The Musical Artist P&L in Today’s Digital Streaming World – 2021 Update

The Rock&Roll gymnast is pleased to pen this year’s update of “The Musical Artist P&L in Today’s Digital Streaming World”.  2021 global recorded revenue totaled $25.9 billion1, surging 18.5% to last year’s results of $21.9 billion, and exceeding my forecast of $24 billion.  This is nearly double the average annual growth rate of 9.6% between 2015 and 2020.    

In the United States, 2021 U.S. record industry sales revenue totaled $15 billionon 418 million units sold, at a total average unit price of $25.873.  In comparison to 2020, sales revenue grew 23%, a new annual growth record. The average unit price increased 25% on robust growth in digital streaming subscriptions and the first annual increase (+56%) in physical sales since 1999.  Wow!  Further, since 2015, the average physical unit price has risen from $14.04 to $18.72.  The volume is still a far cry from the height of the market, but it’s very encouraging to see positive growth!  

Ironically, the digital music format that sent the global recorded music industry plummeting by more than half between 1999 and 2014, is now leading the revival.  84 million U.S. consumers paid for interactive digital streaming subscriptions in 2021, more than double the 35 million who paid in 2017, and nearly 14 times higher than the 6 million who did so in 2013.  Associated revenues hit $8.6 billion in 2021, while also maintaining an annual average paid subscription rate just above $100 since 2013.  To see annual streaming growth rates in the U.S. of 20-60% without price erosion is most encouraging.    

 

Streaming growth is expected to continue with projected 2030 revenues to reach $38 billion globally, but at a slower annual rate of 10-15% as the market matures, according to Goldman Sachs Analyst Lisa Yang’s team.  Of the forecasted $38 billion, expect $27 billion in paid subscription and $11 billion in ad supported.  Also to note, China, whose streaming service Tencent reports 71 million paying subscribers and 636 active monthly users, is forecasted to surpass the United States in streaming revenues before 2030. Goldman 2020 Music In The Air Report 

This leads us into the important discussion of “On Demand Ad Supported Streaming”, which is primarily YouTube, and new entrant TikTok .  In 2020, Lisa Yang reports that the average royalty rate per video stream was 3x lower than the rate per audio stream in the U.S.  I should note that the gap is about 6x lower when comparing pure on demand add supported video.  Said another way, the YouTube “Value Gap” is still significant.  While some see evidence of an improved relationship between music content owners and YouTube, I can tell you first hand, we have a long way to go.  Currently, there are about 1.9 billion active monthly users on YouTube versus 406 million Spotify, 80 million Apple, and 60 million Pandora.  To be clear, this monetization gap is not sustainable for the music creative community.  The entry of TikTok and future renegotiations with the record labels might just provide some leverage, given the success of this new platform. I’ll stay on this.

The final and most important point we need to discuss is songwriter compensation. There is a major disparity in today’s digital streaming era, between royalties paid to the recording artist and record label for the sound recording copyright, versus the royalty paid to the songwriter and music publisher for the “song” copyright. 

For every $10 monthly streaming music subscription, here’s where it goes:

Platform $3.30
Record Label $3.80
Recording Artist $1.70
Music Publisher $0.60
Songwriter $0.60

While the recording artist is able to negotiate in an open market, the songwriter’s royalty is regulated by the U.S. Copyright Act of 1976, and more recently by the passage of the groundbreaking Music Modernization Act (MMA) in 2018.  While the passage of the MMA resulted in the U.S. Copyright Rate Board (CRB) declaring a much needed royalty increase to songwriters for the 2018-2022 term, the powerful digital service providers (DSPs), led by Spotify, appealed this rate increase in a most disingenuous fashion!  To date, the matter has not yet been settled in the courts.  Moreover, the DSPs are requesting a further rate reduction for the 2023-2027 pricing term.  This is not a sustainable model for the songwriter!  Just remember, without the songwriter there is no song, and without the song there is no music!

Please ask me about a leaning forward, badass organization doing something about this, Songwriters of North America (SONA).  Look for future updates in 2022 as I stay on all of this! 

I guess it’s only fitting to take you out with some live photos from the rail for Guns N’ Roses August 2021 LA Stadium performance.  Enjoy!

All Global data is sourced by the IFPI 2022 Global Music Report Summary IFPI 2022 Global Music Report Summary

All U.S. data is sourced by the Recording Industry Association of America database, with all $ figures not adjusted for inflation.  U.S. RIAA 2021 Year End Music Report

3 2021 U.S. total units sold of 418 million includes 84 million paid subscription streaming.  Please note that certain forms of revenue cannot be quantified in units sold and are therefore excluded in the average price calculations.  This includes Limited Tier Paid Subscription, On-Demand Streaming (Ad-Supported), Sound Exchange Distributions, Other Ad-Supported Streaming, and Synchronization revenue.  

ROCK ROYALTY INCARNATE

To be fully transparent, I had not planned to write another blog post on the planet’s greatest Rock&Roll band, my beloved Guns N’ Roses.   But after four hours of exquisite musical masterpiece Wednesday night November 29, 2017, in the final performance of the 2017 Not In This Lifetime tour, by the “full on” committed talent of these exceptionally gifted rockers now in their 50’s, following multiple decades of excess and strife hard to fathom, I couldn’t possibly maintain integrity of my musical brand, if I were to write nothing.

Since my Signature VIP experience the opening night April 8, 2016 at the T Mobile Arena in Las Vegas, Nevada, and spanning 2 years, 6 states, 11 electrifying performances, backstage tours, on stage photos, lots of swag and iconic limited edition apparel purchases, more VIP lanyards, a “jumbotron” capture, and an official GN’R Tweet Like and “Retweet”, my eyes and ears were wide open, no ear plugs please, as Guns N’ Roses rightly brought down the house Wednesday night at iconic music venue The Forum in Los Angeles, California, to close out year two of a once “never imaginable” #NotInThisLifetime tour!

I hope this post captures the essence of my awe and admiration. In the last three years, I have learned a lot about what it takes to create music to fill one’s soul. If you’re lucky, you write countless songs, over many years, with many collaborators and perhaps one or two will become a hit. Then of course you have the select few, in your genre of choice, that you can count on one hand, a group of musicians that somehow find each other and legends are sprung! Guns N’ Roses is that band!

Shortly after 8pm Wednesday night November 29, 2017, the seven band members of Guns N’ Roses, six men and one woman, three of which built this iconic act from the ground up, stormed onto the stage of the venerable and refurbished Forum in downtown Los Angeles. They would exit the stage about 4 hours later after playing a record 37 timeless classics that had fans on their feet swaying to and fro, arms in the air, singing along with passionate might, and some with tears flowing. From the early days in the late 1980’s and their meteoric rise to fame on the best selling debut album in U.S. history, “Appetite for Destruction”, to the Grammy Nominated Use Your Illusion I & II albums, to the 2008 release of Chinese Democracy, the collective talent, dedication, and relentless pursuit of excellence in this band, has arguably ignited one of the greatest resurgences in Rock&Roll history. Fans from across the U.S. and the world ascended upon L.A., as they similarly did in Vegas in April 2016, to bear witness to the majesty of Rock royalty incarnate, with the powerful & eloquent four octave vocal range of Axl Rose on Lead Vocals, Saul Hudson AKA Slash, Chief Shredder on the Electric Guitar, the commanding cool of Duff McKagan on Bass, the fierce and electric Richard Fortus on Rhythm Guitar, Dizzy Reed spinning exquisite lyrical yarns on the Keyboard, the mighty Frank Ferrer on Drums, and Guns N’ Roses first female band member, the very talented Melissa Reese on Keyboards and Backup Vocals.

