Bubbly Bubbly and it's not champagne...

Many internet star-ups are willing to go public. For example, Linkedin, a professional network, filed for an initial public offering in January 2011 and traded its first shares on 19 May 2011, under the NYSE symbol "LNKD''. It was valuated at $8.8 billion. Groupon, Pandora and probably Zynga the creators of Farm Ville; all these web outfits are queuing to join the stock scenario. 

Also, other sites from China, Russia and elsewhere are interested in listing on the American exchanges. Once, Linkedin debuted the price of its shares doubled. After, Russia's Yandex decided to go public, it floated its shares on the NYSE and saw its share price soar by more than 50%. Yandex is a Russian IT company which handles the largest search engine in Russia, with 64% market share and ranked eighth-largest in the world. It is attracting more than 56 million users from all over. The website is also present in Belarus, Kazakhstan and Ukraine. Yandex Labs, is a another division of Yandex and it is located in San Francisco Bay Area.

Additionally, Groupon is also willing to go public. It has been labelled as "the fastest growing company ever" and has been valued in $15 billion. It is less than 3 years old and it already operates in 43 countries and has 83 million subscribers. Even though it seems to be very successful, it lost $390 million in 2010 and $103 million in the first quarter of this year. How can a company that is loosing money be valued in $15 billion? who knows... but Price Waterhouse Coopers (PWC), ranks web firms according to their "value per user". It is calculated by dividing a start ups's estimated worth by the number of its users. According to this ranking approach Groupon scores well, just below Facebook and Renren (a Chinese social network that already is listed on the NYSE).

All these social media companies seem to be over valued. So, does is this market bubbling up? Let's wait and see what happens, hopefully no bubble will burst.

Based on the article "Welcome to IPOville" from The Economist, June 11th-17th, 2011.

Music in the Clouds

If there is something that we all love is music. There are different genres, so there is always one that fits your taste, never letting you down. However, this industry has evolved and here I'll try to make a brief history line, in order to analyze this business, and understand how it was and how it has changed into what it is now. 

The first device where we could listen to music from was the phonograph (also known as the gramophone or record player) introduced in 1877 by Thomas Edison. This device was used until the 1980's, almost for 103 years. After the phonograph, came the radio, a new way of listening to music. In 1920, the station KDKA is supposed to be the world's first commercially licensed radio station. At first, record sales decreased as people could listen to the music on the radio for free. Despite this, radio started to have the contrary effect. People heard the song on the radio, and if they liked it, they went for the record. So, the radio became, and still is, a channel to promote songs. 

In 1931 the magnetic tape was created, but it wasn't until 1964 that the compact cassette was launched into the market. Then approximately 16 years later the Sony Walkman came out. It revolutionized the industry because it introduced the concept of portable music; with it you could take your favorite songs anywhere. Afterwards, in 1992 the Compact Disc (CD) was introduced, followed by the discman by Sony. Then the mini discs entered the market, but this format didn't last for long. Soon, the mp3 format started to spread. In 1999, Napster the peer to peer sharing file internet service, started operating. Users could upload their songs, share them with others and they could also download them for free! Other sites such as this one started to offer the same services. People began to listen to music through a different channel and for free. Obviously the music industry had changed. Since, 2000 when online file sharing took off, global recorded music sales have been dropping from $26.9 billion a year to $15.9 billion according to the IFPI (International Federation of the Phonographic Industry).


After, some legal issues that Napster and other like services suffered because of sharing music files illegally they had to shut down. A new player arrived, and it wasn't form the music arena, Apple in 2001, came up with iTunes, an online music store where you could download songs legally and for only 99 cents. Along the way other online music services also entered the "new" market, such as Pandora or Spotify, which offer internet radio service.

Now, the latest trend for consuming music is "the cloud". Amazon's Cloud Player, Google's Music Beta and the latest Apple's iCloud are the 3 main players in this digital arena. Seems that Apple will win this battle as its service is not only for storing music. It will search devices for tracks purchased from the iTunes store and automatically users may download the music directly to any Apple hardware. This gives Apple a huge advantage compared to Amazon or Google, as the install base of Apple products such as iTunes, iPods and iPads is larger, this battle seems to have a winner.

The online music outfits like Spotify or  iTunes bring in much less revenues than records sales, yet they produce more precise real time data. For example, Universal is developing its own data-crunching tool called the Artist Portal. Atltantic Records, owned by Warner Music Group, uses data to enhance its marketing campaigns. Some of these data crunching companies such as Buzzdeck, Artist Portal and Big Champagne they are helpful for record companies to understand better their customers and get the needed data to promote their artists in a more economical and precise way. The music industry is making its profits from live music shows and merchandise and to be successful in these areas they need to know their consumer's behavior, here is when the digital technology comes in handy and not damaging as many have been considered. If today want to listen to new music you just have to look into the clouds!

ebooks on the Rise!

The shift to digital of the editorial industry seems inevitable. On May 19, 2011, Amazon declared that they sold more ebooks than printed books, including hard covers and paperbacks. Since, April 1, 2011, it has sold 105 Kindle books for every 100 print books. In 2007 they launched the Kindle, a tablet for reading digital books. Apparently, the sale of ebooks is on the rise!

Will this ebook trend bring changes to the editorial industry? The answer seems obvious... Yes! First, the value chain is going to change. For example, publishing is not as complicated as it used to be. Today, authors don't need to go through the approval of powerful editorials to publish their work anymore. Thanks to the Internet they can make their own website and upload their work for anyone to download it digitally.

Second, there also new players on this arena such as Lulu.com, a website that offers open publishing, authors can publish their work on the site and stay with 80% of the revenues. Since their founding in 2002, 1.1 million creators from more than 200 countries and territories have signed up. This way Lulu.com facilitates the interaction between creators and buyers. Creators can publish their work in multiple formats (ebook, Ipad, CD's...) and buyers can look for the content they need.

Third, new hardware has been created for this new way of reading, as a result, the developers of these gadgets are also new players on this industry. Fourth, printing companies won't be needed as much as before, as the content will be provided digitally. Therefore, the players of the production phase will have to adapt to this new model, in order to keep with the "book business". For instance, they can offer printing on demand. However, no more mass printing of books seems to be required, on demand seems to substitute this vanishing need. 

Fifth, another player of the value chain that is affected by this new trend are the distributors. Now, the game has changed for them as well. Thanks to the Internet the distribution process is almost unnecessary, as their is no need to allocate books among retailers, as everything is online on the same website, just a click away.

For sure there are some other variables that can be analyzed on the digital shift of the editorial industry. However, this is just a sneak pick so reflect on where will you buy your next favorite novel and in which format will you be reading it.

Based on the article "Amazon now sells more eBooks than print books" from the Washington Post (Click Here)