Apple Buys Tesla? Signs Point to "YES" (... & How Musk Saved My Life ...)

Apple leaks a story that it's developing an electric iCar.  Tesla's stock drops.

Coincidence?  I think not.

Rather, I think this news supports the notion that Apple is, in fact, serious about the automotive industry and ultimately will buy Tesla (something I first predicted -- and laid out the rationale -- nearly two years ago on June 6, 2013).  And, if that's true, why not inject fear and doubt about Tesla in the market to better position itself for an ultimate acquisition.  After all, why build (a massively long and winding road as Forbes points out) when you can buy -- especially when Apple and Tesla share (shared) similar DNA and charismatic leaders.  Elon Musk is the Steve Jobs of our day ... taken to the Nth degree.  The Street would love it if Apple anointed Musk as its CEO (I laid this out recently in a separate blog post).  And rolling iPads are a logical "next frontier" for Apple.

I originally made my prediction when I bought my Tesla Model S -- well before subsequent rumors swirled months later about Apple and Tesla top execs met to discuss something massively strategic.

I am long on Tesla (own stock in the company as well as drive its car) -- and surmise that Apple is too.  Here's why.

(1) It's a great car.  Plain and simple.  It is revolutionary.  I still feel this way after driving the Model S for nearly 2 years and now over 35,000 miles.  My weekly commute is from San Diego to LA and back.  My Tesla continues to bring a smile on my face as I "zip" (well, that's a bit overstated) through the car pool lane with my "all electric" stickers;

(2) I am not alone in feeling this way.  I know several people who own Teslas.  ALL feel this way.  Once a Tesla owner, always a Tesla owner.  That's the kind of customer loyalty you simply don't see elsewhere.  That bodes well for the company long-term.  (Sounds a bit like how Apple customers feel about its products, no?).

(3) My Model S saved my life last week.  Am not kidding.  Back to that car pool lane I discuss above -- which, in SoCal -- is double yellow-line laden, signifying to other lanes that merging into it at those points is illegal.  For obvious reasons.  Unexpected movements as all cars go at the normal "flow" (75-80 mph) can (and frequently do) lead to tragic results.  That was the scenario last week -- when out of the corner of my eye I see a car TWO lanes over dangerously swerve between two high speed vehicles -- and then swerve directly into my lane (obviously didn't see me at those speeds).  In an instant -- literally the shortest instant -- I faced  this: (i) car swerves directly toward me across the double yellow line; (ii) with a concrete dividing barrier with just inches of clearance to my left (i.e., I am sandwiched); (iii) at high speed.  Absolutely no time to think.  Couldn't.  Didn't.  Pure instinct.  I slammed on the breaks (full slam at those speeds!).  I turn the wheel slightly to the left (and then back straight again in an instant).  Miraculously avoiding the inevitable sideswipe by no more than inches.  Miraculously screeching completely straight to an immediate and massive drop of speed.  And, miraculously having no car immediately behind -- rear-ending/slamming me -- ______ me (you fill in the blank of possibilities here).  Any single one of those factors off by just a hair, and the results at those speeds and with that traffic would have been tragic.  No doubt in my mind about that.  And any single flaw in the car's performance could (I think would) have led to disastrous results.  A very fine thread indeed ...

Faced with this scenario -- and all those factors -- my Model S performed.  Flawlessly.  Now THAT's a product (if you can call it that)!

I am long on Tesla.

Think Apple is too.  And Tesla's only imaginable home is within Apple's core.

YouTube V. Facebook, Amazon, Apple - Clash of the Video Titans (& The Role of DNA)

It's a wrap for the Digital Entertainment World (DEW) Expo in LA -- a conference in its second year that celebrates precisely what is happening now in the media & entertainment business -- which is what most call "disruption."  But, I call it "transformation" -- a positive (but authentic, real) "take" on the massive new opportunities to reach, build, and effectively engage with, an audience in our increasingly multi-platform world ... well, at least for those who accept new realities and have the resolve to act.

Yesterday, I moderated an "all about MCNs" panel with nothing but A-list executive talent.  But, MCNs are just one part of the overall digital-first video ecosystem that is at the center of the fundamental media and entertainment transformation in which we find ourselves -- an ecosystem that was birthed by YouTube, which remains the "mother of all video platforms."