They powered through timeless classics including “Welcome To The Jungle”, “Mr. Brownstone”, “Out Ta Get Me” and “Used to Love Her” that speak to the reckless abandon that first defined them. Axl Rose playfully offered up “You Could Be Mine” as a “touchy feely” love ballad. Awesome! We love engaging with our legendary frontman! The absolutely riveting and anthemic “Rocket Queen”, infused with epic guitar riffs that only Slash could craft and deliver, did indeed lead the charge for passionate love ballads, to which only a band like Guns N’ Roses could do justice, including “This I Love” from Chinese Democracy, and classics “Sweet Child O’ Mine”, “Don’t Cry”, and “November Rain”, with devoted fans erupting in emotion when Axl Rose’s Grand Piano arose from below the stage.

The intelligent and in your face “activist” persona of Guns N’ Roses certainly ignited  a powerful response Wednesday night with thunderous applause and energy for the very timely classic “Civil War”. Title cut “Chinese Democracy” kicked things off early in the set list, and recent addition “Madagascar”, also from the Chinese Democracy album, burst into the mix in the encore. Income inequality and hate are powerful forces in our country that demand thoughtful action. I just love the integrity and commitment of this band to raise important thought provoking issues. Of course, a live Guns N’ Roses set would certainly not be complete without the driving instrumentals and scorching vocals in “My Michelle” and “Nightrain”.

The global Rock&Roll community has been devastated this past year with the passing of Chris Cornell from Soundgarden and Malcolm Young of AC/DC, among others. In tribute to these extraordinary musicians, Guns N’ Roses added Soundgarden cover “Black Hole Sun” to the set list on May 27 at Sloane Castle in Ireland. On this particular Wednesday night, epic GN’R classic and Bob Dylan cover “Knockin’ on Heaven’s Door” followed. A fan favorite with audience participation, this ballad has evolved since the early days at venues like The Ritz in New York City. The exquisite combination of Slash on the double neck guitar, “Mr. Richard Fortus” as introduced by Axl, on rhythm guitar, Dizzy Reed and Melissa Reese on the Keyboards will certainly bring you to your knees as you approach Heaven’s door. Perfectly placed following “Patience”, the band launched into AC/DC cover “Whole Lotta Rosie” to pay tribute to Malcolm Young, who was laid to rest days earlier in his hometown Australia.   Both artists also hold the composition copyright to these two classics, which means their estates will receive performance royalties for each live GN’R performance.

The band added three songs the final evening, “There Was a Time” and “Catcher In the Rye” from Chinese Democracy, and “Yesterdays” from Use Your Illusion II, which I should note, includes Guns N’ Roses’ very popular Road Manager Del James on the composition copyright, which means he will receive a performance royalty check as well.

Hailing to the very beginning, epic anthem “Paradise City” continued to take the anchor position in leading us out for the night. You can’t argue with success! The energy in the room was still at a fever pitch and a very humble and quite chatty Axl Rose was beaming from ear to ear. Slash, who spends much of the night flying through the air in a tuck position some are lucky to capture on film, continues to evolve his brand with a trademark handstand on stage, this after 4 hours of intense sweat dripping shredding. Bravo! Duff McKagan, who strategically struts around the stage strumming that Bass Guitar like no other, delights his fans by spraying guitar pics from each section of the stage. Richard Fortus, whose skill on the rhythm guitar is beyond measure, commands your attention with a simple quiet strength. The presence of Keyboardists Dizzy Reed and Melissa Reese, tucked away in their mighty musical setups, are lost on no one. The incredible precision and strength of Drummer Frank Ferrer, with a kick a** smile to light up the world, rounds out this incredible ensemble we have come to know and love quite well over the past 20 months.

They return one final time for a bow. Tears are starting to well …. To lead us out, perhaps we should return to the beginning. Welcome To The Jungle baby!

Thank you for the gift of passionate A** Kicking Rock&Roll that fills my soul! I hope you all have a joyous and peace filled Holiday Season!

Axlpiano Axl1 Slash1 Slash&Duff Axl2

 Slash2 Duff1 Duff2 Axl3 Axl4 Fortus Combo1 Slash3 Axl5 Axl6

Axl7 Slash4 Slash5 Slash6 Trio Trio2 Slash7 NovRain1 NovRain2 GNRLEADcopyright

Google and the Internet of Things 2017 Update

As a follow up to my first article on Googlethe internet and technology juggernaut whose innovations in search and advertising have made their brand one of the most recognized in the world, this update will focus on the leverage such dominance brings. Google core products, including Search, YouTube, Android, Google Play, Maps, Chrome, and Gmail, each have over one billion active users monthly. 2016 Net Income totaled $19.5 billion, up 19% to 2015, driven on 22% growth in Google Properties revenue, formerly referred to as Google Websites revenue. Gross profit margin was 61%, down slightly (1%) to 2015. Net profit margin remained steady at 22%, and the effective tax rate was 19%.

Taking a closer look at Google Properties revenue, 2016 revenue totaled $63.8 billion, comprising 71% of total Google revenue. While Google doesn’t currently disclose the product breakout in their public filings, there’s enough public information available to estimate the pieces. Analysts Eric Sheridan at UBS and Justin Post at Merrill Lynch both estimated You Tube revenue to be about $12 billion in 2016. I estimated Google Search revenue at $50.5 billion and Android at $1.3 billion. Google dominates the global search engine market, maintaining a near 90% worldwide market share since 2010, although they have lost a little ground recently, currently holding a little under 87%. Android revenues, driven on mobile ad revenue, experienced strong growth in 2016, with my estimate reflecting a 60% increase to 2015.

While clearly Search revenue dominates the Google revenue story, investors are now paying closer attention to YouTube as analysts have become very bullish on this product segment and project revenues to reach $20 billion in 2018, and $27 billion by 2020.   Merrill Lynch now believes YouTube may reach a $90 billion valuation on a standalone basis. YouTube’s $90 million valuation.

The P&L success of the YouTube operating model finds its roots in the Digital Millennium Copyright Act (DMCA) of 1998, legislation enacted before user generated content sites like YouTube existed, and before the significant transformation in digital technology we enjoy today. Google’s YouTube takes full advantage of the DMCA “Safe Harbor” provision that provides full protection from infringement liability for content flowing through their lines. To qualify, Google must meet certain guidelines, including promptly blocking access to newly discovered infringing material, and terminating repeat infringers. However, the responsibility for surveillance and enforcement lies with the musical creator, not with Google. Most in the music industry view YouTube as a huge problem, a large global firm making billions of dollars, at the expense of the little songwriter who is struggling to survive.

Before we get into the latest key developments surrounding “Safe Harbor” protections for large powerful platforms, it’s important to note a recent operational change at Google’s YouTube, that also has a disparate impact on the songwriter with less than 10,000 YouTube views, and more importantly, that forces program loyalty provisions for all of their content providers. In 2013, Jack Conte, a struggling musician on YouTube, founded Patreon, a platform where musicians can post their content and find backers to support them. Content creators are projected to earn $150 million on the crowd funding platform in 2017.  Digital Music News reports that in order for musical creators to add external links to their videos, to sites like Patreon and Amazon, they are now required to join YouTube’s Partner Program, which carries an additional requirement, of a minimum of 10,000 views. It’s important to note that most content creators on YouTube depend on external links to earn money, that Google’s YouTube controls 60% of all streaming audio business in the world, and that it pays for only 11% of total streaming audio revenue artists receive. 1

Wait, there’s more. Are you familiar with Senate Resolution 1693 Stop Enabling Sex Traffickers Act of 2017? This bills amends the federal criminal code to include those who benefit from “participating in a venture” that supports child sex trafficking, to be subject to the same consequences as those who are directly engaged in this criminal activity. To achieve the intended goal, the bill seeks to amend the Communications Act of 1934, specifically Section 230 on Safe Harbors, to remove the protections communication and content delivery companies currently receive, should a sex trafficker use their company’s internet platform to advance their cause. Since introduction, the bill has received wide bipartisan support and additional sponsors, as well as support from companies like 21st Century Fox and Oracle. However, pro-internet groups like the Center For Democracy and Technology and the Electronic Frontier Foundation, powerful organizations well funded and with close ties to Google and similar minded Silicon Valley internet firms, are against this legislation. They are concerned that the removal of the Safe Harbor provision, as it relates to child sex trafficking, will set a precedent and open the door for further erosion of Safe Harbor provisions that could ultimately impact the organizations whose causes they are advancing. Background on the Stop Enabling Sex Traffickers Act.

