IT’S 4:00AM AND STILL NO AGREEMENT:  I’m not kidding, there’s a minute by minute deathbed watch for iHeart right now.  When we left things off iHeart and its lenders had agreed to a second forbearance agreement (aka time extension to continue negotiating bankruptcy terms), which expired at midnight last night.  So as you’re waking up this morning you’d expect to hear some news one way or another.  But as reported by Radio Ink, apparently everyone went to bed without a deal because it’s crickets today.  Maybe they just can’t find Bob Pittman for a signature because he’s hiding out on iHeart’s Cannes yacht or Burning Man yurt?  Regardless of his whereabouts something (anything) has gotta happen with this situation.  Rest assured I’ll let you know when it does.

DISSECTING FACEBOOK’S DECLINE:  Let’s begin with some hard stats.  As you can see in the image below from Edison’s latest Infinite Dial report Facebook use is down in the US.  Overall weekly FB usage dropped 5% YoY from 67% to 62%, with the 12-34 yo decrease being the most pronounced.  Part of this drop is due to younger tech-forward users shifting to the next coolest social platform, which usually happens on the same day grandma sends them a FB friend request.  But there’s likely an even more fundamental problem for FB which AdAge simply terms Oversharing.  FB’s Newsfeed has become a non-stop babble of useless taco salad pictures and headlines which look interesting but have little substance behind them.  So users just aren’t getting as much for their time and attention as they used to.  Of course FB’s “network effect” (everyone is on the platform so I must be too), still generates a powerful FOMO pull.  But more and more users are finding out there is real life after they kick their Facebook habit.

MICROPROCESSOR MELEE:  I usually don’t spend time on the microprocessor side of tech, but there’s a really interesting showdown looming in the chip space.  First, some background.  Last month mobile chip giant Qualcom and chip + data center leader Broadcom announced plans to merge in a deal valued at $117B – which would be the largest tech M&A play ever.  This got the attention of Intel, who dominates with PC chips but is a relatively small player in the mobile chip market.  As described by WSJ, Intel is considering making their own bid for Broadcom because a Qual-Broad tie up would put them further behind in mobile chips and the build out of what will eventually become the lucrative 5G LTE market.  You can see each companies’ current share of the mobile microprocessor market in the image below. There’s also a concern about the strategic advantage a Qual-Broad could render if they start using their own chips to build mega server farms (which is the backbone of cloud computing).  As a result of this threat late yesterday the Trump administration moved to block the Qual-Broad merger, sighting national security concerns over too much microprocessor manufacturing being held by a foreign company.  Obviously this wouldn’t be an issue for Intel since they’re American, so Trump’s move may open the door even further for an Intel acquisition of Broadcom.  Even though these brands aren’t consumer or marketing facing, the implications of who wins the microprocessor jump ball will be felt in the entire tech world for a generation to come.

Have a great Tuesday guys!

ELON MUSK UPLIFTS SXSW . . . LITERALLY:  Happy Monday from Austin!  Those of you attending SXSW Interactive this weekend have probably had your fill of tech talk, over-the-top street activations, impossible to get into parties, and the ubiquitous brisket tacos.  For those of you not attending there will undoubtedly be several “here’s what you missed” articles over the next few days.  In the meantime I wanted to share the most uplifting (literally) content session from the weekend, compliments of the one and only Elon Musk.  Mr. Musk took the main stage Saturday to explain in detail how the work his companies are doing now are just the setup steps for the next chapter of mankind.  Mr. Musk’s vision is of a human race which is no longer Earth-bound, with bases on the Moon, Mars, and beyond.  That’s an audacious plan to be sure.  But he actually backed up the talk by explaining how advances being made at his companies including SpaceX, Tesla, The Boring Company, and Neuralink are the groundwork to make his future vision a reality.  TechCrunch has some really solid coverage of Elon Musk’s presentation, but fasten your seat belt before you give this one a read.

