[This was just published on GigaOm]

I was talking to an executive at a major label the other day. We
were talking about startups and he noted that they either sue these
companies out of business or legitimize them out of business. That is
not far from the truth. How many legitimate, standalone digital
businesses can you name that rely on licenses from the labels for their
primary business and are profitable? Let’s categorize by business model:

E-Commerce/Transaction-based: iTunes immediately
comes to mind. It may be profitable on its own, but we all know that
Apple’s main business is to sell iPods and now iPhones. eMusic is the
other one, and I think it has a real business on its hands — of course
the vast majority of its repertoire is non-major label.

Music Subscriptions: This segment is dominated by
Rhapsody and Napster. Neither is solely a music subscription service,
but that’s what both are best known for. At any rate, neither is
profitable. RealNetworks’ music business lost $1.9 M in the second quarter of this year. Napster? Well its stock chart kinda says it all; it’s currently trading for a little less than the cash it has on its books.

Ad-Supported Music: This includes on-demand audio
and video and also Internet radio. The major players here are the radio
divisions of companies like Yahoo, AOL, CBS (Last.fm and CBS Radio),
MTV, Clear Channel, MySpace, Facebook and then independents like iMeem, Last.fm, Pandora, Live365
(my alma mater) and a number of others. It has been widely reported
that the standard license for on-demand consumption is $0.01 per play,
which amounts to a $10 cost-per-thousand plays, not including other
costs such as publishing, bandwidth/streaming and ad sales and serving
costs.

In short, I think its very hard for any of the ad-supported players
to build a meaningful basis from licensed music. Instead, many of the
larger players will use it as part of a larger strategy to attract
audiences and offer related products that generate higher-margin
revenues. For instance, Clear Channel might have a sponsor for its Stripped
series, which will probably not have the same license cost as a regular
music video. Or MySpace will sell an ad campaign around an event that
it hosts. As for Internet radio, there is a lower royalty rate, but the
CPMs are lower, too. Pandora’s founder was recently quoted as saying
the service may have to throw in the towel if things don’t change with
the fee structure. iMeem has licenses from several labels but it’s been
reported that it gave up a significant piece of the company and agreed
to onerous terms, so, needless to say, it likely isn’t profitable on
its licensed music either.

This is by no means a comprehensive list of business models nor of
the companies within each segment, and there may be companies within
each that are profitable. But that’s beside the point.

The point is that the labels have been lulled into the conviction
that their rates are ‘market’ since some of companies have been willing
to pay such rates to license music as a loss leader. The labels have
been penny-wise and pound-foolish in cutting deals with seemingly
lucrative rates. However, that is not the recipe for a vibrant,
competitive ecosystem of licensees large and small, with no one company
having too much market share — which is exactly what I’d want if I were
in their shoes.

The good news is that I know this has been recognized by people with
the major labels, and they’re experimenting with new licensing schemes.
Hopefully it’s not too late.

Update: I've removed the discount code upon a request from Bonobos

Or trousers as they're called here in the UK ("pants" are not 'outerwear').  At any rate, Bonobos is a new brand of men's pants or trousers.   A former classmate of mine, Brian Spaley, is one of their co-founders.  In their words:

Bonobos exists to solve two problems we had
ourselves. (1) Men's pants do not fit well; they are either baggy,
frumpy, and unflattering. Or way too tight.  We make pants that fit and look
better, on most gents and especially on guys with athletic builds. The
second problem (2) is retail.  How could we enjoy paying 120% markup
to try on clothes in an uncomfortable public environment where sales associates—who
are total strangers—either scrutinize our figures, or pay no attention
to us at all?  Meanwhile, pricing games are no fun. We're tired of
waiting for sales… but paying full price makes no sense when
inevitably everything will go on sale. We got tired of the traditional
retail shopping experience. So we are building a different kind of clothing
company, one that offers a fantastic customer experience, innovative low-cost
distribution, and a stylish
product that fits well.

I bought a pair of these, which have proven to be super-comfortable.  I also like how their inside linings are kinda funky.  First-time customers can enter [DELETED] as a code to get 15% off their first order (there's nothing in it for me save for good karma). 