Huge thank you to the Association for Independent Music Publishers (AIMP) for a very informative panel discussion on these important matters, featuring Jonathan Taplin, Director Emeritus of the Annenberg Innovation Lab at USC Annenberg School for Communication, member of the Academy of Motion Picture Arts and Sciences, who also sits on the California Broadband Task Force. I highly recommend Mr. Taplin’s book “Move Fast and Break Things” How Facebook, Google, and Amazon cornered culture and under-mined democracy.

I’ll leave you with this epic performance from my beloved rockers, incredibly on point some 25 years ago, and always forward thinking…

“.. You can’t trust freedom when it’s not in your hands, when everybody’s fighting for the promised land.. I don’t need your civil war.  It feeds the rich, but it buries the poor..”

Guns N’ Roses “Civil War” Live Paris 1992

Enjoy!

1 Jonathan Taplin, “Move Fast and Break Things”

Feature Image Credit: Cynthia Drew with Rock&Roll soul sister Tammy Michaud on the GN’R stage Labor Day Weekend 2017, at The Gorge Amphitheater in the stunning Wenatchee Valley, just over the mountains from Seattle, Washington.

The Music Of Sound

.. Be sure that you have not reduced the filesize to the point where the audio has become mono – PRESERVE THE STEREO AUDIO..’ So read an important instruction I followed to the letter of the law, in the final assignment of my Music Supervision class at The Berklee College of Music. Professor Brad Hatfield, Emmy Award winning composer and creator of the Music Supervision program at Berklee demands excellence in the music of sound! I couldn’t agree more! Hence my recent purchase of Bose Soundtrue-ultra-in-ear-headphones-apple-devices. ‘..headphones designed so nothing will get between you and your music… At a retail cost of $129.95? Yes. Boes is in the music business. Apple is not. Where is this leading? The quest to find the best quality audio possible delivered at home and on a mobile device! MQA. Master Quality Authenticated. What is MQA? So glad you asked! Let me paint the canvas for you.

The very first 45 I bought was “That’s the Way I Like It” by KC and the Sunshine Band. Next came “Fly, Robin, Fly” by Silver Convention. These two hits traded the #1 and #2 spots on the Billboard Hot 100 in December 1975. My enduring love affair with all things music began with U.S. Top 40 Terrestrial Radio and Vinyl Singles. Every Friday I went to the Plaza Department store, eager to plunk down $1.04 for the latest chart topping single. I should note that since I moved to the land of music and sunshine this summer, I actually met a member of KC and the Sunshine Band, keyboardist Robert E. Lee! If you’re an “indy” recording artist, you must check out his unique operation at Creative Studios LA in the heart of North Hollywood’s famed Art District.

As my musical tastes continued to form in the 70’s and 80’s, I amassed a pretty extensive Vinyl collection from singles like The Bay City Roller’s “Saturday Night” and Queen’s “Bohemian Rhapsody” to well over 200 albums. My very first Vinyl LP was Meatloaf’s “Bat Out Of Hell”. Led Zeppelin, The Rolling Stones, Aerosmith, and yes of course Guns N’ Roses followed. I would like to personally thank my parents who supported my Rock&Roll love affair by letting me join the Columbia record club, where you could purpose a gaggle of 10 albums or so for 1 cent, and commit to purchase x amount more over 3 years.   Who remembers that?

The quest to fill my world with epic musical masterpiece of course grew from there! I’ll never forget the day I convinced my mom to buy me my very first stereo console system, complete with equalizer and real speakers, where you actually had to plug in the speaker wires! It was like a right of passage and I felt invincible! In my first year of college I bought my very first full rack system made up of actual components! My heart rocketed to the moon and let me tell you there were many rockin’ parties on the 8th floor of Tower A at Hofstra University!

By the time I graduated from college in 1987, vinyl sales in the US had dropped by more than half since I had graduated from high school, and the world was introduced to the first digital audio format, the compact disc. By 1999, the industry soared to record high revenues on commanding sales of the compact disc, with a file format that consists of two channels, signed 16-bit Linear PCM (pulse code modulation) sampled at 44.1 kHz, basically setting in motion transformative change of the audio file format from analog to digital.

And so begins the debate on the music of sound! The Compact Disc Digital Audio format was developed by Sony and Phillips in the 1980’s and is the Red Book audio standard for encoding music on CD’s. While you can certainly argue that the CD is more durable than a vinyl phonograph record, there is endless debate as to the quality of sound between the two. From a technical aspect, it boils down to two things, how much space is available, and the level of noise discernible to the human ear. From a pure musical aspect, ask critically acclaimed and legendary guitarist Slash, who decidedly prefers analog tape to existing digital formats.  Check out this very up close look of the entire in-studio recording process of his 3rd solo album “World On Fire” with Myles Kennedy and the Conspirators. Slash Real to Reel  Drummer Brent Fitz tell us “…The most important thing for Slash and the rest of us is to capture a vibe that is almost a forgotten art form, which is recording to two inch analog tape… The music is what speaks the most….” Slash goes on to say, “It’s one of the few band oriented up and running Rock&Roll studios in town.”, referring to NRG Recording Studios in North Hollywood where recording to two inch analog tape is still an option. Studio Barbarosa in Orlando, Florida is another.

To be fully transparent, while Brad Hatfield’s Music Supervision class has provided me a basic primer in music editing and audio file formats, I have no formal expertise in this area. What I do understand is that the maximum frequency at which humans can hear background noise is 20 kHz.  The experts at Sony and Phillips determined that the sampling frequency of the compact disc audio file must be greater than twice the maximum frequency. They arrived at 44.1 kHz.

Of course the recorded music industry was turned upside down and forever changed in 1999 when technology internet firm Napster arrived on the scene and introduced a peer to peer file sharing internet service that created a mechanism to exchange music in a new MP3 format that, among other things, accelerated the continued erosion of sound quality.  The MP3, designed by the Moving Picture Experts Group, and further developed for audio by several teams of engineers at The Centre for the Study of Television Broadcasting, Matsushita, Phillips, Sony, AT&T, Bell Labs, and others,  is a patented digital audio encoding format that uses a form of lossy data compression.  Basically this means that certain parts of the sound are compressed and the result is music that is not full quality audio. The compression is needed for the audio file to fit on a digital delivery medium, and the feeling was that most people will not notice the difference in sound quality. Additional formats have since been developed. iTunes downloads utilize the AAC format, generally regarded as higher quality than the MP3, yet still not considered full quality audio, also a compressed format. WAV and AIF formats have no compression, also referred to as lossless compression, and are considered full quality audio. ALAC and FLAC formats are also forms of lossless compression for storing digital audio, but they’re generally much smaller in file size than WAV and AIFF files, hence more practical for downloads and streaming.   They are considered “High Definition Audio” formats.