FACEBOOK AND WMG JUMP INTO BED TOGETHER:  On Friday Facebook and Warner Music Group jointly announced that they had reached a music licensing agreement.  According to RAIN the arrangement gives all of FB’s properties (including Facebook, Messenger, Instagram and Oculus) the rights to use WMG’s music.  However it remains to be seen what FB will do with this licensing.  As I’ve postulated is previous posts FB has two likely options.  They can add song-insertion functionality to their platform so users can drop a song snippet in a post or message.  And/or they can start their own music streaming service to compete with Pandora, Spotify, Apple, etc..  The fact that they keep signing new music licensing agreements tells you they’re just about ready to make their move.  Only question is which way they’ll go.

RADIO STUCK IN 1999:  Over the weekend I came across an interesting perspective piece from a gentleman named Dick Taylor.  Mr. Taylor writes a radio blog utilizing the expertise gained over a 40 year career in broadcast radio – so the guy has the chops.  In his latest post Dick Taylor laments about radio’s inability to more forward to meet the tech challenges of today’s music landscape.  He effectively calls out broadcasters for being stuck in a 1999 mentality (insert Prince song here).  The craziest part about the position radio finds itself in is how long they’ve been there.  All the points Dick Taylor articulates in this piece were originally laid out at the NAB Radio Show in 2009 – not a typo.  So for nine years broadcast radio has stood still, like the proverbial deer in the headlights, while the audio streaming freight train has come barreling down the tracks.  Sadder still is that in another 5-10 years there will be radio execs maintaining the lie of denial that their business is as healthy as ever.  Tick, tick, tick . . .

Have a great Monday guys!

IHEART UPDATE:  Over the last 48 hours several of you have asked me what’s happening with iHeart’s potential bankruptcy.  Late Wednesday night all sides agreed to extend the forbearance agreement for another five days (through midnight Monday) as they try to negotiate an organized bankruptcy settlement.  So nothing new to report, but rest assured I’ll keep you posted if anything breaks.

RIP WLUP:  Speaking of bad things happening in radio, there was another pretty shocking development that sort of flew under the radar screen this week.  On Tuesday night Merlin Media announced it had sold WLUP-FM to a Christian broadcasting group called the Educational Media Foundation (EMF).  As a result the legendary “Loop” radio brand is being retired, and will be replaced with non-commercial religious programming called “K-Love” starting this weekend.  Let that sink in for a minute.  The Loop has been a constant presence in Chicago radio for 41 years.  One of its DJs Steve Dahl was responsible for the Disco Demolition riot (pictured below) that almost destroyed Comiskey Park in 1979.  It’s the same Loop whose black t-shirts (you can choose any color as long as it’s black), defined music’s underground movement in the 80s.  And until this week it was the only Classic Rock station in Chicago right in the middle of the FM radio dial.  All of that heritage is gone, literally overnight.  I’ve included links to Inside Radio and Radio Ink for some industry reaction to this news.  When radio as we know it no longer exists 20 years from now remember back to this story.  Because if The Loop can’t survive who can?

DO YOU HAVE A SMARTSPEAKER YET?:  Yesterday Edison Research released selected data cuts from its 2018 Infinite Dial report.  One of the most anticipated findings in this year’s report is the surge of smartspeakers and other connected home devices.  According to RAIN smartspeaker ownership nearly tripled from 7% a year ago to 18% now.  At that growth rate you could see smartspeaker penetration in the 70-80% range by 2020.  Not surprisingly Amazon is winning the lion’s share of new purchases, with Google Home in second place.  (I wonder why people choose to have both platforms in their homes?)  Since Apple’s HomePod just entered the market in February they weren’t tracked in this year’s study.  I’m guessing we may see them show up in the data next year.  Based on these numbers I think it’s safe to say we’re seeing with mainstreaming of smartspeakers in the US.

WHAT’S HOT/NOT AT SXSW:  If you’re on your way to Austin for either SXSW Interactive or Music, Digiday’s Definitive Guide To SXSW might come in handy.  They publish this list every year in a “only your true friends will tell you your breath stinks” sort of way.  This year’s not list includes ad agencies, Instagram, wearables, and even brisket.  The hot list includes consultancies, Amazon, block chain, #MeToo, and hash startups.  I have to admit I’m not sure what a “hash startup” is and I’m sort of afraid to search the term on my work computer.  Anyways, this year’s SXSW should be as entertaining as ever.  See you in Austin!

Have a great Friday (and weekend) guys!