Now, for the first time, even mother YouTube faces what seemed to be almost unthinkable just one year ago -- i.e., real formidable challengers.  THESE are the conversations that took place at DEW.  On the stages ... and, even more importantly in the bars of the Hyatt Hotel where liquor flowed and candid discussions followed.

YouTube "challengers" are everywhere.  And many loudly preach (more like screech) their "alternative platform" gospel to every would-be believer.

Who are these contenders?

Well, you have your primarily short-form video-focused MCNs about which I write regularly.  Leaders include broad-based Maker Studios (now owned by Disney), Fullscreen (now owned by Otter Media, the JV of AT&T and The Chernin Group) and Collective Digital Studio; fashion/beauty young female-focused StyleHaul (now essentially owned by Euro-based media company RTL Group); young male gamer-focused Machinima; foodie-focused Tastemade; sports-focused Whistle Sports; Latino-focused Mitu; urban-focused All Def Digital (with the perfect acronym ADD for our short "bite-sized" vid world); and dance-focused DanceOn.  All of these now actively look to find their audiences on as many "off YouTube" platforms as possible.

Next you have young OTT/MCN upstarts like high-profile Vessel which punches above its weight and hopes to open subscription-based distribution exclusivity windows while others (Netflix) try to slam them shut.

You also have social sharing sites like Twitter and increasingly Snapchat.  Snapchat, a media company?  Really?  Just discover "Discover."  And talk to the CEOs from the leading MCNs.  Snapchat matters. A lot.

You now even have your major brands that advertise on all of these platforms.  Lifestyle brands Red Bull and GoPro aim to be your first-choice destination for a certain, specific action/adventure segment of short-form video content that historically has found its home on YouTube.

Then, you have your established major OTTs like Netflix and Hulu who -- at least up to this point -- focus instead almost exclusively on longer-form motion picture and television content.  That will change over time.  It is inevitable.  Each must play more effectively in the mobile space -- and that means short-form video content.  Just trust me on this one.

You also have your major carriers like AT&T (via its Otter Media partnership with The Chernin Group) and Verizon (via the OnCue OTT platform that it acquired from Intel) getting into the OTT game with their own major plays.

And, of course, you have your more "traditional" cable/satellite companies entering the fray (case in point, Dish Networks' surprisingly heavily-discussed new Sling TV service which is getting real "buzz" here at DEW for what it represents).

But, YouTube's biggest challenger right now in the minds of those at DEW clearly is Facebook.  The votes are unanimous there.  Less obvious -- but real, very real -- are the other two 800 pound gorillas known as Amazon and Apple.

When considering the media ambitions of all 4 behemoths -- YouTube, Facebook, Amazon, Apple -- consider this.  While each of their ultimate video ambitions are roughly the same (essentially to "own it all" -- both short form and long form video), their individual core DNA is not.  And, that unique individualized DNA colors each company's particular video offering and opportunity, as well as the video opportunity for both brands and those who buy from them (in other words, us).

To understand what I mean in this DNA discussion of genetics, first, let's recap.

YouTube is a video destination first and foremost.  It was built for our viewing pleasure.  Plain and simple.  Yes, we can (and do) share videos.  But, we primarily come here to find something of interest and watch.  Passively.  And, YouTube makes money from ads served against that watching.

Facebook -- the video challenger on everyone's lips at DEW -- has fundamentally different DNA.  Facebook is all about sharing.  We go to Facebook to share pieces of our lives and pick up the breadcrumbs of others.  Yes, we can (and do) watch videos.  But, we primarily come here (at least up to this point) to share.  Actively.  And, so while Facebook, like YouTube, makes money primarily from serving ads, the path to (and mindset of) engagement with those ads is very different.  And, the numbers related to engagement bear this out.  Check out this excellent analysis from Advertising Age to take a look behind the curtain.

