Showing posts with label e-commerce. Show all posts
Showing posts with label e-commerce. Show all posts
Friday, December 04, 2015
Sunday, November 29, 2015
The Limerick of Finance for 11/29/15
Cyber Monday is looking so good
Shoppers prefer online neighborhood
Retail sales pitches shift
Discount changes are swift
Stores would all sell online if they could
Shoppers prefer online neighborhood
Retail sales pitches shift
Discount changes are swift
Stores would all sell online if they could
Friday, July 03, 2015
Behemoths of the Online Music Marketplace
Competition in the online music sector looks much like the cloud computing sector. A small number of companies with huge audience penetration fight to distribute products whose unit production costs are close to zero. Cloud computing and music are not completely identical; cloud storage space and performance are commodities where music can sometimes command a premium price.
The big channels include Apple Music, Google Play Music, Spotify, and Pandora Media. All except Spotify are part of publicly traded companies. Apple's cash hoard makes it the strongest competitor regardless of the other competitors' market penetration. Apple can win any price war and drive less well-funded companies out, just as it can in cloud computing. Apple Music and iTunes do not cannibalize each other thanks to matching through the iCloud Music Library. Apple Insider describes the library's back-end technical challenges; those problems will lead to user cancellations if Apple doesn't fix them soon.
The key difference between cloud computing and music is not the commodification of storage but the brand image and performance of the final product's aesthetic features. The UX design of the desktop interface and mobile app certainly matter. The musical artists' published product is the aesthetic users ultimately want to experience. Listener demand for some artists is price inelastic and those artists exercise outsize power over their distribution channels. Taylor Swift's recent demand that Apple pay its artists during a free trial period has encouraged independent artists to view Apple Music more favorably. Prince demanded that some streaming services pull his music. The streaming services that retain access to the most lucrative music libraries - The Beatles, Elvis Presley, Frank Sinatra, etc. - will have to pay premiums to those artists' publishers, estates, or digital rights managers.
It is too early to tell whether music will become hostage to the walled garden trend in computing. Your favorite artist may very well end up available only on one streaming platform. Limiting exposure in such a way would be a tragedy for the listening audience. Streaming services pursuing two-tier pricing models will continue to charge premiums for unlimited access and special access to the most popular artists, while enabling advertising sponsorship for free subscribers. Keeping those top artists happy means streaming portals must expand both audience share and the presence of smaller artists on their platforms. The bigger the audience, the bigger the advertising subsidy that makes up for the added costs of hosting popular artists. A vast number of boutique performers on a streaming channel should attract a sufficiently sizable demographic base that makes "freemium" advertising permanently viable.
Full disclosure: No positions in any of the companies named above. The Alfidi Capital website and blogs use Google AdSense code to display advertisements.
The big channels include Apple Music, Google Play Music, Spotify, and Pandora Media. All except Spotify are part of publicly traded companies. Apple's cash hoard makes it the strongest competitor regardless of the other competitors' market penetration. Apple can win any price war and drive less well-funded companies out, just as it can in cloud computing. Apple Music and iTunes do not cannibalize each other thanks to matching through the iCloud Music Library. Apple Insider describes the library's back-end technical challenges; those problems will lead to user cancellations if Apple doesn't fix them soon.
The key difference between cloud computing and music is not the commodification of storage but the brand image and performance of the final product's aesthetic features. The UX design of the desktop interface and mobile app certainly matter. The musical artists' published product is the aesthetic users ultimately want to experience. Listener demand for some artists is price inelastic and those artists exercise outsize power over their distribution channels. Taylor Swift's recent demand that Apple pay its artists during a free trial period has encouraged independent artists to view Apple Music more favorably. Prince demanded that some streaming services pull his music. The streaming services that retain access to the most lucrative music libraries - The Beatles, Elvis Presley, Frank Sinatra, etc. - will have to pay premiums to those artists' publishers, estates, or digital rights managers.