FOX TALKS THE TALK ON FEWER COMMERCIALS:  Last week I featured a story about NBC cutting their ad breaks by 20% and ad load by 10% during prime time programming as a way to better compete with digital video’s sparse ad load.  Now Fox appears to be jumping on the less commercials bandwagon too.  As reported by WSJ, Fox’s President of Ad Sales Joe Marchese has publicly committed to decreasing the network’s ad load by 20% (from the current 13 minutes/hr down to 11/hr) by 2020.  Admittedly this is “sort of an aspiration or goal . . . and not a declaration.”  This differs from NBC who has their hard target decrease planned for this Fall.  The problem with making these reductions is that the networks are hooked on the revenue generated by the extra commercials.  So if Fox wants to drop its ad load by 20% it would theoretically need to increase rates by 20% just to stay flat.  Any economist will tell you scarcity of inventory does drive up price, but that’s easier said than done in media sales.  Bottom line – I’m not sure Fox really has the stones to carry out this reduction, but at least they’re publicly talking about TV’s ad load problem too.  Any radio execs out there thinking the same thing?!?

PINK SLIPS AT SNAPCHAT:  Sadly yesterday’s headline about Snapchat laying off 100 employees isn’t really that unusual in tech.  It’s become the reality of life in digital media these days that companies periodically go through RIFs, reorgs, and layoffs.  But what made yesterday’s announcement so unusual is Snap’s plan to lay off 100 engineers.  Forget unusual, publishers laying off code writers is unheard of.  So what does this say about Snapchat?  TechCrunch’s hypothesis is that Snap is trying to blaze a completely different trail to create some separation from Instagram.  After Instagram cloned the Stories feature Snap’s UX stopped being unique.  So they might feel compelled to reinvent themselves as a way to regain some momentum.  There’s also rumors that Snap is still putting resources towards an updated version of their Spectacles AR glasses – which seems crazy to me.  Maybe Evan Spiegel has a trick or two up his sleeve.  I’m just hoping his plan doesn’t require engineers.

MUSIC AS THE NEW SOCIAL?:  Finally today, I’d like to leave you with a really interesting thought leadership piece from AdWeek around the idea of music becoming the next important social platform.  Humans already self-sort into groups who love certain music genres and artists – think about standing and singing your heart out for two hours straight in a crowd of strangers at the next concert you go to.  So it’s only logical that music tribes should also exist online.  Streamers like Pandora, Spotify and Apple are already doing this by customizing playlists and music recommendations based on what others with the same musical taste are listening to.  Allowing for group curation of online stations and playlists is also starting to happen.  And what about the social power of music in the future?  Imagine putting on a pair of AR glasses and being transported to a virtual concert with a crowd of fellow fans who are all enjoying the show from their respective living rooms.  It’s going to happen thanks to music’s power to connect.

Have a great Thursday guys!

FLIPPING THE SCRIPT ON NET NEUTRALITY:  I have to admit this one’s brilliant.  As reported in Geekwire the Governor of Washington State just signed its own NN law as a counterpunch to the FCC’s recent repeal of Net Neutrality regulations.  So basically Washington State is restoring what Washington DC just stripped away.  The authority to pass a state-level law is based on Washington State’s right to dictate its own consumer protection laws – which has very well established and protected legal precedence.  So there’s a high probability this law will survive any court challenges.  Playing this out a little further, there are another 24 states with their own versions of NN laws in the pipeline which could result in half the country having Net Neutrality protection while the other half doesn’t.  If that occurs NN advocates will win by default, since it’s not really feasible for national ISPs like Comcast and AT&T to run different data delivery systems in different states.  Can you feel FCC Commission Ajit Pai’s rage right now?  Maybe needs something stronger in that giant coffee cup of his?  (sorry – I just can’t resist reposting this pic!)

