I was just reading a couple of posts about Apple here and here

And I was reading the other day about how the music industry has figured game over as far as downloads are concerned. Apple won of course. The music industry - quite reasonably - thinks that it knows best about what it does. I say quite reasonably, knowing full well that the reality is that they actually dont know what is best. If they did they would have figured out that the digital realm is where it is at and that CD's are overpriced a long time ago.

But - to the point - the other day I had a meeting with the CEO of a small start up in Sydney. He has had some discussions with Apple in the US suggesting that they should open up their DRM in order to make it easier for other companies to work with iTunes. The response was that they would, but download business models are morphing so rapidly that if they opened up the DRM they would be forced to stick with it. And they want to be able to change it on the fly.

I dont know whether this is just a neat answer from Apple to keep the outside at bay, or something really important to consider right now. What it seems to indicate is that if you can do the great trick that everyone wants to do - that is enter a market and dominate it absolutely - then you would absolutely also need to be changing the business model as rapidly as you issue software upgrades.

Is there irrational exuberance and a bubble about to burst or are we living in a margin economy where the thin margins on hardware are exported to Asia and the big margins on the design and ideas stay in the US?

There are two interesting points of view that don't quite converge here, but are worth contemplating.... On the one hand there is Stephen Roach's macro view of the problems of global balancing and the challenges associated with an American current account crisis, brought on by a lack of saving..... On the other there is the views originally written about by Andy Kessler and blogged about by Tom Evslin that describe why Microsoft and Intel are such good investments....

Hmmm....

Here is a great music mash up..... The Beatles meeets The Decider in Chief.

Koo Koo Ka Choo.....

Enjoy!

Here is a tale of how an old style music company (Reprise Records) can suddenly make themselves relevant as a label:

They have the new Neil Young album ready to be released. Yes the anti war, anti Bush album that is being set up to be big. And they are previewing it to bloggers! Here is one blogger who was invited to a preview and writes about the album.

I am totally impressed with the whole launch plan that is emerging from Reprise. They are positioning this album to be BIG. What will be even more interesting is whether Clear Channel plays it. Remember they are the biggest radio network in the US and have proved to be extremely supportive of the Bush administration in the past.

Of course if the album gets zero airplay and still gets to number 1 and if Howard Stern is the only one to play it, what will that tell you about radio?

And how about "Impeach the president" (apparently one of the standout tracks according to several bloggers who have heard it) as a ring tone!

Talk to entrepreneurs in Australia about transiting to the US always brings the same responses; 'We want to create an Australian company'. 'We're building for the long term' 'We  want to remain Australian' 'We want to preserve the company's culture.' And so on and so forth.

But the business culture of anywhere else, and the US, is completely different. The US is competitive. Restless. Always focused on the new. Ready to scale. Happy to take bets on the future. Hyper media driven. Prepared to venture build companies. Inward looking. Big.

The US drives forwarded hungrily. Insists. Do it our way or not at all. Companies that want to access the US market, still the most forward looking consumers in the world, need to  make adaptions. They need to come here. To build a company that Americans can buy into. Need to absorb the US business culture. You can't do it from Sydney.

That is always the endpoint of the discussion. Either move or forget the US market. 

MySpace is a youth phenomena. It has exploded form 35 million to 70 million users since Rupert Murdoch bought it last year. It has only existed since 2003. It is now the second most visited site on the net. In fact, its users have created so many pages that advertisers feel that they can't generate enough ads to reach all the pages. (see today's NYTimes) 

Yet the potential of linking highly focused ads to targets of pages visited, profile, music preference, etc on a social networking site is so high, it has to happen. Rupert wants it to happen. And when it does, then the web, because winning ideas will be copied widely, and MySpace will not be the same.

Skype is now an old persons play. Grandparents everywhere have decided that "free" video calls are perfect to keep in touch with long distant grandchildren that inconsiderate children have removed to new lives in new countries as the world becomes more mobile and global.

It's a paradox. With the internet, as relatives and friends become more distant, they are brought closer by Skype. The flat earth of flat priced video calls.

Another paradox. New ideas are usually driven by young people. Skype's VOIP is now about to be mass adopted by older people who will drive the mass middle market. That is going to spread the rate of adoption by exponential increase.

Last week in Sydney, at Balmain, the Woolworths was out of Streets Blue Ribbon 2 liter Vanilla ice cream and Sara Lee French Vanilla. "Yeah, they're both really popular" says the service guy. How often do we see this? The line that sells the most, is the very line that the shop or business is out of stock.  That lost sale always goes somewhere else.

The problem of the sold out ice cream is a constant at that Woolworths. Clearly someone isn't paying attention. Or doesn't care. There are too many similar stories everywhere you look in retail. Why is this? What happened to the customer always being right? Wouldn't that mean the retailer would always have enough stock on hand to make sure the most popular line wasn't shopped out?

This morning I was at an art auction in the San Fernando Valley. The auctioneer accepted bids from the room, the phone and the internet via eBay. After running around LA, four hours later, I was on eBay, bidding again in the same auction. What was missing from the online experience was the auctioneers voice. Online is more clinical and lacks the immediacy of the conflicting bids and buyers competing. Hence, the eBay purchase of Skye makes sense. Add in a miked up auctioneer to the eBay auction experience and you replicate the room. That has to drive sales because with the human touch you involve the buyers emotions.

And if Skype gets its videocasting right? Add in pictures and video of live auctions and eBay will have a major new revenue source from live auctions that will have a whole new dimension.

On the VC Blog, the quarterly numbers for Google were pointed out a couple of days ago.....

Quarterly EBITDA - $1bn - up 86% year over year

We are witnessing a business that is approaching $10bn in annualized revenues growing at 80% year over year.

And we are looking at a business with operating margins of almost 50%.

....and according to Comscore they are continuing to increase in market share.... amazing..... but I wouldn't be surprised to see Ask continue to grow over time. Still tiny in comparison to the others, but the only one on the chart getting growth and they do have a great product.