Lots of great points, and I love the fact that there is a full transcript. Personally, reading the transcript, noting the important parts, then listening for other contextual cues in which the point was made adds another dimension to these podcasts.
Just as an example from this podcast, the points about Recurring Payment pricing strategies were extremely helpful. It immediately struck with me because:
(a) Recurring Payments are awesome! (profit wise)
(b) They are Hell to setup for anyone outside the US
US companies have awesome companies like Stripe, Braintree, etc... as a Singapore Pte Ltd, the only 2 choices were Paypal or WorldPay. We chose the latter, and while their Customer Service was good, the technical details absolutely sucked.
Anyway, the point is that Patrick being in Japan and facing the same issues (he uses Recurly + Paypal), was a good personal reminder for the issues facing a small startup.
Maybe a profit opportunity? Well, at least it would make a good blog post.
My company is based in the UK, and FastSpring has so far been working very well for our recurring billing.
I think you're only very limited if you're selling subscription products with such low margins that paying 6% or so to a reseller is a significant problem. A good reseller like FastSpring makes recurring billing much easier by handling tax, invoices, cancelled cards, PCI compliance, and by simplifying your accounting as you only have one customer (them).
First, I have to say I agree with essentially every single piece of the article. This is clear thinking from someone who obviously has seen all sides of the picture.
But first, I want to talk about a personal example that centres around the role of technology, and spins back around to some ideas.
One of the distribution parties I really like (and which got mention in the article) is Bandcamp. As Lowery stated, they only take 15% of the revenue made from bands (it drops to 10% once the artist has >$5000 in rev - http://bandcamp.com/pricing) and provides some really great features, the most significant one I feel being a publicly facing band website which really focuses in one the content (more on their FAQ - http://bandcamp.com/faq).
I was searching for music to code to, and the instant-play feature of bandcamp sites made it so convenient to find stuff I wanted.
It all started with the "Recommendations" page of Cloudkicker - http://bandcamp.com/recommended/cloudkicker, which led to the discovery of "When Day Descends" and "Sioum", which in turn led to the rest of the above.
By clicking through the links above, and previewing the tracks, it's obvious that I'm a fan of instrumental rock / metal / post-rock / jazz-metal, etc... and I literally found.
The artists named their prices, bandcamp got a share, and I discovered some insane music that I was more than happy to pay for (all the above only cost me about US$50).
Ok, that's a personal example from this one particular music enthusiast. Some assumptions that made this possible:
- I like discovering stuff. I started by previewing the Song 'CAFO' by animals as leaders on Youtube (http://www.youtube.com/watch?v=NmfzWpp0hMc&ob=av3e), getting my mind blown, searching for other similar artists, finding Cloudkicker, and then spiraling to the rest of the similar artists
- I've got niche interests. I've been playing the electric guitar seriously for a couple of years (about 4,000+ hours of practice by my best guess), and since all sufficiently complex Melody converges to Metal and all sufficiently complex Harmony converges to Jazz, I end up developing a liking for those "obscure" genres, and don't ever mind the extra work needed to find, learn about, and pay for good music, even if it were just to make myself a better musician. This drives the above discovery process.
- I got a paypal account the moment I turned 18, and wired my (Australian) bank account to feed funds directly into it, and always have enough cash on hand. Not everybody has a convenient source of money to spend, especially not a large chunk of the demographic that finds pirating attractive (teenagers and young adults in particular, especially those in "less developed" areas, though I don't know exactly how much piracy stems from this group)
Hopefully we'll have more technology like bandcamp which make it easier for the creators of music.
But I have a more general gripe. In short, I hate it when consumer-facing, disruptive technology gets adopted too fast. There just isn't enough resource (brain power) to get things right.
What I mean is that the entities who end up winning use "technological solutions" that optimise for market-share instead of creator productivity.
We then end up merely hoping that the market settles upon a solution that has the creator's interest in mind, which is essentially hit or miss. Once the market settles upon the winning model, it typically is there to stay until the next diruption cycle.
I like to raise the example of the iPhone, specifically, iOS.