DISCLOSURE RULES COMING TO DIGITAL MEDIA . . . SORT OF:  Remember all the calls to reform political advertising on digital media once everyone figured out the extent of Russian meddling in the 2016 Presidential election?  In response to the uproar Congress created a bill called the Honest Ads Act, which was supposed to provide full transparency into who’s funding political ads online.  But after some chest pumping the legislation lost steam on Capitol Hill and is unlikely to be passed before this year’s election.  So now the Federal Election Committee is taking matters into its own hands.  According to the attached Inside Radio link, the FEC is scheduled to vote this Thursday on a regulation which would require digital ads to carry the same disclaimer requirements as broadcast ads.  Disclaimers are the short “I’m so-and-so and I approved this message” tag at the end of political ads.  The regulation is meant to provide voters with an understanding who’s behind the ads.  But as you can imagine this plan is filled with loopholes.  Elections manipulators aren’t likely to call themselves “bad guys from Russia” at the end of their ads, and instead come up with a more positive moniker like “concerned voters coalition”, which will still allow them to disguise their ads.  Yes, disclaimer requirements are a step in the right direction towards political ad transparency.  I just don’t think it goes for enough to protect our electorate.

INTELLECT OVER INSANITY AT SXSW?:  This Friday digital media’s annual rite of Spring kicks off with South By Southwest in Austin.  Yes there will still be keynotes, panels, new tech reveals and music performances galore.  However, as reported by AdAge this year’s Sx may be a little more understated.  Over the past few years brands have gone big with activations – like a 40 foot Doritos chip or Starwars Stormtroopers sashaying Sixth Street (say that three times fast).  The conventional wisdom from recent years has been to make an over-the-top splash in front of thousands of geekaratzi influencers with the hope that they’ll push a brand’s buzz into their social network.  But that play only works for so long before attendees start succumbing to “next big thing fatigue”.  I’m thinking we may have hit the breaking point this year, which could explain why attendees are more interested in content and conversation this year.  Given the challenges facing digital media these days, it’s probably for the best that Sx refocuses on quality content instead of just a 10 day excuse to binge drink and act like a Yuccie.

Have a great Wednesday guys!

BANKRUPTCY OVERTIME FOR iHEART:  Sorry, I know I’m beating the iHeart bankruptcy story to death, but every day there are more new twists and turns than a telenovela.  Yesterday’s action was the disclosure of something called a Forbearance Agreement which iHeart and its lenders signed on Sunday night.  According to the attached Inside Radio link, the forbearance agreement is basically a fancy legal mechanism to give all sides a little more time to work through the reorganization plan.  This bought iHeart 72 hours – so they have until the stroke of midnight on Wednesday, March 7^th to reach a deal.  It’s worth noting that even Inside Radio (owned by iHeart) is now talking in terms of a post-bankruptcy solution, so bankruptcy still appears to be eminent.  I just wish I could be a fly on the wall in Bob Pittman’s office this week watching him tap dance through this legal entanglement.  Rest assured I’ll keep you posted as things unfold.

TAKING ATTRIBUTION TO THE EXTREME:  These days attribution is more important than ever in Digital marketing.  If brands can figure out which ad unit drove the purchase they can double down on that publisher while scaling back on less effective vendors.  With that in mind there’s a fascinating experiment taking place in the UK right now involving Honda.  According to the attached Digiday link during March Honda/UK will only transact on a CPV (cost per visit) to a physical dealership.  They’re using a third party data company called Rippll that can track mobile devices (and their MAIDs) which come into dealerships, and then compare the mobile ads ran on those devices over a 14 day lookback window.  Tracking like this already exists in the US, but you never see major brands switching from CPM or CPC billing models to all CPV.  The outcome of the test will have ramifications.  Obviously publishers with lower CPVs (so more store visits relative to ads run), will start to see more spending at the expense of higher CPV sites.  But then I wonder how Honda will still keep a branding presence up across all sites (especially the mid to upper funnel ones), and how they’ll apply these metrics to non-trackable broadcast advertising.  Should be interesting to watch.

MADISON AVENUE IS GOING COUNTRY:  Ever wonder if certain music formats work better for brand activations than others?  Would it surprise you to learn that Country music is becoming THE go-to genre for marketers trying to reach core consumer groups?   According to the attached AdWeek link, marketers are choosing Country artists more than ever to represent their brands and engage with potential customers.  There are a few reasons for this.  For starters Country artists are generally considered more down to earth and in touch with typical consumers.  Nothing wrong with Bruno Mars, but are you more likely to grab a beer with him or someone like Luke Bryan?  Country authenticity creates brand legitimacy which marketers can harness.  Then there’s the crossover factor.  What started with Taylor Swift going pop and Blake Shelton going to The Voice has turned into a regular feeder system of Country stars like Maren Morris and Sam Hunt who make it big in Nashville and then crossover into mainstream celebrity.  These factors create the perfect environment for marketers to enlist Country stars to drive success for their brands.  And yes that Colonel Sanders picture is actually Country legend Reba McEntire, who was the first woman and first musician ever to play the QSR icon in a commercial.