Fast forward to 2014 and newly patented digital audio technology MQA is about to revolutionize the music listening experience by delivering “better than full quality audio”! Bob Stuart, founder of Meridian Audio, launched MQA (Master Quality Authenticated), a revolutionary British born technology poised to change the way people enjoy music! From the same country that gave us the British Rock invasion in the 60’s and beyond, this breakthrough technology will reverse the trend, in which sound quality has been continually sacrificed for convenience. MQA allows listeners to experience every intricate detail the microphone heard, offering music fans the purest ever sound! In 2016, MQA recruited Warner Music Exec Mike Jbara to lead the newly spun off firm.

How does MQA work? MQA starts by capturing 100% of the musical performance. It then cleverly adapts to deliver the highest quality playback your product can support. After capturing the performance, MQA “folds” the audio file to make it small enough to stream. They call this “Music Origami” and it can be fully approved in the studio. Next comes the “unfold” process where the first level of “unfold” recovers all the direct music related information. Output is 88.2kHz or 96kHz. Products with a full MQA Decoder deliver three levels of “unfold” and the music listener is hearing exactly what the artist created in the studio. I’m told it’s incredible!

I can tell you with first hand experience, that MQA sound at the first level of “unfold” is amazing! Nugs.net, a firm dedicated to delivering the highest quality audio for live performances of many well known Artists, has partnered with MQA and currently offers Springsteen and Metallica concerts in full MQA format. I purchased a Hi-Res MQA Download of the 1/27/17 live performance of Bruce Springsteen & The E Street Band in Perth, Australia. Promise me you’ll do the same and listen to Bruce and his band perform the epic classic “Because The Night”, he co-wrote with the legendary Patti Smith. Even on a basic smartphone, at a default sample rate of 44.1kHz, it will blow you away! See how many instrumental stems you can hear! At the very least, ask me for a listen the next time you see me.  I can’t wait to see the expression on your face!  For the music production folks reading this, you can bring it a step further by loading the album into your DAW and adjust the sampling rate to 96kHz.  I used Amadeus Pro.

AudioBruce

MQA at its most primitive level will bring you to your knees. Please look at the Spectrum graph below.  The pink highlighted region represents additional musical sound and texture you will experience at a basic minimum MQA level of play. I can’t even imagine what it will be like at the full three levels of “unfold”! I won’t have to wait long. MQA has just partnered with LG to deliver the very first global MQA smartphone the LG V30!  

FrequencyBruce

And earlier in the year, MQA and Universal Music Group entered into a multi-year agreement to encode UMG’s extensive catalogue of master recordings in MQA’s industry leading technology! Imagine listening to some of the greatest Artists in the world, in the very best high definition audio format?   I’m hoping this will include all the labels under the Universal Music Group umbrella that include legends like The Beatles, The Rolling Stones, Lady Gaga, U2, Bob Marley and Guns N’ Roses, to name a few. Incredible! I’ll bet the GN’R guys would approve!  MQA and UMG collaboration.

Speaking of epic musical masterpiece, I’ll leave you with this live fan favorite from the opening night of the U.S. leg of the 2017 Not In This Lifetime Tour. Extraordinary musical genius absolutely committed to the very best in audio fidelity! How many instrumental stems can you hear? Perhaps the lovely thoughtful teams at MQA, Nugs.net, and Guns N’ Roses will provide us the opportunity to experience this in ultimate exquisite sound form, as it should be.  Check out the big screen on the left side of the stage, you might recognize someone you know at 9:19 and 9:46. Enjoy!

Knockin’ on Heaven’s Door Live St. Louis 7/27/17

Feature image credit:  Thank you to one of the awesome fans from the “GnFnR Fanspot #NotInThisLifeTime fan group for sending me this incredible photo, taken at extraordinary timing from the other side of the PIT; and to Margott Hinostroza for creating this wonderful worldwide network of GN’R fans!

 

Google and the Internet of Things

Continuing in my series on mobile and internet technology, this month I take a look at Google, the internet and technology juggernaut that generated $75 billion in gross revenue and $16.3 billion in net income in 2015. Net profit margin was 22% and the effective tax rate was 17%. The stock closed 2016 at $793.02 with a market capitalization of $554 billion. Google takes pride in not being a conventional company. Their innovations in search and advertising have made their brand one of the most recognized in the world. Their core products, including Search, YouTube, the Android mobile operating system, the Google Play app store, Maps, the Chrome internet browser, and Gmail each have over one billion monthly active users. Google believes they are just beginning to scratch the surface. In 2015 they created a new public holding company named Alphabet, a collection of businesses, the largest of which is Google, as well as new businesses Verily, Calico, X, Nest, GV, Google Capital, and Access/Google Fiber.

 google-pl

Focusing on 2015 Google Websites revenue of $52.4 billion, at 70.2% of total segment revenue, up from 67.4% in 2013, the firm’s SEC filings describe this segment as advertising revenue on Search, Google Play, YouTube, Gmail, Finance, and Maps. While Google does not publicly report earnings by product line, Search, YouTube, the Android mobile operating system, including the Google Play app store, are the key product lines in this segment. For 2015, researching multiple sources of earnings estimates, including these two by eMarketer and ForbesI estimate the breakout to be:

google-websites-new

 

I should note that there is considerable debate about how much Android contributes to Google’s bottom line, with annual revenue estimates ranging from $300-$500 million to $1 billionto as much as $31 billion, as recently claimed by Oracle in their lawsuit against Google.  Oracle is suing Google for copyright infringement, for using its Java software to develop Android, without paying for it. Five years of litigation continues following a January 2016 U.S. Supreme Court ruling where Google lost in their effort to derail the case. Any settlement figure would be a function of this estimate, where it may be appropriate to include “Search” ad revenue. We’ll leave that decision to the copyright finance valuation team assigned to the case.

In the Search space, competition is fierce. Competitor Microsoft’s Bing market share continues to increase, at 22.3 percent in October 2016, compared to Yahoo at 11.7 percent, with Google still leading the pack at 63.6 percent. Considering that Bing was first introduced in May 2009, and that it also largely powers Yahoo Search, Microsoft is certainly gaining ground. Bing finally catching up to Google. U.S. Search Engine market share.

The biggest advantage Bing has over Google right now is their paid advertising platform. Bing is closing the gap by offering more niche advertising, and at lower prices. New functionality in the Ad Preview and Diagnostics tool is starting to turn Bing Ads into a major player in the paid search advertising world. It’s likely that more marketers will start using Bing Ads as an online advertising platform for budgetary reasons alone. If combined with more design, functionality, and visibility changes, Bing could start closing that gap between them and Google faster than ever before. Another increasing threat is in Europe where the European Commission has instituted new personal privacy provisions. Further, many European countries have launched legislative attacks on Google’s ambiguous privacy policy. This presents a significant opportunity for Bing to rise up and force Google out of Europe.

In the smartphone space, Google’s Android operating system is the hands down leader at 86.2% market share, compared to Apple’s iOS at 12.9%, according to the latest Gartner research.  Android, which was launched in 2008, makes money for Google in two ways, advertisements supplied by Google shown on Android phones, and revenue Google takes from its mobile app store, Google Play, which some technology analysts predict will soon overtake the Apple app store. Google Play to overtake Apple App store.

Also, in 2013, Starbucks dropped AT&T to partner with Google to provide an improved WIFI experience to their customers. Google will also work with Starbucks at developing the next iteration of the Starbucks Digital Network to provide increased content. Interestingly, I should note that following a recent flurry of iOS 9.3 updates, the functioning of my Apple iPhone 6 has declined dramatically when connected to Starbucks WiFi. Starbucks Google partnership.