It is too early to tell whether music will become hostage to the walled garden trend in computing. Your favorite artist may very well end up available only on one streaming platform. Limiting exposure in such a way would be a tragedy for the listening audience. Streaming services pursuing two-tier pricing models will continue to charge premiums for unlimited access and special access to the most popular artists, while enabling advertising sponsorship for free subscribers. Keeping those top artists happy means streaming portals must expand both audience share and the presence of smaller artists on their platforms. The bigger the audience, the bigger the advertising subsidy that makes up for the added costs of hosting popular artists. A vast number of boutique performers on a streaming channel should attract a sufficiently sizable demographic base that makes "freemium" advertising permanently viable.
Full disclosure: No positions in any of the companies named above. The Alfidi Capital website and blogs use Google AdSense code to display advertisements.
Monday, June 22, 2015
Financial Sarcasm Roundup for 06/22/15
The markets are on edge about Greece's fate, and my sarcasm is far edgier. Investors can pull all the money they like from bond funds, because my sarcasm will always be there to fill the hole.
Greece throws some new proposals at Europe. Only the dumbest journalists and analysts believe anything Athens says these days. The Greek leadership goes through the motions and Europe's leaders act like they've earned another few billion euros. Neither party believes in the process but they're both too terrified of what may happen in the markets if they don't keep up pretenses. Anything Greece does to fulfill its austerity commitment will force a snap election that brings real radicals into power, and then the world watches an instant default.
Caterpillar plans another round of layoffs. I'm glad I don't own that stock. Bad times in the mining sector will hurt more than heavy equipment. A whole bunch of truck stops and flophouses in Idaho, Montana, and Nevada will go under at some point. Guess how much more the heavy equipment sector will hurt once the next housing market downturn comes along.
Amazon has incentives for vanity press authors. Wow, now there's a reason to accelerate my pipe dream of self-publishing my financial tomes through Amazon's Kindle. Content marketers are increasingly measuring user engagement in smaller increments. Every instance counts. It pays to change the metric from broad downloads to something like a la carte pricing.
I have to blast out a sarcastic missive at one loser who claims to operate in the tech sector. I won't embarrass him by name. This dude wouldn't listen to me a few years ago when I told him what he needed to do to make a minimum viable product (MVP). He also demanded that I pretty much write his business plan for him and do a whole bunch of things he was too lazy to do himself. I recently noticed that this guy is back in startup mode, running through the same accelerator program he's done before. He has never succeeded in commercializing any of his claimed inventions. Dude, sometimes you just need to know when to quit, so quit already. I'm so glad he's not cramping my style anymore.
Greece throws some new proposals at Europe. Only the dumbest journalists and analysts believe anything Athens says these days. The Greek leadership goes through the motions and Europe's leaders act like they've earned another few billion euros. Neither party believes in the process but they're both too terrified of what may happen in the markets if they don't keep up pretenses. Anything Greece does to fulfill its austerity commitment will force a snap election that brings real radicals into power, and then the world watches an instant default.
Caterpillar plans another round of layoffs. I'm glad I don't own that stock. Bad times in the mining sector will hurt more than heavy equipment. A whole bunch of truck stops and flophouses in Idaho, Montana, and Nevada will go under at some point. Guess how much more the heavy equipment sector will hurt once the next housing market downturn comes along.
Amazon has incentives for vanity press authors. Wow, now there's a reason to accelerate my pipe dream of self-publishing my financial tomes through Amazon's Kindle. Content marketers are increasingly measuring user engagement in smaller increments. Every instance counts. It pays to change the metric from broad downloads to something like a la carte pricing.
I have to blast out a sarcastic missive at one loser who claims to operate in the tech sector. I won't embarrass him by name. This dude wouldn't listen to me a few years ago when I told him what he needed to do to make a minimum viable product (MVP). He also demanded that I pretty much write his business plan for him and do a whole bunch of things he was too lazy to do himself. I recently noticed that this guy is back in startup mode, running through the same accelerator program he's done before. He has never succeeded in commercializing any of his claimed inventions. Dude, sometimes you just need to know when to quit, so quit already. I'm so glad he's not cramping my style anymore.