Have a great Tuesday guys!

READING THE LAST RITES OR A GAME OF CHICKEN?:  As of Sunday night there was still no official bankruptcy announcement from iHeart.  According to multiple sources, including the attached Radio Ink link, the top debt holders are negotiating among themselves (without iHeart’s involvement) for the best way to liquidate the company.  iHeart also continues to propose various refinancing solutions which involve giving up 93% of the company’s ownership in return for $5.5B in new loans – their latest option is laid out below.  While there’s a high probability that iHeart will declare bankruptcy as early as today, there’s also a school of thought that iHeart could be playing a game of chicken with its creditors by using the threat of bankruptcy as a motivation to refinance.  The only problem with this theory is that iHeart even admits their last ditch proposal is worse for the creditors than bankruptcy.  Keep an eye on your news feeds today.

THE “SOFT LANDING” CONTINUES FOR THE US AUTO INDUSTRY:  On Friday the US Auto sales numbers for February were released, and let’s just say there was more red in the report than a mafia movie.  As reported in the attached Automobile Magazine link, here are the decliners compared to Feb’17 – Hyundai (-13%), GM (-7%), Ford (-6%), Honda (-5%), Kia (-5%), Nissan (-4%), and Fiat Chrysler (-1%).  On the other side of the ledger here are the gainers – Mazda (+13%), Audi (+12%), Toyota (4%), BWM (+7%), VW (+6%), and Mercedes (+2%).  With the exception of Toyota the bigger OEMs declined while the smaller ones gained.  This led to a YoY unit sales decrease of -2.3%, and that’s compared to Feb’17 which was off a few points from 2016.  This is consistent with an overall trend in US Auto Sales which is going through a gradual decline after seven straight years of growth.  While shrinking is never as fun as growing, at least it’s still a soft landing, marked by years of gradual decline, instead of one sharp free fall.

COULD THE HOCOs BE FACING DISINTERMEDIATION?:  Over the weekend I came across a very in-depth article on the state of WPP (and all the other Holding Companies), in the attached Didigay link.  The HoCos are going through the worst financial stretch since the Great Recession ad slump of 2008-09, and this is happening in a period when global media spending is increasing.  On one side agencies are dealing with increasingly sophisticated clients who are more likely to in-house parts of their marketing operation and also demand greater billing transparency for media bought on their behalf.  This leaves less work for the agencies to do at lower margins.  On the other side there are external threats from business consultancies who now offer traditional media services, and the Duopoly whose client penetration is so deep that they’re starting to cut the agency middlemen out of the marketing conversations.  All of these factors are putting the HoCos between a rock and a hard place.  The long term solution will require some kind of reinvention where agencies can rediscover an essential purpose in the relationship between clients and vendors.  If not some of these agencies and their HoCo parents might find out the true meaning of the word disintermediation.

BONUS FUNNY:  You know I love a good programmatic cartoon every once in a while.  Today’s feature from AdExchanger is a tip of the hat to Pandora’s entry into audio programmatic, which is expected to establish a full prog marketplace in the coming months.  Enjoy!

Have a great Monday guys!

IT’S BANKRUPTCY TIME:  It looks like judgement day is finally here for iHeart.  According to multiple sources and the attached Bloomberg link, iHeart is preparing to file for bankruptcy protection as early as Saturday.  This is a result of iHeart missing a nine-figure debt payment on February 1^st which triggered a formal default on March 1^st.  Over the past 30 days iHeart has been working with creditors to finagle more favorable debt terms, but those efforts appear to have failed.  It also looks like the Liberty Media hail Mary to acquire 40% of a post-bankruptcy iHeart for $1.2B in cash isn’t getting any traction either.  So what happens next?  Once they enter bankruptcy the courts will help negotiate a settlement between the broadcaster and its creditors.  This will most likely result in a sell off of properties like ClearChannel Outdoor and station clusters in certain markets.  It’s even possible that they’ll spin off the iHeart streaming platform into a separate entity which could run independently from the stations.  Let the fireworks begin!

