Users frequently _cost_ money. Ask anyone who has significantly scaled freemium services.
Exposure to lots of users who might not use your service can kill your business.
If your service is really that good or serves a real need, you would recognize these potential users and market to them _aggressively_. You would even raise significant capital to do so if you did not have it. Seeing the value in your product, VCs would invest in you.
Even if your product has no inherent costs to provide as a service after it is made, you scale the money and time that invested in it based on your expected reach/profit and your profit model has just been thoroughly fked by Apple.
This definitely applies to people who produce music too because the product you're releasing has a profitable shelf-life (except for unicorns, really) and artists release on a schedule that their market (and they personally) can support.
You put a certain amount of money and time into an album based on how many people it will reach and the likelihood and timeframe before you can put out another one. Some artists release every few years, some every year and some release multiple albums per year.
If Apple is giving away your album for 3 months and you release 4 albums a year, they may be giving away 1/4 of your yearly income...(Think of it like Big O and worry about your worst-case performance.)
Using revenue streams that you don't control is hazardous. Relying on them is outright dangerous. Using revenue streams that you don't control AND marketing streams that you don't control? Suicide.
Note: this is not an argument for whether you should pay for music or not...that's a topic too hot for HN.
I think that all transactions _inevitably_ break down when (at least) one party has no skin in the game or when they misestimate their or the counter-party's stake. (Call it the busterarm theory of economics).
The only possible skin in the game that Apple has here is their brand. Their offering here is basically a value statement that Apple's brand and what it brings is worth more than artists will be losing in streaming dollars.
I think Apple is significantly misestimating both their risk and their counter-party risk here. _And_ the risk to their brand is effectively zero. It'll be interesting to see what happens. My impression of their music offerings was that their real value was the trust they had with both artists and consumes; they probably don't see it being that way.
One cannot operate a paid media streaming music while simultaneously proposing that the value of that media is zero. There's that old business maximum that if you want to know what a company cares about, look what they spend their money on.
And that would be an incredibly productive artist. Most artists release something like 1 album every 1-2 years, at best.
Many well-known artists have released multiple hit records in the same year before though and many more are releasing their own albums and producing other peoples. In the early 60s popular artists sometimes put out two hit records a year (Bob Dylan, The Beatles '63-'65)...Led Zeppelin did that once in '68. David Bowie put out two hit records AND co-wrote and produced two Iggy Pop records in '77. CCR put out three LPs one year...
It happens a lot more than you realize.
I really want to drive home the "you're going to work just as hard, but for less money" argument to get people thinking about it the right way.
It's no different than music piracy, which actually I don't care about, just don't be dishonest about doing it as a business.
> Exposure isn't necessarily good for an app. Users
> frequently _cost_ money. Ask anyone who has
> significantly scaled freemium services.
You can't just "be ready to host a 100 million users, tomorrow" in the early stages of your business.
If there are credible signs you will acquire 100m users tomorrow, and you can't walk in to a VC and walk out with a big chunk of money for a small amount of equity, it means you don't have a real business plan.
Additionally, I would be interested in any examples you have of companies acquiring 100m users overnight, or anything within two orders of magnitude of that.
http://blog.shiftyjelly.com/2011/08/02/amazon-app-store-rott...
> All we got was about 300 emails a day to answer over the space of a few weeks, that left us tired and burnt out. For all we know most of the people who wanted our application, now have it. To add insult to injury Pocket Casts relies on a server to parse podcast feeds (allowing instant updates on your phone), and all these new users forced us to buy more hardware just to meet demand. Hardware that we are going to have to support indefinitely at our own cost.
Can you fault Shift Jelly for not being able to see through this?
But part of your argument has merit: it's the same reason that "exposure" doesn't create album sales. There's no real chance (really, there isn't) that you have a product that will reach 100m people tomorrow, so you shouldn't be producing music as if you would.
> You can't plan for it.
> The corpses of businesses that scaled past their ability
> to serve their customers are real.
> Turns out that a Rails App + someone calling themselves a "Serial Startup CEO" on LinkedIn don't necessarily equate to a business.
Rails, like any other tool/framework, works perfectly well for certain kinds of problems. I would say this is very true for the kinds of businesses that most "serial startup CEOs" are solving. Twitter gave Rails a bad reputation because Twitter's problem was exceptionally bad for Rails at Twitter's scale. In most other cases it's just poor engineering discipline, whether it's in choice of tool or how it is used. It turns out that ActiveRecord isn't really a great tool for dealing with 450M+ write transactions per day. Wasn't designed to be.
Rails is powerful and ubiquitous for very good reasons. The tools that often get the most hate end up quietly doing their jobs or, worse, growing up and becoming better and everywhere. JavaScript, PHP, Lisp, C, Java? And that's just a few programming langauges...There's a holy war over Text Editors that aren't ever going away.