The final point of analysis, and of course near and dear to my heart, is the subject of music video and Google’s YouTube, which was estimated to gross $5.6 billion in revenue, and net $1.6 billion or 28.6% margin to Google’s bottom line in 2013. Advertising Age on Google’s YouTube.  In the U.S. they were expected to net $1.08 billion, just 6.3% of all of Google’s net U.S. ad revenues for the year, but 20.5% of the $4.15 billion U.S. online video ad market.  Forbes contributor Tim Worstall on Google’s YouTube.  We can only rely on estimates as I noted earlier, in that Google does not publicly disclose financial results by product line. My 2015 gross revenue estimate for YouTube is $7.5 billion.

The P&L success of the YouTube advertising revenue model finds its roots in the Digital Millennium Copyright Act (DMCA) of 1998, the most important amendment to the U.S. Copyright Act of 1976; legislation enacted before user generated content sites like YouTube even existed, and clearly long before the significant transformation in digital technology we enjoy today. Google’s YouTube takes full advantage of the DMCA “Safe Harbor” provision that provides full protection from infringement liability for content flowing through their lines. To qualify, Google must meet certain guidelines, including promptly blocking access to newly discovered infringing material, and terminating repeat infringers. However, the responsibility for surveillance and enforcement lies with the Musical Artist, not with Google. Once a user uploads a video from a concert for example, probably without a license from the Artist, a global marketplace with at least five billion active users monthly, is instantly able to access this creative work for free. While Google’s YouTube is clearly not the only source of music piracy, the sheer global volume of the user base and ease of access to musical content, certainly makes it a major player. In the U.S., music piracy is a serious problem and results in the loss of $12.5 billion in total output annually, another $2.5 billion to downstream industries, the loss of 71,000 jobs, and $422 million less in U.S. tax revenue. The RIAA on the true cost of music piracy.

Further, Google’s YouTube is permitted to operate under an advertising revenue model, markedly different from a royalty based revenue model that has long been the standard in the recorded music industry. Musical Artists are in the fight of their lives! Multiple advocacy groups, including The Grammy Creators Alliance, The Future of Music Coalition, and the Berklee College of Music’s Rethink Music Initiative to name a few, are waging in earnest, a campaign for U.S. Copyright reform that reflects today’s music delivery system, that will protect Artists’ compensation, and that will ensure an enduring legacy of creative expression for years to come.

Looking abroad, in September 2016 the European Commission proposed modernizing copyright rules to help European culture flourish. The EU has adopted the Digital Single Market Strategy to offer better choice and access to content online and across borders, and to promote a fairer and sustainable marketplace for the creative industry. EU Press Release.

The winds are shifting and the message is becoming more clear. As the global recorded music industry is gaining legislative ground, particularly in the EU, and as consumer and music industry awareness and activism are on the rise, and as the Google YouTube development team has begun to respond with technology advances like Audible Magic and ContentID, expect to see transformative change in digital copyright law and protections, that will ultimately put some pressure on the YouTube profit model. Further, here is an interesting point if you’re really paying attention.  Today’s technology graduates are more interested in the altruistic goals that silicon valley offers, like working on products that will change the world, as opposed to Wall Street, where attractive compensation packages apparently don’t carry the same level of gravitas. Talent wars: Silicon Valley vs. Wall Street. Then perhaps it’s not a stretch to say that these young grads will not want to play a role in the continuing erosion of the Artist P&L and musical creativity in our society.

Let me leave you with this thought. What value does music create in your life? Think about that first piano recital where your daughter was so excited to play Beethoven’s “Moonlight Sonata”; or that hard fought comeback to competitive gymnastics performing the floor routine of your life to Bill Conti’s “Theme From Rocky”; or the incredible emotion flowing at the debut reunion performance, twenty three years in the making, of a legendary and iconic Rock & Roll band! What about the pure joy and hope you feel when your very special and brilliant 55 year old brother writes his first set of lyrics to the “Twelve Days of Christmas” and then sings them to his girlfriend! Yes! “…take me down to the Paradise City.. yeah yeahah!” For those of us who cannot possibly imagine a world without music to fill our souls, with pure unbridled emotion and purpose that inspires us every day, our message is simple. We’re on it and we’re in it for the Artist! Count on it.

 “Ten years ago they sent a machine from the future, “You Could Be Mine”

 

#NotInThisLifetime

If you had asked me this time a year ago, if Guns N’ Roses would ever get back together, I would have answered, “Not in this lifetime.” Perhaps I should have been playing closer attention. There were definite signs, but I just didn’t believe it. In a Renaissance period of my life, fueled by my passion for epic Rock&Roll, I am simply grateful they made this choice and I had the opportunity to immerse myself in all of it! Following the memorable debut Arena performance Friday night April 8, 2016 at Las Vegas’ brand new T Mobile Arena,  Masterpiece Guns N’ Roses historic reunion. my insatiable appetite for this band, no pun intended, demanded two more performances at hometown New York City area 82,500 seat capacity Met Life Stadium on July 23rd and 24th, and finally on August 12th to the magnificent city of Seattle, Washington, nestled between a thriving sea port and the majestic domes of Mount Rainier, a metropolis steeped in rich music history, and the hometown of GN’R Bass Player Duff McKagan. I have never attended more than one live concert event in one single tour, not even for the Stones, Led Zeppelin, or Aerosmith. Perhaps the twenty year void of the iconic live trio ensemble of Axl Rose, Slash, and Duff McKagan tugged at my heart strings. Perhaps the opportunity to experience the only true Rock&Roll band of my generation tugged even greater. Yes that sounds right. What about the fans? WOW! I have never seen such devotion from a fan base that spans continents. The final hook was the ensemble of new and old with the very athletic and masterful Rhythm guitarist Richard Fortus, the very cool and accessible Frank Ferrer, whose mastery of the drum kit keeps this band in precision timing, and the creative and melodic sound rising from the keyboards with long time member Dizzy Reed and GN’R’s newest member, the brilliantly coiffed Melissa Reese. As a pianist myself, inspired recently to make a new keyboard purchase, I love that this classic Rock&Roll band has evolved and strengthened the mastery of the musical experience beyond the beloved and traditional electric guitar.

Take me down to the Paradise City, where the grass is green and the rockers are gritty! In my Smartphone Blog post this month, I wrap up with a mesmerizing performance of Civil War, that opens with a young and very athletic Axl Rose adorned in a patriotic leather jacket with the words “REBEL” on the back. I am very purposeful in every media choice I make for my Blogs. Very athletic still at 54 years of age, young at heart, passionate, and completely on top of his game, Axl Rose personifies the Rock&Roll rebel heart that brings legions of fans around the world to blockbuster stadium performances, standing for hours in the pit, waving and swaying to the music .. “yeah yeauh “.

Slash, our beloved and very humble Top Hatted Rocker, face buried by a mass of gorgeous rocker curls, whose message to the world doesn’t come from his lips or face, but rather from epic Rock&Roll riffs that send fan emotions into the stratosphere, is simply the greatest guitar player ever to grace a musical stage!

Bass Player Duff McKagan’s first encounter with his friend Slash, took place at Canter’s Deli on North Fairfax in Los Angeles in 1983. A 19 year old Duff had just moved from Seattle and answered an ad Slash had placed looking for a bass player.   The conversation logically flowed for more than two hours, simply talking about music. Ultimately they would go on to form the original lineup of Guns N’ Roses in 1985, then releasing their epic debut album Appetite for Destruction in 1987. In Seattle, Duff had been playing with bands since he was 14 years old. A versatile rocker who also played lead guitar and drums, he finally settled in with the Bass. In recent years, he has fronted as lead singer for the various projects he has led since the breakup of the original GN’R lineup. In this tour, he performed lead vocals duty with a gritty rendition of “New Rose”. Also a songwriter, the band opened this tour with “It’s So Easy” GN’R’s first single release from “Appetite For Destruction” in June 1987 in the UK, written by Duff and Wes Arkeen.