THE CREAM RISES TO THE TOP:  By now you all know P&G CMO Marc Pritchard’s crusade against digital ad fraud, advertising within inappropriate content, and non-transparent measurement.  A little over a year after he threw down the gauntlet we’re starting to see the impact on digital publishers.  As reported in the attached WSJ link, P&G is on track to reduce digital spending by $200M in their July-June fiscal.  Several large publishers received a “pretty big hair cut” and YouTube was cancelled completely after P&G ads ran adjacent to objectionable content.  On the other side of the coin digital good guys like Pandora, Amazon, and Alibaba, who run very clean ad platforms with logged in human users, actually increased their partnerships with P&G.  So it’s not just a case of P&G trying to cut digital – they’re just trimming the fat to be more efficient.

LESS IS MORE AT NBC:  Yesterday NBCUniversal announced plans to overhaul its network ad load.  As reported in the attached WSJ link, NBC is planning to decrease the number of commercial breaks by 20% and the amount of ad time by 10% during prime time programming beginning this September.  This is a fairly bold attempt to improve the viewing experience and (hopefully) stop the audience erosion all networks are experiencing.  Traditional TV ad loads, which have been high for decades, are starting to come under scrutiny because OTT (streamed TV) runs many fewer commercials.  It’s a case of viewers getting used to lower ad loads in a digital environment, and then suddenly becoming super-annoyed when they go back to the commercial dumpster of traditional TV.  So kudos to NBC for trying to implement some ad load discipline.  I wouldn’t be surprised to see some other networks follow their lead.  I also wonder if the radio broadcasters, who still run four times as many ads as their streaming counterparts, might wake up and do the same thing.

Have a great Friday (and weekend) guys!

SPOTIFY’S IPO IS HERE:  Yesterday Spotify formally announced plans for its long awaited IPO.  As expected the streamer is going with a Direct Listing, which means that won’t raise any new capital by selling shares through institutional investors.  Instead individual equity holders will be able to sell their own shares on the NYSE.  Besides the Direct List shenanigans the other usual aspect of their IPO is the “placeholder valuation” of $1B, as reported in the attached Axios link.  Industry estimates peg Spotify’s market cap at anywhere from $10B-25B, but there’s no real way to tell until the stock starts trading and a price is established.  The other interesting aspect of Spotify’s filing is the first ever disclosure of their audience metrics and financial position.  We now know Spotify has 52M MAUs in North America (they don’t break out the US separately), and about 40% of their audience is subscription.  According to my napkin math that leaves roughly 31M addressable listeners in NA.  The other surprising number is their operating loss, which was a jaw dropping $1.5B in 2017.  So they’re miles away from breaking even and won’t be raising any new capital from a traditional IPO.  Does this sound like a recipe for success to you?

FACEBOOK’S ELECTION TELL ALL:  Over the past few days there’s been a growing controversy over disclosures Facebook has made about the 2016 Presidential Election.  The flash point has been around the different CPMs FB charged the Clinton and Trump campaigns.  The initial headline read as if FB charged Clinton much more than Trump, but this was based on a cost per click metric instead of CPM.  Trump was getting more clicks per ad placed because his creative was much more inflammatory, so the ads performed better on a CPC basis.  This created enough market outcry that FB felt compelled to release the actual purchased CPMs of two campaigns in the image below.  It shows Trump paying higher CPMs – so they probably bought more desirable ad units and/or audience segments which lead to a more efficient click ratio.  Slate does a nice job of unpacking this complex scenario in the attached link.  You rarely get a look under the hood at a major publisher like FB, so spend some time with this one.