I just recently developed a substantial app for iOS (substantial meaning > 40k lines of code, not including comments and .xib files), and I can't remember how many times I was swearing at my computer at how atrocious iOS is. non-comprehensive APIs, arbitrary restrictions, non-deterministic view behaviour, potential for retain cycles even with ARC, no backgrounding for sockets, pathetic tooling (had to get a third party openSSL), etc, etc, etc ...
I doubt it was malice on Apple's part, but rather, an optimisation for profit rather than creator productivity (iOS devs). A "slick" interface which is uniformly programmable is all they need, and they weigh the tradeoffs and decide to adopt the existing MacOS platform to build iOS instead of starting from scratch (which would have arguably allowed for much more "developer control"). Let's not even get into the app approval process yet ... that's a whole other mess.n
But I like that example because (a) it was an opportunity to gripe about Apple (sorry, the Lisper in me couldn't resist =P), and (b) there is a significant market opportunity (for music, and for apps), there are high production costs, and the creators of the final product will figure out a way to make their stuff anyway. Which makes it all the more harder to change the existing system without fundamental disruptive forces.
Where can technology help? I honestly don't know. One way is to hope that the disruptor is benign (like Linus and Linux), but more often than not it is profit-seeking, and won't respect the means of production (the artists). Maybe some cryptographers can make specific DRM channels to authenticated parties in a sufficiently general authentication scheme (inherent to the computing environment, and not having to jump through 5 different hoops)? Maybe ubiquitous P2P payment systems will enable musicians (and other artists) to take credit for their work?
I'm starting to ramble, so I'll just end on a positive note, saying that the solution space is sufficiently large, and the non-financial motivation to continue to produce music is enough to constantly drive people toward solutions. We need more technical people (like Lowery) writing articles like this and talking about better ways to approach the problem with a technological solution -- it's the only type of solution which we can rightfully say, "nothing can stop an idea whose time has come".
Thanks for the feedback. What you've said is true, and I should have included a clause asking what the answerer's background was.
Personally, I started out programming with Lisp, and hence got introduced to the functional style early on. So that was 2 years spent with Lambda's, and a year with laziness, type classes and purity (Haskell) before being introduced to Continuations.
Essentially, he's saying that innovation by browser vendors drives innovation in general to a great degree. However, it hampers the ability of standards to do the work in some areas which need standards (such as Security).
I'd expect it to be the same with app side of things, especially with so many vendors trying to get their slice of the pie.
eg: HP's WebOS is supposedly a sort of hybrid web-native combo, RIM now has QNX, Qualcomm has Alljoyn for P2P and is pushing some fancy LTE frameworks. And let's not even get into Near-Field Communications (pretty hardware dependent) and the future of mobile payments =p.
I agree with the author almost almost every point. There is one which raised a question in my mind.
The author states:
"The music industry is the problem—too many bad songs are the problem. It’s the reason the audience doesn’t roar when you talk about playing a new track or two that were added for a re-release of your greatest hits. If your greatest hits were from the last three years, imagine how much money you’d be making on album sales even beyond your touring."
When he says "greatest hits" here, what exactly is he referring to? Am I right to assume, that he means that bands, just like startups, need to be continuously iterating and innovating?
If so, then I'll sympathise a little with the frustration a musician must feel.
I think it's fair to say that musicians make their money of their long-time fans, which implies that they need to keep people happy with their music for a long period of time.
I think this is slightly harder for a musician, since unlike a startup, they don't explicitly have a "problem" to solve. For myself, I used to be a great Linkin Park fan, and I still think that 'Hybrid Theory' and 'Meteora' are 2 of the best albums around. They lost me after that unfortunately, and being 14 at the time when Meteora was released means that I never gave the band any cash.
On the other hand, there are other bands that I've been following for a long time whom I still gladly pay for their music. E.S Posthumous released their album 'Makara' last year, and even though its on YouTube, I still paid for the thing --- Thanks to iTunes =) [by the way check them out - http://www.youtube.com/watch?v=-0kH781DV0U] The same goes for bands like 'Mr Big' and their album 'What if','Nightwish' with their album 'Dark Passions Play', and Steve Vai with his recent 'Live in Minneapolis' album.