Saturday, April 25, 2015
Friday, July 25, 2014
Sunday, July 13, 2014
How APIs Make Money
I have attended enough conferences on the social / mobile / cloud / Big Data economic nexus to recognize the new buzzwords entrepreneurs throw around. Venture investors listening to pitches from e-commerce entrepreneurs must be getting pretty jaded hearing about apps. The one key driver of the mobile app revolution is the application programming interface (API). Developers building apps for mobile platforms find they can more easily drive user adoption if a branded platform has an effective API. I now wonder how and why developers choose to enter the API sector.
An API has to make money somehow for its sponsor. A major e-commerce platform adopts an API that allows its developer ecosystem to build apps that enhance its user experience (UX) and reduce friction in transactions. Check out eBay's developers program for examples of APIs that broaden their platform's appeal. We publishing platforms deploy APIs so their channel distribution partners have additional means of sharing their content. NPR's API is one example, and that API's creator reveals on ProgrammableWeb how it creates revenue opportunities among very focused target audiences.
The US federal government's extensive API collection at Data.gov don't bring in extra tax revenue. They make it easier for businesses to manipulate the government's public data into formats their customers can use. I suspect there's an untapped market among government IT contractors for services that clean up dirty data. They can tap that market if they figure out the APIs that lead them there.
API monetization is probably a tough road to travel for stand-alone developers. Most large enterprises seem to open their APIs to developers for free. A free tech giveaway encourages adoption. The apps employing the API can make money through in-line ads or e-commerce fees. I think independent software developers who focus on creating APIs for enterprises can make money on a contractual basis. This does not mean the API itself is a stand-alone money maker akin to a retail portal. It means API development is a specialized niche. API developers who insist on placing the most desirable features behind a pay wall risk being shut out of an ecosystem if users fail to adopt. Freemium APIs that showcase a developer's quality may be the best way for IT contractors to build a portfolio of work.
Alfidi Capital does not have any APIs available for download. This firm maintains no client data, performance data, or any other kind of data that developers could ever use. The analysis you see here is data-driven but that data is all in the public domain, linked where appropriate in these blog articles. I don't have the computing skills to throw APIs at the public. If I did, I'd deploy an API that enables female tech developers to share photos of their hot bodies with each other and me. That day may never come, so techies will just have to launch APIs at each other and hope some major platform adopts one as its standard.
An API has to make money somehow for its sponsor. A major e-commerce platform adopts an API that allows its developer ecosystem to build apps that enhance its user experience (UX) and reduce friction in transactions. Check out eBay's developers program for examples of APIs that broaden their platform's appeal. We publishing platforms deploy APIs so their channel distribution partners have additional means of sharing their content. NPR's API is one example, and that API's creator reveals on ProgrammableWeb how it creates revenue opportunities among very focused target audiences.
The US federal government's extensive API collection at Data.gov don't bring in extra tax revenue. They make it easier for businesses to manipulate the government's public data into formats their customers can use. I suspect there's an untapped market among government IT contractors for services that clean up dirty data. They can tap that market if they figure out the APIs that lead them there.
API monetization is probably a tough road to travel for stand-alone developers. Most large enterprises seem to open their APIs to developers for free. A free tech giveaway encourages adoption. The apps employing the API can make money through in-line ads or e-commerce fees. I think independent software developers who focus on creating APIs for enterprises can make money on a contractual basis. This does not mean the API itself is a stand-alone money maker akin to a retail portal. It means API development is a specialized niche. API developers who insist on placing the most desirable features behind a pay wall risk being shut out of an ecosystem if users fail to adopt. Freemium APIs that showcase a developer's quality may be the best way for IT contractors to build a portfolio of work.