So of course, the July 23rd and 24th NYC area performances couldn’t come soon enough, following the April 8th performance in Vegas. A Kick A** Rock&Roll weekend start to finish, with my longtime best friend since the 8th grade, the brilliant Robyn Bryson and her boyfriend Ron, the very cool David Paul, an innovative educator in the New York City school system, who hails from southern California, and a lovely new group of devoted GN’R fan friends Monni, Joe, Nevy, Joseph, Nir, Nick, and Margott. We kicked things off with a tailgate party in the parking lot before heading inside. This would be my first experience of an athletic and mobile Axl Rose since his seated and “throned” performance in Vegas, with his foot healed and free of the huge plaster cast! Live Nation delivered a terrific and well organized “Paradise City VIP” experience and my beloved rockers reinforced their commitment to their craft, this long awaited reunion tour, and their devoted followers. A very fit and athletic Lenny Kravitz opened the night and we never looked back!  A month into their U.S. stadium tour, all the worry was gone, and we were all back in the groove of epic Rock&Roll masterpiece by this band of ferocious and legendary Rock talent!

Axl Rose and Duff McKagan Met Life Stadium July 23, 2016 photo taken by Cynthia Drew

Axl Rose and Duff McKagan Met Life Stadium July 23, 2016 photo taken by Cynthia Drew

Axl Rose July 23, 2016 Met Life Stadium photo taken by Cynthia Drew

Axl Rose July 23, 2016 Met Life Stadium photo taken by Cynthia Drew

Slash July 23, 2016 Met Life Stadium Photo Taken by Cynthia Drew

Slash July 23, 2016 Met Life Stadium Photo Taken by Cynthia Drew

Duff McKagan July 23, 2016 Met Life Stadium Photo taken by Cynthia Drew

Duff McKagan July 23, 2016 Met Life Stadium Photo taken by Cynthia Drew

Lenny Kravitz July 23, 2016 Met Life Stadium Photo taken by Cynthia Drew

Lenny Kravitz July 23, 2016 Met Life Stadium Photo taken by Cynthia Drew

In August 2015, I traveled to Seattle’s iconic Pike Place Market for a very unique concert experience and musical fundraiser. Seattle’s public radio station KEXP had managed to raise a whopping $12 million to build new studios at the Seattle Center, studios specifically designed to elevate the musical fan experience with live participation. WOW! I am so impressed by that. They held a free outdoor concert “Raw Power” on the roof, on a gorgeous summer evening overlooking the harbor, in a musical tribute to Iggy Pop, with four legendary Seattle rockers. Yes you guessed it, Duff McKagan on Bass, his “Walking Papers” band member Barrett Martin on Drums, Pearl Jam’s Mike McCready on the electric guitar, and singer Mark Arm from Mudhoney. Following the free concert, there was a VIP after party with these iconic rockers, KEXP management, and some influential local businessmen and women at top floor restaurant Matt’s In The Market. They ultimately reached their goal of $15 million and I am so proud to have played a small role in that. In keeping with the tradition of cool fan engagement this band promotes, I met a new Rock&Roll soul sister Jenn Iverson who, a year later, invited me to her lovely home on Lake Washington she shares with her husband Evan and their precious 3 year old daughter Edie, for the Guns N’ Roses August 12, 2016 Friday night performance at the 69,000 capacity Century Link Field. Life is an adventure and I plan to make the most of it! We began this adventure Thursday night at the iconic grunge bar “Linda’s Tavern”, the public place where Kurt Cobain was last seen alive, with yet another GN’R fan group pre party that brought in fans from across the U.S., Canada, and South America. The day of the concert, I decided to stroll around the Lake and amazingly I believe I caught a glimpse of Duff McKagan whizzing by on his bicycle in the early afternoon. An avid bicyclist, I’m guessing he was thrilled to be back at his hometown Lake home following two months of being on the road. Did I mention eldest daughter Grace, 19 years old in her sophomore year at Seattle U, and very talented lead singer of the Pink Slips, was set to open the night, along with Alice In Chains. Yes an unforgettable night steeped in rich Seattle music history!

Jill, Cynthia, Evan, and Jenn August 12, 2016 Century Link Field Seattle, Washington

Jill, Cynthia, Evan, and Jenn August 12, 2016 Century Link Field Seattle, Washington

My GN’R 2016 adventure continued with a terrific set by The Dead Daisies on September 8th at Webster Hall with appearances by Rhythm Guitarist Richard Fortus and Drummer Frank Ferrer. Both mingled in the club briefly following their performances, graciously giving their devoted fans exclusive access to rock royalty!  I even met a couple from the south of France, who were doing an Air BNB in Tribeca and who graciously took this lovely photo of me with Frank Ferrer. Yes the FB fan group #GnFnR Fanspot #NotInThisLifetime group is continually growing!

 

Richard Fortus Webster Hall September 8, 2016 Photo taken by Cynthia Drew

Richard Fortus Webster Hall September 8, 2016 Photo taken by Cynthia Drew

Frank Ferrer Webster Hall September 8, 2016 Photo taken by Cynthia Drew

Frank Ferrer Webster Hall September 8, 2016 Photo taken by Cynthia Drew

Frank Ferrer & Cynthia Drew Webster Hall September 8, 2016

Frank Ferrer & Cynthia Drew Webster Hall September 8, 2016

The pace continued with a scintillating performance Wednesday September 14, 2016 at Madison Square Garden! Our beloved Axl Rose, in commanding high power lead vocal force, substituted for an ill Brian Johnson with legendary Rock&Roll band ACDC! Founder and lead guitarist Angus Young, not a young man at 61, delivered an incredibly physical and impressive performance on the electric guitar! Yes another new GN’R Rock&Roll sister Tammy Michaud from Los Angeles, who I met in June at Slash’s Conjuring 2 movie screening, flew out for the event and we had a terrific time! The concert was book ended by fan before and after parties with good friends Tammy, Monni, Nir, Joseph, and Avi.

Angus Young AC/DC Madison Square Garden September 14, 2016 Photo taken by Cynthia Drew

Angus Young AC/DC Madison Square Garden September 14, 2016 Photo taken by Cynthia Drew

Axl Rose lead singer with AC/DC September 14, 2016 at Madison Square Garden Photo taken by Cynthia Drew

Axl Rose lead singer with AC/DC September 14, 2016 at Madison Square Garden Photo taken by Cynthia Drew

I would be remiss if I did not mention the terrific surprise guest Drum performances by original GN’R drummer Steven Adler. I’m sorry that I missed them and understand it was much appreciated by the fans. I see Steven Adler’s tremendous enthusiasm for this reunion tour and I hope his recovery from back surgery continues in good fashion. Please know that I have equal appreciation for Frank Ferrer and would love for both of them to perform together. Why not? GN’R is a clear driving force in Rock&Roll trend! Where does it say you can’t have two drummers? Like many, I did miss seeing Izzy Stradlin on the Rhythm Guitar and am hopeful that each member of the original lineup can reach a happy accord.  Again, like Adler and Ferrer, I hold the same feelings on Stradlin and Fortus.

Sadly I have to wrap up, but I am joyful to end on a very poignant and emotional note. After a record 23 years of not speaking with each other, following a roughly 10 year span of extraordinary Rock&Roll brotherhood that created some of this genre’s greatest classics, I was delighted to see this tweet this morning, with Slash and girlfriend Meegan Hodges in attendance Tuesday night September 20 at AC/DC’s final 2016 tour performance at Philadelphia’s Wells Fargo Center, cheering on his legendary rocker brother Axl Rose.   Yes this is how it should be! Thank you Axl, Slash, Duff, Richard, Dizzy, Frank, and Melissa for re-energizing a global Rock&Roll audience and delivering some of the best damn music in the history of modern music!