I use those bands as an example because they've been around for awhile (10 years or more) and still can provide innovative, new music that retains the same appeal as their previous work, but yet provides a distinct WOW factor to it. ie: same but different.
I personally think that very few bands can do that, and the industry that supports long-term creativity like this will inevitably be small.
So that's a long way of saying that I agree with the author's premise, and that the music industry of the past is bound to see a major change (relatively shrinkage) thanks to the inherent nature of the craft along with the new-found efficiency of distribution.
From the article, on going to college: "The way it works in Israel, you have to go to the army first"
I wonder how much this impacts the entrepreneurial mindset in male youth. I grew up mostly in Singapore, and they too have conscription upon reaching the age of 18 (with some exceptions, eg: for medicine and for national scholarship holders). From what I see from my friends' facebook channels, it's definitely a draining experience indeed, one that takes months to recover from once its done.
But Kudos to this guy! Greplin is pretty awesome and I've already put it to use.
I'm Israeli, so I thought I'd share on how the Army has a huge positive impact on entrepreneurship.
For a lot of Israelis who are smart, the army is a great experience that really helps them. For example, there is a very respected Programming Course in the Israeli army, which trains programmers for half a year. These programmers then go on to work on all the Armies' systems for the next 5 1/2 years. This course is called Mamram (I was in it).
This means that programmers in Israel are not only trained in a very intensive course for half a year, but they then go on to work on real-world (and often critical) systems, for 5 1/2 years. Which means there are many Israeli programmers who, at age 24, have 6 years of professional experience working on big, important systems.
Add to this that the Mamram course is very famous (most Israeli companies require programmers to either have a degree or be a graduate of Mamra). Also, serving 6 years in the army (and being in a course with 100 peers) means you get an incredible network of connections. I'm a good example - I'm working on my own startup with two people I served with in the army, and I know many people who either work at or run a lot of Israeli startups, just because I served with them at some point. I'm probably 2 hops from most startups in Israel, just because almost all of them hire programmers from the Mamram course.
OK that came out long. I only focused on the Mamram course since that's what I know best, but there are a lot of other fields the army is great for that have nothing to do with programming.
That sounds great! It seems like the Israeli military system brings with it an integrated approach to pathways in life.
That's far better than the picture that has been painted in front of my eyes (South-East Asian context) with places like Singapore and Vietnam. With the former, it's 2 years of physical grunt work. With the latter, one of my friend's cousins had to serve in the Army for 2 years as a Private after having graduated with an Engineering degree from the University of Melbourne, Australia. =(
If Nokia were to do this, then they had better find a way to make developer migration/adoption as frictionless as possible.
We're talking about smartphones here, which are going to be driven by developers to some extent. A whole scale migration from Symbian/MeeGo to something else is going to be a messy one for sure, one that's definitely going to anger the current crop of developers.
With frameworks like Qt in place, which makes it easy for developers to build for all Nokia platforms, I tend to think that Nokia would not to go down the path of an OS overhaul.
Then again, anything is possible when you've got billions of dollars in revenue. It could be anything from an OS switch, to a new version of Qt which natively compiles Python, Ruby, JS, etc
The first "MeeGo" phone was designed to run Maemo 6 and was set to be released in 2010. MeeGo changed plans and the hardware was ready to be scrapped. The successor is in development.
I'd believe WP7 could replace Symbian in mid-range phones, and MeeGo is reserved for really high-end phones and tablets (possibly for x86-devices only). MeeGo and Qt won't go anywhere though, even if Nokia doesn't use them.
Just as an example from this podcast, the points about Recurring Payment pricing strategies were extremely helpful. It immediately struck with me because:
(a) Recurring Payments are awesome! (profit wise) (b) They are Hell to setup for anyone outside the US
US companies have awesome companies like Stripe, Braintree, etc... as a Singapore Pte Ltd, the only 2 choices were Paypal or WorldPay. We chose the latter, and while their Customer Service was good, the technical details absolutely sucked.
Anyway, the point is that Patrick being in Japan and facing the same issues (he uses Recurly + Paypal), was a good personal reminder for the issues facing a small startup.
Maybe a profit opportunity? Well, at least it would make a good blog post.