How about Amazon?  NOT a YouTube competitor, you say?  Don't be fooled.  Amazon wants to own it all.  Yes, Amazon Prime is front and center with its premium long-form movies and television.  But, take a closer look.  That's right, there it is -- something called "Amazon Shorts" that looks a lot like YouTube.  So, now we increasingly watch videos on Amazon.  But, let's face it, we still primarily come to shop, because Amazon's core DNA is commerce.  And, Amazon's differentiated genetics put it in a unique position to effectively monetize videos through commerce.  Videos serve as a marketing spend -- digital billboards that drive us into its virtual store.  Intriguing.  Very.

And then there's Apple .... don't forget this $700 billion juggernaut, of course, because although it has laid largely dormant on the video side (causing all of us to occasionally scratch our heads), let's not forget that little thing called iTunes.  And, reports just recently surfaced, once again, that Apple hopes to launch its own OTT streaming service to become our video platform of choice.  Speculation abounds that Apple's OTT play may be akin to DISH's stripped-down programming bundle approach known as Sling TV.

But, here's my guess.  Apple will not launch its OTT service unless and until its OTT package includes ESPN -- THE critical pay TV ingredient.  And, let's not forget that small little detail that Apple has a long and uniquely cozy relationship with ESPN's owner (Disney) (Jobs/Pixar, anyone?).  If Apple were able to score ESPN (just like only iTunes scored The Beatles), that move alone would be a game-changer.

Why would Apple play in the "alternative YouTube" world?  Sure, incremental revenues are nice.  But, that's not it.  Instead, Apple's DNA reflexively drives its actions -- and Apple's core DNA is not like any of the others.  It is hardware pure and simple (Samsung shares that same DNA via Milk Video).  Apple makes its money by selling "cool" metal -- iPhones, iPads, iWatches and the inevitable iTV (and perhaps even ultimately the iTesla?).  We ride the video Trojan Horse into our neighborhood Apple Stores (in the same way Apple bought Beats Music to build it's music streaming Trojan Horse).

So many video players, and oh so little time.

YouTube.  What to do, what to do?  Well, for now, YouTube remains the "must be there" platform for creators.  We also are still very, very early in the overall digital video game.  So, while YouTube's ultimate market share will be chipped away, that reality will be countered by significantly (massively) more volume.  And, just like long-form video platforms like Amazon and Netflix increasingly play on YouTube's short-form turf, YouTube will play on their home courts and seek to steal share from the in the long-form video space.

After all, many of these players' ultimate vision is to own it all -- be your single destination for all your video needs -- short-form, long-form, and everything in between.

Vendedy Wins $75K Digital Media Startup Pitch-Fest at DEW Expo 2015

Today and yesterday, Manatt Digital Media (MDM) sponsored, and participated in, the second Digital Entertainment World (DEW) Expo in LA (I moderated an A-list all-CEO MCN panel).  As part of our sponsorship, MDM contributed $50K of the total $75K prize package in the form of: (1) a $25K investment in the company (in the form of a convertible note); and (2) $25K in business consulting and legal services.

And, tonight, MDM announced the winner of this year's startup Pitch-fest ... "Vendedy" (Founder & CEO Christine Souffrant is pictured here holding the check).  Souffrant describes Vendedy as being "Etsy meets eBay for street vendors" globally -- and Vendedy's A-list partners including IBM and the Clinton Global Initiative (from which it has received funding).  

Vendedy is an incredible story -- and compelling vision.  Just watch this video.

Vendedy was pronounced "winner" by a panel of judges -- and it encapsulates the power of "digital": (1) global/borderless; (2) the impact of compelling visuals/images; (3) the power of micro-transactions in our new digital "share economy" world where even those with little can connect due to deep mobile phone penetration; and (4) the concept of social impact, which is increasingly important to millennials and all of us alike (which the studies show).

MCN CEO Summit at DEW

Earlier today I moderated an MCN-focused panel at the 2nd Digital Entertainment World conference in LA.  Pretty remarkable "Who's Who" of panelists in the MCN world.  From left to right (counter-clockwise -- yours truly (moderator), Amanda Taylor (CEO DanceOn), Reza Izad (CEO Collective Digital Studio), Marvin Scott Jarrett (CEO Popular), Sanjay Sharma (President of All Def Digital), Scott Maddux (VP Gracenote), Roy Burstin (CEO Mitu), and Allen DeBevoise (Chairman Machinima).  Full house.  Impressive group.  Great insights.  Here's Deadline's recap, including the unanimous consensus that a few years from now Disney's near $1 billion acquisition of Maker Studos will be viewed as a bargain (just like Google's $1.6 billion buy of YouTube several years back). 