Will sign off with this epic classic … Nothing lasts forever, even cold November Rain.  Official November Rain Video

Cynthia Front Row July 23, 2016 Met Life Stadium

Cynthia Front Row July 23, 2016 Met Life Stadium

Cynthia, Robyn, and Ron In the Paradise City VIP Lounge July 23, 2016 Met Life Stadium

Cynthia, Robyn, and Ron in the Paradise City VIP Lounge July 23, 2016 Met Life Stadium

Slash July 23, 2016 Met Life Stadium Photo taken by Cynthia Drew

Slash July 23, 2016 Met Life Stadium Photo taken by Cynthia Drew

Slash July 23, 2016 Met Life Stadium Photo taken by Cynthia Drew

Slash July 23, 2016 Met Life Stadium Photo taken by Cynthia Drew

Axl on the Piano November Rain July 23, 2016 Met Life Stadium Photo taken by Cynthia Drew

Axl on the Piano November Rain July 23, 2016 Met Life Stadium Photo taken by Cynthia Drew

Epic November Rain finale July 23, 2016 Met Life Stadium

Epic November Rain finale July 23, 2016 Met Life Stadium Photo taken by Cynthia Drew

Axl Rose Seattle August 12, 2016

Axl Rose Century Link Field Seattle, Washington August 12, 2016 Photo taken by Cynthia Drew

Axl Rose July 23, 2016 Met Life Stadium Photo taken by Cynthia Drew

Axl Rose July 23, 2016 Met Life Stadium Photo taken by Cynthia Drew

Axl Rose July 23, 2016 met Life Stadium Photo taken by Cynthia Drew

Axl Rose July 23, 2016 Met Life Stadium Photo taken by Cynthia Drew

Duff McKagan July 23, 2016 Met Life Stadium Photo taken by Cynthia Drew

Duff McKagan July 23, 2016 Met Life Stadium Photo taken by Cynthia Drew

Duff McKagan July 23, 2016 Met Life Stadium Photo taken by Cynthia Drew

Duff McKagan July 23, 2016 Met Life Stadium Photo taken by Cynthia Drew

Melissa Reese July 23, 2016 Met Life Stadium Photo taken by Cynthia Drew

Melissa Reese July 23, 2016 Met Life Stadium Photo taken by Cynthia Drew

Richard Fortus July 23, 2016 Met Life Stadium Photo taken by Cynthia Drew

Richard Fortus July 23, 2016 Met Life Stadium Photo taken by Cynthia Drew

Who Is Leading the Smartphone Market Today?

We can evaluate this a few different ways. If we compare current market share of the major operating systems, Google’s Android is the hands down leader at 86.2%, compared to Apple’s iOS at 12.9%, according to the latest Gartner research. If we’re looking at manufacturer volume sold, the numbers certainly make the case for Samsung with 22.3% market share to Apple’s 12.9%. If we consider TechRadar’s most current ranking of the top 10 smartphones, the iPhone 6S and 6S Plus are ranked 7th and 8th respectively. They are the only smartphones in the top 10 who run on the iOS platform, currently 9.3.5. All the rest run on Android, which continues to evolve with the new Lollipop and Marshmallow updates. Samsung’s Galaxy S7 Edge and S7 lead the rankings. The HTC 10, new 2013 Chinese manufacturer OnePlus 3 model, and the LG G5 round out the top 5. The Sony Xperia Z5 and the Xperia Z5 Compact come in at #6 and #10, and the Nexus 6P is in 9th place. Read more here in TechRadar rankings.  

However, if we look at net profit, Apple dominates. This Forbes article points out that while Google’s Android dominates market share, Apple makes all the money.  A 2013 Forbes article, this one by Tony Bradley, suggests Apple can ignore Android market share all the way to the bank.  But that may be changing, particularly given the recent news that in Q1 2016, Apple has experienced the most significant drop in revenue since 2003. More here on iPhone sales drop.

So why am I telling you all this? I’m trying to figure out if I should stay with my current smartphone manufacturer. Can you live without your mobile device? I can’t. So here’s my take on Apple. There’s an app for everything and I rely on quite a few of them to live my life. Email, calendars, notes, text, maps, music, social media, coffee, news, travel reservations, ticket purchase, transportation, weather, and even a wireless speaker system. I recently purchased a Sonos system for my home and it is controlled by an app on my iPhone. I have speakers in my living room, kitchen, and bedroom that did not require any added installation expense, drilling, or unsightly wires. Yes, Steve Jobs was as equally passionate about aesthetics, as he was about functionality. If you want to regularly learn about new apps, register with the Starbucks app and you’ll get weekly messages highlighting a new free app. You have to be discerning though, as data overload can certainly be a problem. I am a huge advocate of “less is more”.

Given that Apple’s current market capitalization is about $576 billion, more than double the level when I made my first Apple purchase in 2010, I expect nothing short of white glove service. Let’s see how they measure up and what is required for that to happen.

I actually hopped on the current mobile technology bandwagon later than most of my contemporaries, with the purchase of the iPod Touch in 2010 and iPhone 4 in 2012. Both were introduced in 2007. Of course my passion for music led the charge! Enamored with 24 hour on demand music, I quickly fell in love with Apple and got out in front on the purchase of the iPad 2 in 2011. Then I discovered the MacBook Air in 2012. All of my devices are on the iCloud under my Apple ID. I do not have an Apple Watch.

I think it’s important to understand some underlying basics first. The iPhone, iPod Touch, and iPad all operate on the iOS operating system, although the underlying technology of the iPad is different than the iPhone. The iPod Touch is a media player. The Mac operates on the OSX operating system. All Apple devices, whether they run on an iOS or OSX operating system, are intended to sit harmoniously together on the iCloud. Also relevant to the discussion, in 2014 Apple rolled out a new programming language called Swift. Learn more about Swift here.  Building upon their core language Objective-C, Swift offers an “interactive playground” and is viewed by developers as a new simpler language that could make their lives easier, thus lowering the barrier to entry for Apple developers. But it does require a new learning curve and it drives a wedge between iOS & OSX development and the rest of the mobile software world. Swift development is only applicable to Apple devices. In a 2015 Bloomberg article, Joshua Brustein writes, “..There was almost no way Swift wouldn’t lure developers in large numbers. Apple gets to decide which languages can be used to write apps for iOS devices, and legions of coders take heed because the average Apple user generates four times as much revenue for developers than the average Android user. It almost didn’t matter whether Swift was any good…” The article also references assertions made by Kyle Sherman, a software developer with Linked In owned document sharing firm SlideShare, as to the onerous degree of processing power software developers need on their laptops to convert Swift into a computer readable format. Additionally, Colin Eberhart, Technology Director for UK based software development company Scott Logic said, ‘Swift updates regularly break his code. “If you are building production code, right now you just don’t want to be using Swift,” he says. Apple declined to comment for this story.’

As an analyst who partners with Capital Markets business heads to drive P&L growth, the past 10 years in trading technology, and as an avid mobile technology user, I have many thoughts on this evolving landscape. As for me personally, currently with an iPhone, iPod Touch, iPad, and MacBook Air, I really only need the iPhone and MacBook Air, or a competitor equivalent.

