paying US$10.00 for the digital download.  How about you?

Link: Radiohead - Album - Cost - New York Times.