Amazon Prime Has Unbundled

For those cord cutters who don't want to pay $99 a year for Amazon Prime and its entertainment video package, Amazon is offering a monthly rate instead.  For only $8.99 a month you can subscribe to the service with the ability to cancel anytime.  And according to Techcrunch, "You can also choose to subscribe to Prime for $10.99 per month. You get access to expedited shipping, Prime Video, Prime Music, the Kindle Lending Library and probably a bunch of other stuff that I’m forgetting."  If cash flow is your issue, the new Amazon offering provides a smaller monthly fee. 

But if a $99 yearly cash outflow doesn't hurt your pocket, the simple math proves that buying the annual membership is the better value of about $10 for the video only package, $32 more for the full package of Prime services.  Heck if Netflix offered an annual discounted payment, they likely would find a strong conversion by existing subscribers although a lower revenue stream. 

Will the new payment structure encourage new subscribers to try the Amazon Prime service?  There is certaily no savings if all you wanted was the video offerings.  Given the pricing, it seems like you might as well pay the higher fee and add books and music to the mix. 

I am not an Amazon Prime customer.  I don't buy that much from Amazon to see value from the expedited shipping and have yet to find a must-have show that would drive me to purchase.  I do believe the ultimate driver for Amazon Prime is geared to those that utilize them frequently for purchases.  The entertainment library is the added value to the package.  I would love to see a comparison of Amazon Prime to Netflix and Hulu for number of monthly streams and hours per household utilized to see how each service is treated among its subscriber base.  Given the proprietary nature of the business, I doubt that info will ever be shared willingly. 

Cloud Business Follows Office Space Strategy

The NY Times article on cloud computing shares a little secret on how they make money, with micro charges that add up.  "That is one way to think about what is going on at the world’s biggest cloud-computing companies. Instead of grains of sand, think about computing cycles, the activity that goes on in a computer server that is running software. For a price, think about one line of software code for two one-millionths of a penny."  And these micro charges add up to a billion dollar business.  As the article describes, fortunes add up when you keep adding these pennies. 

Perhaps they got the idea from the movie Office Space. In the movie, Peter has a plan to steal half a penny from each transaction.  It quickly pays off as he sees his bounty grow by hundreds of thousands of dollars.  For folks like Amazon, Microsoft and others, those micro payments from cloud computing provide legal riches as well.  It seems that counting pennies does work!

Customers Are Staying With Their Netflix

When it comes to churn, or subscribers that end their financial relationship with a company, keeping customers engaged and valued assures a company a strong revenue stream.  Because once you have lost the trust of your customer, it is much harder and much more expensive to try and win them back. 

In the digital media space, churn could kill a business. And folks like Netflix, Amazon, Hulu, Sirius, and HBO Now among the many others count on customers to continue to pay a subscriber fee and use their services.  Well according to a Multichannel article, "Netflix is by far the largest subscription OTT video service provider, with 52% of all U.S. broadband homes taking it by the end of last year, but it also enjoys the lowest churn rate as a percentage of its total sub base, Parks Research found in a new study focused on the over-the-top video sector."   Certainly, Netflix hopes that trend continues as they raise their monthly fee about a dollar a month. 

Many may not notice or even care.  Given the aggressive push for content aggregation and a continuous stream of original content on the service.  Tomorrow, Netflix presents a new season of Unbreakable Kimmy Schmidt as one such example.  And this summer comes another season of Orange Is The New Black.  For those fans and others eager to binge on their favorite series or to watch a movie, Netflix keeps its customers from departing.  On the other hand, one out of 5 broadband homes did drop a subscription service.  How much price elasticity can a Netflix home handle?  Netflix hopes to keep their churn low while eking out more revenue.

Goodbye To Some Jobs, Hello A.I. And Bots

Technology is shifting labor usage once again.  The rise of tools, the Industrial Revolution, and robotics have caused labor to shift from hands-on to programmer. We see commercials for IBM's Watson, Apple's Siri, and the Amazon Echo.  They all are shown answering our questions and providing solutions to our queries.  And frankly, for simple questions like, what is the weather or what time is it or play a piece of music, they let our voices takeover for our fingers in seeking the answers from the world wide web.

And we are seeing an increasing usage of automation as we call out to customer service, whether it is for banking, cable, appointments, and other service related calls.  The need for a human being on the other end of the line means less need for actual customer service reps to handle your calls.  Unfortunately, they can't handle every unique problem, but most likely solve some leaving a smaller pool for actual CSRs to answer.  It may be why Verizon is letting their unions go on strike and not resolving their pay dispute.  One of the unions striking are the CSRs and Verizon probably feels they can get by without that many employees they need. Union demands may just run counter to what Verizon's new world requirements. 

Facebook's Mark Zuckerberg recently announced plans to put A.I. bots into their Messenger app.  Per USA Today, "Facebook announced that businesses would be able to start using their messenger platform to buy and sell products and offer customers support."  Instead of going to a mobile app to make a purchase, you can use Messenger and start "chatting" to tell what you want to do, like buy flowers or order a pizza.  No more search as Messenger aggregates all those conversations.  And soon we can replace our typing with our voices to drive our purchase behavior. Amazon aims to do the same thing using its Echo device to search and handle commerce via the Amazon infrastructure. 