My Apple device world worked very well until 2014 when I purchased the iPhone 6; previously I was very happy with the iPhone 4. I often wonder if my iPhone 6 experience would have been better, had I upgraded from the iPhone 5. In the beginning I had very poor cellular service. Apparently I wasn’t alone. In 2014, IOS 8 updates caused Apple to pull 8.01 release due to dropped calls issue. More on this in Forbes magazine. Thankfully, that problem resolved pretty quickly with subsequent updates.

The main issue that continues to frustrate users in 2016, is the wireless network problem. In 2014, I used AOL for my personal email, and had terrible difficulty sending email on my iPhone 6. Apple genius bar specialists repeatedly blamed AOL. At one genius bar visit, the specialist suggested restoring network settings to factory settings. The effort was futile. I finally figured out that if I turned off Wi-Fi, then the email would fly successfully, otherwise it would sit pending in the outbox until I deleted it. So my solution worked well for about two years, but with a recent flurry of iOS 9.3 updates, once again I can no longer send AOL email from my iPhone, even if I turn off Wi-Fi.  Thankfully I now have a new email account on my business website server that works just fine. Interestingly, when I send from my AOL mail folder on my MacBook Air, I have no issues with the transmission, but I do notice that it generates multiple copies of that sent email to my junk folder.

An ongoing problem, I have difficulty with several social media apps and maps when not connected to strong WiFi, or where the WiFi setting is on, but none are available. The search function works terribly, and often new links will not load.  I regularly close all the apps multiple times a day, and frequently reboot my phone.  The maps function has been particularly frustrating as the GPS does not always work correctly.  One time I was driving in upstate New York, and the app thought I was in Illinois.

Most recently, with a spate of iOS 9.3 updates mainly designed to address security issues, now running 9.3.5, it is clear that many settings have changed on this latest update. In addition to deleting some very important Notes, I lost the ability to search in my Notes, which was a huge problem as I have many passwords and important information I use regularly. The Apple genius bar staffer told me my Notes were no longer backing up on the iCloud and therefore lost the ability to search. She adjusted the setting and recommended that going forward, I should check all my settings after each iOS update. To be clear, I don’t consider that white glove service. Another setting change that stood out, was to my Weather Channel app, which changed location to Las Vegas, Nevada since this latest iOS update. I clicked on “Add Current Location” and a new window popped up called “My Profile”. I was instructed to turn on “Weather Follow Me”. Are you aware that you have a Profile on your iPhone? I had never seen that before. Do you know how to access it? Since making that update, I am unable to find My Profile and the screen where I turned on “Weather Follow Me”. I checked my iCloud account, accessibility, privacy, location services, and the Weather app. I can’t find it anywhere. I believe it is hidden to make it more difficult for hackers, which I heartily endorse, but if you’re going to change settings to protect me, that also affect functionality I rely on, you either have to get the settings right, or you have to make it reasonably easy for me to find and update them. I rely on my mobile device to make my life easier, not more difficult. That standard must change, or I will no longer purchase Apple products.

At one point in the history of my iPhone 6 difficulties, I was told by an Apple genius bar staffer that my iCloud account had become corrupted and suggested recreating it. Again, I wasn’t alone in this. In 2013, my research shows that Apple began having problems with the iCloud. Apple iCloud service issues.  In general, I think Apple’s iCloud has difficulty when you have multiple devices of varying age and operating system on the same Apple ID. I also think that when a new iPhone comes out, the updated operating system works best when you have migrated from the previous iPhone model. I have since taught myself the steps to create a new Apple ID to see if that will help. 

As to my MacBook Air, recent OSX El Capitan updates have also created problems and strange software functionality, including issues with the Facebook event calendar. The chief difficulty I currently have is opening new windows in the Safari browser, when multiple windows are open. Recently I have had the same issue with apps on my iPhone, if I am using several at once. Once again I am not alone. iOS 9.3 had a bad week.  While this article speaks to a fix, I can tell you this is the single largest ongoing problem I have with my iPhone and Mac.  Many iPhone users complain about battery life, which I have never done.  I believe carrying an auxiliary battery is a very reasonable solution.  However, I have noticed that since the latest iOS update a few weeks ago, the battery life has noticeably worsened.  I assume this is because a setting has changed.  I have gone through all the menus and adjusted settings to preserve battery life, yet this problem persists.  The final point this music lover will make, is the quality and volume of sound when listening to music.  If my phone is connected to a power outlet, the sound is better.  It also seems to me there is a problem with the actual port where I connect my headphones to the phone. Interestingly, I have a friend who purchased the iPhone 6S a year ago, and he has a similar problem with the power cord port, frequently having difficulty plugging in and having the phone charge.  I believe that falls into the category of problem where some iPhones were bending.  I am happy to hear today that the iPhone 7 now has wireless headphones, so I am interested to hear more about that!

As Apple rolls out the new iPhone 7, I am considering buying one, as perhaps this will end my current iPhone 6 suffering, but I will certainly wait until all the reviews are in, and will specifically look for improvement on the issues I detail in this post.  I certainly want to learn more about the wireless headphones and two-camera system, but those added features alone, assuming they work well, are not enough to entice me.  I’m really interested in learning the nuts and bolts of iOS 10.0.    I am also considering the the Samsung Galaxy S7 Edge, at a current sticker price of $792, but I need to do my research first.  Apple is offering $649 for  the regular size iPhone 7 if you pre-order now.

One final point I will make, that I will develop in greater detail in a future blog post, has to do with mobile software performance on different wireless networks. I have Verizon FiOS 150/150, which is considered very good, although I should note that my wireless function works better when I am in the subway. Transit Wireless, a bai communications company that boasts a highly experienced global technology management team, has produced an impressive level of service in my opinion. Perhaps we can encourage them to enter the residential space. Also, since the latest iOS update, I have noticed a substantial decline in service on my iPhone while at Starbucks. Apps are very slow to update and media often fails to load. Previously I found wireless capability at Starbucks to be quite robust.  Interestingly, Starbucks WiFi is powered by Google, whose Android operating system is a major competitor to Apple iOS.

Overall, I believe the software hacking issues that have historically plagued Windows applications, are finally becoming an issue for Apple. I wonder if the “simpler” Swift programming language Apple rolled out in 2014 is a contributing factor. Also, if one of the goals of rolling out a simpler language, is to facilitate more cost effective programming, then there needs to be a standard as to level of functionality and service. In my September 2015 Blog post on long term capital appreciation, read more here, I spoke about the intense pressure CEO’s face as to quarterly earnings reports, yet most believe a long term growth strategy is better. Simply finding the least expensive path in the short run, may ultimately cost more in the long run. There is a simple saying, you get what you pay for. There’s a cost to service delivery failure.  Firms can model different P&L forecast scenarios based on these different strategies.  Apple states that they don’t compete with consumers who buy other smartphones.  I assume then, that they have a very good handle on the category of consumer who buys their phones.  For their “highly discerning technology user” clientele, I would evaluate sales and genius bar records to determine this population.  If this group comprises a small %, and it is better for the overall P&L to risk losing them on service performance, as opposed to making development and service delivery changes that will probably increase expense, then I will have my answer.  An industry colleague and friend I admire, recently told me he gave an estimate to a prospective client for some software development work. The prospective client advised that he had received a lower price estimate from another provider. My friend pointed out that when his team finishes delivering the product, it will stand firmly on two legs and deliver the type of service the client demands. In the case of the lower bid, the client will probably be at risk for service failure, and ultimately will need repeated follow up work, which will cost more in the long run. What is your client’s service level threshold?

Next month, I’ll take on Samsung and Android.

To wrap up in signature Rock&Roll style, hungry for a first class service level, and still riding the Guns N’ Roses #NotInThisLifetime reunion tour high, I’ll leave you with this epic live performance from the early 1990’s. “..When everybody’s fightin’ for their promised land. I don’t need your Civil War.”