THE ONE THAT GOT AWAY:  If you’re a regular reader of the DG you know I’m a big fan of the show Shark Tank and in particular of Mark Cuban.  The knowledge they drop about basic business strategy and marketing is so spot on . . . most of the time.  Every once in a while a great idea is overlooked even by this group of preeminent venture capitalists.  That was the case with a young entrepreneur named Jamie Siminoffs and his IoT connected video doorbell called DoorBot.  As described in the attached QZ link, in 2013 Mr. Siminoffs pitched the DoorBot concept to the Sharks and offered 10% of the company in return for a $700K investment – which valued the company at $7M.  None of the Sharks took the bait (sorry!), so Jamie went home with his DoorBot invention and no deal.  But that’s just where the story begins.  Jamie Siminoffs kept working on his invention and company, which was eventually rebranded as Ring.  This is the same Ring that Amazon just purchased for $1B (with a B, not an M).  Obviously this is a lesson in perseverance after rejection, which we could all use more of.  But it’s also an example of understanding that no matter how much of an expert you are, you can never really be perfect in your decision making.  I think the Sharks found that out the hard way with this one.  (If you’re interested check out the second video link in the article to see why the Sharks dropped out of the DoorBot pitch one by one.)

Have a great Thursday guys!

MACY’S MOVING DOWNTOWN:  Last month I posted an article using McDonald’s menu offerings as an anecdote for the polarization of our society – where the middle is collapsing as consumers gravitate toward either Premium or Value camps.  Nowhere is this trend being felt more than in Retail.  For a prime example of what I’m talking about check out the attached Business Insider link, which explains the strategic pivot Macy’s is making.  A few decades ago Macy’s was known for superior service and making an experience out of shopping.  But things have changed as Macy’s customers’ tastes evolve.  Now Macy’s is going headlong into Value with the opening of more Backstage sub-stores which carry off-rack discount merchandise.  Macy’s is even doing away with its associates in the shoe department by rolling out self-serve shoe kiosks.  These moves are being made to help Macy’s stay competitive, since more of its customers just want it fast and cheap.  Consider this change on a macro level – if a storied retail brand like Macy’s has to resort to the Value play how many other less established players will have to go even lower on price to stay alive?

IS THE DOJ BARKING UP THE WRONG TREE?:  To understand this next article you first need to know the current consolidation that’s happening in TV’s content and distribution ecosystem.  In a post a few weeks ago I explained how larger entities like AT&T and Disney are starting to gobble up smaller players to create end-to-end operations which create and distribute their own content.  This has caught the attention of the DOJ (aka Trump Administration) who is challenging mega-acquisitions such as AT&T buying Time Warner, which could lead to the possible divestiture of CNN.  (Confused yet?)  With that as the backdrop check out CNN President Jeff Zucker’s comments from a Mobile World Congress interview in the attached AdWeek link.  According to Mr. Zucker the DOJ is looking at the wrong players for a potential TV monopoly.  Instead of the traditional networks Zucker points to Google and Facebook, with their domination of OLV, as the real gorillas in the video room.  Per Mr. Zucker, “The fact is nobody for some reason is looking at the monopolies that are Google and Facebook, and that’s where the government should be looking and helping to make sure that everyone else survives.”  Obviously this is an attempt to shift attention from CNN to other players in the space.  But it’s also a legitimate question about why the Duopoly seems to be immune to antitrust questions while the traditional networks get all the scrutiny.  Fair point, I think.

TWITTER SINGING THE SOUNDCLOUD BLUES:  Did you even know Twitter had an investment stake in SoundCloud?  If you didn’t you’re not alone.  In 2016 Twitter’s Ventures unit invested $70M in the German Streamer, but only as a passive investor – so there was never a real business strategy with this.  According to the attached RAIN link, even that stake is now just dust in the wind, with Twitter choosing to write off the entire $70M as a loss.  In Twitter’s most recent financial report they justified the write down by saying the investment is “not expected to be recoverable within a reasonable period of time.”  This move is bad for both parties.  First, what was Twitter even thinking?  To invest $70M in anything without a plan or reasonable hope of getting a return on the investment seems blindly naive.  And then there’s SoundCloud, who’s been at death’s doorstep for the better part of a year.  While their more recent $170M round of funding from The Raine Group/Temasek was a lifeline, they’re still not generating enough revenue to survive long-term.  Hence the decision by Twitter to pull the rip cord.  Seems like a bad situation all around.

Have a great Wednesday guys!