Alfidi Capital does not have any APIs available for download. This firm maintains no client data, performance data, or any other kind of data that developers could ever use. The analysis you see here is data-driven but that data is all in the public domain, linked where appropriate in these blog articles. I don't have the computing skills to throw APIs at the public. If I did, I'd deploy an API that enables female tech developers to share photos of their hot bodies with each other and me. That day may never come, so techies will just have to launch APIs at each other and hope some major platform adopts one as its standard.
Saturday, May 31, 2014
LiveDeal (LIVE) Versus Groupon (GRPN)
I got a glossy flyer in the mail prompting readers to check out LiveDeal (LIVE). That's usually a bad sign; glossy mailers invite my sarcasm. I can't see how this company differentiates itself from Groupon (GRPN). They both allow retail merchants to push first-time discounts to customers. They both have search functions that instantly geolocate the first-time user. Their UIs both clarify final-offer prices, but LiveDeal specifies an expiration time to prompt that retail sense of urgency. I guess that's their differentiator.
Let's glance at the fundamentals from Yahoo Finance and Reuters. Here's LIVE first.
P/E: N/A
Profit margin: -114.42%
EPS 5yr growth: N/A
ROE 5yr growth: -84.0%
Now here's GRPN.
P/E: N/A
Profit margin: -4.73%
EPS 5yr growth: N/A
ROE 5yr growth: N/A
Both these companies have pathetic earnings histories. They have lost money since 2011 and that's as far back as I need to go. I am amazed that Groupon's market cap is 63x larger than LiveDeal's given their poor ability to generate earnings. I guess sucker investors are paying a premium for Groupon's market share in the e-coupon vertical. Groupon has 100x more revenue than LiveDeal and still can't make a profit. That tells me that any business model solely focused on channeling retail discounts is not scalable. A first-mover advantage doesn't mean jack squat in a vertical that offers no economies of scale.
I noticed that Groupon had more pics of attractive women and LiveDeal had more pics of food when I checked them out today. Those are two of my favorite subjects. This cursory glance at two sorry companies at least gave me some good visuals.
E-commerce is as crowded now as it was in the late 1990s. Another shakeout is due and the survivors will have UIs optimized for mobile displays. I don't care what either LiveDeal or Groupon look like on a mobile device because I don't need apps prompting me to urgently buy things I don't need, discount or no discount. I also suspect the ultimate winner in the e-coupon vertical will have no more than a dozen employees and a marketing effort governed entirely by BRMS rule engines that automate the sorting and matching of offers.
Full disclosure: No position in either LIVE or GRPN at this time.
Let's glance at the fundamentals from Yahoo Finance and Reuters. Here's LIVE first.
P/E: N/A
Profit margin: -114.42%
EPS 5yr growth: N/A
ROE 5yr growth: -84.0%
Now here's GRPN.
P/E: N/A
Profit margin: -4.73%
EPS 5yr growth: N/A
ROE 5yr growth: N/A
Both these companies have pathetic earnings histories. They have lost money since 2011 and that's as far back as I need to go. I am amazed that Groupon's market cap is 63x larger than LiveDeal's given their poor ability to generate earnings. I guess sucker investors are paying a premium for Groupon's market share in the e-coupon vertical. Groupon has 100x more revenue than LiveDeal and still can't make a profit. That tells me that any business model solely focused on channeling retail discounts is not scalable. A first-mover advantage doesn't mean jack squat in a vertical that offers no economies of scale.
I noticed that Groupon had more pics of attractive women and LiveDeal had more pics of food when I checked them out today. Those are two of my favorite subjects. This cursory glance at two sorry companies at least gave me some good visuals.
E-commerce is as crowded now as it was in the late 1990s. Another shakeout is due and the survivors will have UIs optimized for mobile displays. I don't care what either LiveDeal or Groupon look like on a mobile device because I don't need apps prompting me to urgently buy things I don't need, discount or no discount. I also suspect the ultimate winner in the e-coupon vertical will have no more than a dozen employees and a marketing effort governed entirely by BRMS rule engines that automate the sorting and matching of offers.
Full disclosure: No position in either LIVE or GRPN at this time.
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