As I ended the panel, I predicted that several of these key players will be acquired in 2015.  Check back with me in a few months.  Taking bets now ....  DEW 2015.  It's a wrap.

All About MCNs - My Panel Tomorrow at the DEW Conference

Digital Entertainment World (DEW) starts today in LA -- and tomorrow I moderate a panel from 12:40-1:20 pm titled "MCNs: Monetizing the YouTube Economy" that features a "who's who" list of MCN CEOs as panelists.  Joining me are:

Roy Burstin -- Co-Founder & CEO of MiTu -- the leading Latino creator-focused MCN that just recently announced a $15 million round of financing;

Amanda Taylor -- Founder & CEO of DanceOn -- the leading multi-platform dance-focused company that counts Nigel Lythgoe (founder of American Idol & Dancing with the Stars) and Madonna, as well as major media company AMC Entertainment;

Allen DeBevoise -- Co-Founder & Chairman of Machinima -- the leading young male focused MCN; Allen serves on the boards of several A-list MCNs, including StyleHaul, DanceOn, MiTu, and IndMusic;

Sanjay Sharma -- President & COO of All Def Digital -- which is urban-focused, backed by Russell Simmons and closed a $5 million Series A round last year;

Reza Izad -- Co-Founder & CEO of Collective Digital Studio -- a major MCN that received a major strategic investment from European mega-media company ProSieben last year and counts billions of views per month.

Marvin Scott Jarrett -- Co-Founder & CEO of Popular -- a new young female-focused MCN that launches March 15; he previously created iconic mega-creative and visual media brands Nylon and Raygun;

Of course, I will ask the panel how both they and video creators make money.  But, I will also ask each of them started, why they chose their particular focus, how they amassed their initial critical mass of content, and what was their particular tipping point.  I will also ask them to justify the mega-price-tags fetched by other leading MCNs last year (e.g., Disney buying Maker Studios for a deal that could value the company up to nearly $1 billion) and how they see MCNs evolving in 2015 and beyond.

Should be a good one.  Tomorrow, Wednesday, 12:40 - 1:20 pm.  See you there.

The Search for Something Tangible in Our Increasingly Virtual World (Of Vinyl, Typewriters & Festivals)

Last night I attended a Grammy event -- a gathering of music industry execs at a swank Beverly Hills hotel.  But thankfully this was no typical event.  It actually had some real meaning.  Real feeling.  Real passion about the power of music.  Legendary music exec -- founder of MTV and VH-1 -- John Sykes set the tone with is opening words.  That tone continued with Janine Shepherd, an inspirational woman whose TED Talk you must see (link here).

After speaking for a few moments, Janine guided me poolside to a young woman sitting behind a typewriter who asked me to sit down.  She was an author.  A kind-of poet.  And, her tool of the trade was a Smith-Corona.  A non-electric Smith-Corona!  Do you even remember those and that time not so long ago?  She asked for a phrase (I gave her two options, "Life Is Good" and "Music Saves Lives" -- after all it was a Grammy event and I absolutely believe in both adages).  She chose the latter.  And she typed a lengthy "poem" jumping off from that phrase -- a note she gently folded into an envelope, which she handed over to me after completing it.  (I waited until later that night to read it.)

As she typed, I asked her what spurred her, as an artist, to type with a manual Smith-Corona in our ever-increasing digital world -- a world that I love, for sure, and serves as the centerpiece of my digital media business.  She answered that it was precisely that -- the search for the physical ... the tangible ... in our pervasive virtual digital world.  And she told me that she was not alone.  That typewriters are making a comeback.  And, here's the thing.  This was no simple nostalgia.  This was not me talking.  She was young.  No more than 25.  Could have easily been my daughter.