It's not a "web 2.0 startup" specific problem we're talking about. Rapid growth is notoriously one of _the most common_ reasons that companies fail (regardless of if that failure puts them out of business or not).
It only works if there is a high enough proportion of conversions to paid.
> It only works if there is a high enough proportion of
> conversions to paid.
How much is that worth to society? How much money should you make from that?
Consider an elementary teacher tasked with teaching 28 children to read and guiding them to becoming active participants in democracy rather than repeat offenders. $50k/yr. Compare a state university computer science professor who will teach dozens of new jacks this year how to measure and optimize algorithms-- setting them up for a life of full time employment while all their friends tread in the sea of shit and unemployment around them. $90k/yr. Consider a bus driver, a construction worker, a civil engineer, anyone who didnt have a chance to finish high school or College and still goes to work every day. Or those who went to ivy league colleges and resisted the urge to go into finance. Productive people.
We are all productive and we all add value, and we are underpaid. Our kids will have varying access to good education. We have less access to inferior healthcare. We spend too much time at work and not enough time with our kids. The lowest of us live in poverty and violence, relegated to feeding our children less healthy, life shortening diets. And thats just in the U.S., one of the wealthiest states on the planet.
Now how much is that song you sang worth?
Artists should be about art. If you dont like the fact that Apple wants you to be their slave, then distribute your music yourself. If people dont want to pay for your music, then keep doing what you want to do and starve or start doing what they want you to do and make money. But dont try to be about the art and say the faceless evil corporation should pay you more. It is disrespectful to the productive workers of the world.
If we say that musicians should be paid less because our standard as society is that everyone else is underpaid and that's fine, that's really disrespectful to the productive workers for the world.
In the Apple Music situation, there's likely very little opportunity cost unless we believe that it's going to be so amazingly and instantly successful that it will cannibalize all current revenue streams.
In the Apple Music situation, there's likely very little opportunity cost unless we
believe that it's going to be so amazingly and instantly successful that it will
cannibalize all current revenue streams.
I don’t think they’d be in this business at all if they didn’t think they had a shot at rendering the competition irrelevant.
The reality is that most of the people you're talking about will "waste" their meagre salaries on trivial stuff like streaming music services and satellite TV. Taylor Swift didn't sell millions of albums to nobody.
Music is entertainment, and it makes people's crappy lives more enjoyable, and that's a pretty valuable service, which is why it can be so lucrative for some people.
Sure, you didn't write anything that was going to join the ranks of "The Art of Computer Programming," but surely you wouldn't be okay just giving up the hundred thousand dollars or so in royalties you could have made? Without artists writing hit summer songs, there would be no hit summer songs. Without people writing flavor-of-the-month technical books, we wouldn't have those either. You might scoff, but people should be paid for these things.
"If you dont like the fact that Apple wants you to be their slave, then distribute your music yourself." That's exactly what Taylor is doing. What's your point?
You should read KLF's The Manual. For purposes of achieving "this summer's big record", there's quite often not a lot of correlation with training, study, talent, etc.
Not saying that's always the case and in particular, it's very different with artists producing more than two or three top10 hits, over time, or producing more than one successful full album with good sales. It's that consistency and prolonged creativity that really requires the talent and training. For the #1 big summer hit, it often suffices to just be lucky, hitting the right gimmick and vibe at the right time, just like a video or meme going viral.
Most artists aren't successful (if even) for more than a few years at best. The lifespan of their albums even less so.
(Some old data: http://frumin.net/ation/2008/05/climb_the_charts_schmimb_the... )
Okay, it might matter when it happens: It might be really catastrophic to release your album right when the service starts (actually it sounds like Ms. Swift is pretty smart now, eh?). Though then you might want to hold off for a whole year entirely. Hold on now, why is Apple dictating the release schedule of my albums? I thought they weren't a record label...
...oh wait.
To make the analogy a little more accurate:
> Tomorrow, Apple announces that it will be introducing an "App Store Subscription." For $9.99/month users will be allowed to use one App Store app at a time. When an app is running, it will present a button allowing a user to purchase that app so that they may use it any time they want, whether or not their phone is connected to the Internet, and concurrently with other apps. During the 3 month free trial, Apple will not pay royalties for streaming apps but will pay normal royalties for any apps purchased.
This would suck for the Omni Groups and Mojangs, but absolutely awesome for tiny shops who currently make almost nothing and would now have much greater exposure. Likewise Taylor Swift doesn't need more exposure to sell her music, but Joe Garage might actually pick up a few listeners and fans. You see this is a money grab. I see this is as a necessary (and label approved!) bootstrapping for long term gain.
And in the mean time, even major artists will continue to get their current revenue stream from radio stations, Spotify, iTMS, etc. unless we really believe that Apple Music is going to gain a 100% market share immediately. Long term, even that would probably be a huge benefit to artists because it's almost certainly a better deal than they're getting from anyone else today.