I've only been here a few days and am clealry seeing the city at its best, but here are my impressions:

-Everything is big. From the six to eight-lane thoroughfares to the huge city blocks to the vastness of Tiananmen Square and the Forbidden City, to the massive buildings with throngs of people, the large scale of the landscape jumps out at you. No quaint brownstones or even 6-floor walk-ups here. Apropos, perhaps, for a government and society emphasizing the collective over the individual.

-The Chinese have been friendly. Even at the women's beach colleyball final this morning, the applause was only positive. Not a boo or heckle to be heard, nor dirty look to be seen.

-They don't really card about making money. The concessions at the events are priced within reach of the locals ($0.50 for a beer) although the selection is appallingly inadequate. It's almost weird but there were just a few souvenir shops at the events with not much of a selection.

-The city seems clean, the traffic not too bad, the subway clean and reliable, and the air quality has been fine. We've been told that all of this is the exception and not the norm. Clearly the government has invested a lot into making the city presentable. The question is to what extent things revert post-Games. I know some that are hoping that people get inspired to keep Beijing clean after the Games. I'm very curious to see how things are a year from now.

-While everything has been positive, I wouldn't say that it's a party atmosphere at the events. The vibe at the events is more on security and getting on with presenting the best face to the world vs encouraging those attending to hang out and party.

All in all, it has been fascinating.

It has been hot and humid this past week in Vietnam, and yet the women cover up almost every inch of skin. From the hats to a scarf covering the mouth to full-length clothing. Why? Because pale skin is coveted here in Asia.

Meanwhile, Westerners spend thousands on getting and maintaining their tans.

Having just spent a few days in Siem Reap, Cambodia and currently being in Vietnam, it strikes me how pervasive the dollar has become as an alternate currency. Prices are quoted in both the local currency and in USD In both countries. In Cambodia, often there wasn't a local price to be found and even the tuk-tuk drivers accepted a dollar bill or two for the ride and the ATMs give out dollars by default. And it's not just limited to the tourist trade as I've seen locals paying for items and receiving change in dollars (but certainly less so than the tourists).

The number 8 is a very auspicious number in the Chinese Culture.  So auspicious that China decided to hold the Opening Ceremonies today (08/08/08).

Well today is also when 8tracks is open to all.  Dive in.

I'll be on holiday for the next couple of weeks so posting will be slow.  If anyone is going to be in Cambodia, Vietnam, Beijing or Shanghai in the next couple of weeks, let me know!

Many of you know that I’m a frequent traveler.  I belong to many mileage or points programs but I mainly stick to 2:

American Airlines AAdvantage:  Inflation has run rampant as far as the number of points needed to redeem a ticket, not to mention that there seem to be fewer seats made available for award travel.  I do this mainly because I sometimes get upgraded with Platinum status, it also allows me entry into OneWorld alliance airport lounges and the mileage  bonuses.  My strategy here is to rack points so I can get a business class ticket to somewhere nice every year or two.  Of course, since I’m frequently in Europe, it’s hard to be on OneWorld carriers and so harder to build status and earn points.

Starwood Preferred Guest:  This is by far the best program out there and I’m very loyal to Starwood as a result.  First, they have no blackout dates so rooms are easier to get.  You get automatically upgraded if you’re Gold or above.  You can also book rooms at nice places for as few as 3000 or 4000 points going all the way up to 25,000 points for some of their luxury properties.  Still, I’ve been able to get nights at a luxury property 12,000 – 16,000 points.  You can use points for amenities at a property such as massage or spa services.  Another great aspect is that you can use a combination of points and cash.  For instance, when booking the Le Royal Meridien Shanghai, I could opt to pay all cash (~ $250), all points (12,000), a combo (4,000 points + $60) or 1,000 points to get 50% off rack rates.  What a great idea!  Finally, you can transfer your points to a number of airline and other mileage programs.  I just transferred some to American  Airlines and it was all done online.  I hope Starwood keep up the good work on this front.