And the more we automate these communications and chats and orders, the less need we have for humans to do those jobs.  CSR centers will soon become like the dinosaur as the numbers of actual bodies in these businesses decline.  The rise of artificial intelligence in our commerce activities will continue to drive labor to seek alternative opportunities.  Jobs will go away as companies will find the economic advantages to bots over people, including no healthcare costs, no vacation pay, and a 24/7 work day.  It is the next great technological shift to occur in our labor market. 

Some Baseball Fans Are Striking Out

Local baseball fans in Los Angeles and New York may just strike out when it comes to watching their Dodgers and Yankees play on Opening Day and beyond.  That is because of the same type of disagreement that happens annually between cable programmers and cable operators. In Los Angeles, the Dodger Regional Sports Network, SportsNet LA, is in contract dispute with DirecTv, AT&T, and Cox Communications.   As of now, these operators will not be telecasting Dodger games from SportsNet LA.  In New York, the Yankee Regional SportsNet, YES, is in contract dispute with Comcast Cable.  That means that about 1 million homes in the NY area will not be able to watch YES. 

And while these regional sports networks charge a very hefty monthly license fee for carriage, their drop from the lineup did not lessen the monthly fees that cable subscribers pay to receive their all their cable channels.  According to the NY Post, the Comcast deal has been derailed mostly because of most favored nation issues, where Comcast would receive the best price given its share of the market.  With the merger of AT&T and DirecTv, Comcast is no longer the largest cable operator. 

Will consumers switch to other cable providers to watch their baseball games or will they wait it out and go without?  For the hardcore, the MLB app might help, but local games would still be blacked out.  Yes, the cost of sports programming is too high and ultimately the fan is forced to pay.  It is a no win situation. 

Virtual Reality Is For Porn

We recently saw the show Avenue Q, a slightly risque musical parody of Sesame Street, first produced on Broadway about 15 years ago.  In today's NY Post, we learn that Oculus VR, now owned by Facebook, sees its next growth opportunity through the porn business.  Not an unlikely combination.

It seems that new technology has often found its early adopters through the porn industry.  The rise of the VCR brought many new owners for its easier access to porn videos; the rise of the internet has also been directly connected to the online connection to porn as well.  In fact, in Avenue Q, a popular song is based on this very fact, "The Internet Is For Porn":



The show may now feel a bit dated, but perhaps its rewrite could have this song changed to "VR Is For Porn" instead. According to the Post, "VR porn videos already number north of 1,000 from professional studios alone."  That compares to only about 30 games available for release.  It may seem a bit titillating, but the success of VR may seem to find its initial success as a result of this connection to porn.  We will wait and see. 

Does Anyone Care About Today's Apple Event

The NY Times tells us today that Apple is having another "event" to announce new Spring updates to its current line of iPads and iPhones.  Unlike other announcements, this event seems to be lacking the sparkle that others have caused.  Are we set for a lackluster event?  Will anything revolutionary get announced or will it be a dud?  I'm guessing that we will be very disappointed. 

Apple Cloud Means Business

If you enjoy your Apple products, than you might also be receiving a reminder that your iCloud storage is almost full.  Upgrade for a buck a month and assure that your photos and other data is saved.  Or change your settings and backup frequently to your computer.  Most of us don't do the latter and a buck a month for security also gives us piece of mind.

But iCloud storage is also big business.  With so many iPhone and iPad customers, the revenue can add up.  Apple has been using Amazon for its storage business but now, according to Business Insider, Google may have won a big piece of the business.  And splitting the cloud business offers some redundancy should the need arise.  But the move to Google may also make for good business strategy.

As Google pays Apple to be the search engine for its devices, the risk of losing that revenue always exists.  By spending money with Google for cloud support, their relationship adds more wrinkles and perhaps more leverage in other financial business dealings.  How long this lasts remains to be seen.  Given the dollars that come to Apple from iCloud storage, it may soon be time to bring this business internal and cut out the third parties like Google and Amazon. 

CBS To Sell Radio, Focus On Digital

Death to old media!  CBS is done with the radio business and plans to rid itself of news, oldies, talk, and music stations to focus on the digital business.  Whether that means simply a spin off or a complete sale to someone remains to be seen.  That there may still be a buyer is unclear.  Other radio companies, like iHeart Radio, the former Clear Channel, may go bankrupt!  With so much new competition from Apple Music, Spotify, and other streaming music outlets, CBS is just giving up this fight.

According to the NY Times, CBS "aims to streamline its business to focus on its broadcast network, the premium channel Showtime and digital."  But if the focus is digital, doesn't the content coming from radio help promote a digital business.  Can't they work with their radio assets to create another outlet to reach today's consumer and expand their business reach.  Will this radio contraction really support expansion in their other digital businesses or is this something else?  Could CBS start to split assets to drive shareholder value as they begin to sell off piece after piece.  And could ultimately CBS, the broadcast network, also be up for sale?