Amazon Launches Prime Music: What Next?

Last Week Amazon announced the launch of Prime Music, a music-streaming ad free service available to Amazon Prime subscribers. Prime Music secured the music to Warner and Sony labels as well as a handful of indies with a focus on the top 100 playlists. They have also hired staff to create pre-mixed genre playlists from their existing music library. Their initial library is limited to 1 million titles but they consist of the most popular songs among the general public.

Taking a wide view of Amazon is important to understand what this latest announcement could mean for competitors. Amazon Prime started out as a subscription service that offered free unlimited two-day shipping on all orders for a flat annual fee. The service now has over 10 million members. This mighty ecommerce giant began as an online bookseller. Amazon, similar to the impact Netflix had on the video rental market, decimated the brick and mortar book market and is now having a significant impact on big box retailers brick and mortar revenue. The company has grown into a huge online retail mall. Recently, the company has begun to make land grabs in the film, television and music, and as of last week, the music streaming space. It would be short sighted to not expect these latest developments by Amazon to stake out its territory in the entertainment industry as potentially disruptive.

Here’s how the competition stacks up:

Beats - Apple’s strong hold is in its hardware that has created a closed ecosystem for users, and the large selection of music, film and series and content titles that it has amassed and sells through iTunes. It is a massive force in digital content distribution. Now with Beats, the company has secured its place in the music streaming business. The service has promised to pay all artists equal royalties. Apple’s advantage is that Beats directs its users back to iTunes to purchase titles. The service essentially creates a platform to showcase the company’s unrivaled online music library to users.

Spotify - With over 40 million users, Spotify maintains a dominant place in the market. With Spotify you can select the titles you want to listen to and create your own library, which is why the payout to artists has become such a contentious battle. Spotify also actively makes deals with emerging talent through Spotify Artist and offers direct payouts. Spotify’s revenue depends on its paid subscriber base, which is currently 6 million. But their subscription base does not generate enough revenue to sustain them at their current burn rate. The company has recently added a free mobile service that includes advertisements to create an additional revenue stream.

Pandora - with over 75 million users and a huge library it has secured a significant in the music marketplace. One of the pioneers in music streaming, Pandora follows the radio model. Users cannot select the specific titles they want to hear but instead listen to an automated genre mix. Pandora reported $638 million in revenue in 2013 with content acquisition cost at $343 million. Their profitability depends on their ability to increase advertising revenue. Pandora is also actively lobbying to change federal laws regarding royalty rates.

As the number of Amazon Prime subscribers continues to grow it will become the default go to place for many of its users. Like iTunes, its advantage is that its streaming service directs listeners back its library of titles for purchase. If Amazon is able to amass a large library it could dominate the music streaming business. People like convenience. If for $100 I get all my shipping for free as well as access to digital content then why should I pay for additional services?

It would be short sighted to write off Prime Music as just an accessory. When in fact it is a very important strategic move in the overall content distribution ecosystem. It is unlikely that Amazon is going to take out Pandora, Beats or Spotify anytime soon but what is interesting is how the company is positioning itself in terms of big picture. It is likely that in the foreseeable future, we will need an Amazon subscription just to live our daily lives.

Stay Hungry… Never Give Up

In August of 2009, ex-Yahoo engineer Brian Acton wasn’t offered a job after interviewing at Facebook. Today, Facebook bought his company, WhatsApp, for $19 billion. I’d say it worked out in his favor.

Brian Acton Interviewed at Facebook

Four years ago Brian Acton interviewed at Facebook and wasn’t offered a job.

The Guilt of Selling

After being a bootstrapped company for more than ten years, it came as somewhat of a shock to find ourselves discussing the possibility of being acquired. It wasn’t so much the tiny boardroom in the middle of Utah where this conversation took place that was the foreign part, it was the situation all together. You see, we weren’t actively looking to sell the company. In fact, we were growing year over year and we loved coming in to the office each day. However, when the acquisition call comes in, you have to answer it. And that’s exactly how Scott Skinger, founder of TrainSignal and myself, president of TrainSignal, found ourselves in a one-on-one with Pluralsight executives and board members last April.

In the meeting, we spent the day talking about our respective companies, our achievements to date, recent projects, and future direction. We started discussing details revolving around our revenue, expenses, and individual departments. After a few hours, we realized that we had a lot in common and we were trying to achieve a shared goal; to provide affordable, valuable, and educational content to IT professionals and developers worldwide. In hindsight, having this common platform was the key to a smooth transition.

After leaving Utah and heading back to Chicago, I could sense that the deal was going to happen. I started mentally preparing to accept the fact that something I helped build was no longer mine to control. My stamp on things at TrainSignal would no longer be a part of my day-to-day. As if that wasn’t enough to process, I started wondering how our employees would take the news. I started speculating on who Pluralsight would keep, and who they would let go. It was a roller coaster of excitement and anxiety, ups and downs.

In May, we agreed on the initial terms of the deal and due diligence began by accountants and attorneys. While I knew this would not be an overnight process, it was wrecking on me to go into the office each day knowing that we were in the process of selling, but nobody else knew. I would sit there in meetings and be present for kick-offs knowing it would all mean nothing in a few months. The guilt mounted when I found out who was going to lose their jobs as a result of closing the deal. At that point, I just shut down. I started avoiding the office and declining meeting invitations. The lying, deception; I just wanted it all to be over.

A few years ago, I always thought about how great it would be to build a company that eventually got acquired. Isn’t that every small businessman’s dream? I pictured all the employees celebrating with champagne and party hats. But such was not the case for me. All feelings of excitement were overwhelmed by guilt; a brick that I can still feel in my stomach to this day. Ultimately, I keep repeating that mantra “It’s just business” and I try to remind myself that this was the best decision. But rest assured, none of that changes how I feel about being acquired.

Nothing could prepare me for the day we told the news to the company. In addition to delivering the news of the sale, we also had to let go of about 25% of our team. While we gave substantial bonuses to everyone (even those whose last day it was) and full severance, none of the consolations compared to the guilt of selling. Even though I won’t soon forget this difficult day in my professional history, I look to the future – and to new experiences – for the closure I so badly covet.

How To Block LinkedIn Intro On Your Servers

LinkedIn tried to give iPhone users a quick way to view the LinkedIn profiles of the people they communicate with through e-mail, but to do so they’ve routed all e-mails through their own servers. That’s a GIANT security no-no for so many different reasons. I’d recommend all companies immediately block the mail servers LinkedIn Intro uses by blocking:

IMAP: imap.intro.linkedin.com

SMTP: smtp.intro.linkedin.com