Which brings me to my daughter, Hunter.  At the age of 15, already a passionate music fan.  Not pop music.  Deep meaningful musical art.  And, her medium of choice is vinyl.  Physical vinyl (in fact her bedroom is line with albums purchased at her mecca, Amoeba Music in LA, and a smaller distant cousin in San Diego).  We all know that vinyl too is coming back in a big way.  And it is the millennials leading the way.

What's going on here?

It's simply this.  It is the simple thirst for something tangible.  Something that can be touched, really touched.  Something that has some kind of feeling of permanence -- a permanence that gives it increased meaning.  Think about it.  Notes.  As young kid, we passed them to each other when we liked each other -- and we kept them.  My daughter texts her "notes" -- abbreviated reflexive reactions -- via virtual media on her phone (and receives the same way).  And, SHE -- not I -- bemoans how this kind of virtual interaction has changed boy/girl interaction.  There is less place to hide when writing lengthy thoughts in a note and then handing them over to the one you like.  It is more vulnerable.  Texts are less personal.  Far less.

We see this increasing thirst for the physical in our interactions as well.  Music festivals have sprouted everywhere at an accelerating pace.  Millennials save up all year and spend millions (billions) to make an annual pilgrimages to Coachella, Bonnaroo, Life Is Good, and hundreds of other festivals all over the planet.  Why?  It goes beyond the music (although the music itself is tribal).  It goes to our core desire ... need ... as human beings to have a sense of physical community in our increasingly disconnected (connected?) virtual digital online social media world where we have hundreds and sometimes thousands of friends ... but, how many are real?  Millennials physically connect (literally) at these festivals -- rubbing shoulders (and frequently more) -- and at least for that weekend are, for the most part, heads up and disconnected virtually.  The most physical of these "connections" take place in EDM tents that blast electronic music.  Think about that paradox!

This thirst for the tangible.  It is a movement.  It is a search for meaning (that's why social impact is also core to millennials).  It is manifested by these things -- and a growing number of more.  It is a search and deep hunger for something physical and a bit more permanent.

And it is real, very real ....

Top 10 Digital Media Predictions for 2015 -- 30 Day Scorecard (or, "1 Year in 1 Month!")

One month ago, TechCrunch posted several of my predictions for the digital media world in 2015 in an article titled The Future of Digital Media in 2015.  I then expanded upon that article in this blog to give my very own Top 10 Digital Media Predictions for 2015.

This post is for those of you who read my predictions, keep score, and are in the game of keeping prognosticators like me, honest.  And, here's the deal.  Although we are officially only 1 month into this brave new year of digital media, I am pleased to report that many of my predictions are already coming true ... and in a very big way.

Below are my actual Top 10 Predictions -- juxtaposed against where we stand on each as we enter only 2015's second month.

I.  PREDICTION (1)  --  this one was really a two-parter:

PREDICTION (1) Part 1 -- The mobile-driven premium short-form video YouTube economy “grows up,” and traditional media companies finally take notice on a mass scale.  Shell-shocked studio executives internalize that digital-first platforms are where they must be to reach smartphone-obsessed millennials.  MCN acquisitions will quicken as more studios jump into the M&A game rather than try to figure out this new content platform themselves.  Some leading MCNs ripe for acquisition include ... sports-focused Whistle Sports (in which Manatt Venture Fund is invested). 

THE REALITY FOR PART 1, 30 DAYS LATER -- Whistle Sports in early January announced a major $28 million investment from "traditional" media companies BSKYB and Liberty Global.  Not M&A, but certainly strategic.  Very.

PREDICTION (1) Part 2 -- International also becomes a major new battleground for these borderless video opportunities.

THE REALITY FOR PART 2, 30 DAYS LATER -- Whistle Sports again -- both BSKYB and Liberty Global are major international media companies based across the Pond.  And, oh yes, there is also that little deal just announced this past week by mega-media companies Warner Bros., Sony Pictures Television and SingTel to essentially take over the OTT world in Asia.  That qualifies in my book.  

II.  PREDICTION (2) -- Major consumer brands follow suit and act in earnest.  Massive marketing dollars shift from traditional media to more measurable digital platforms in the form of branded content (not just ads), cannibalizing the former for the first time.  Major investments are placed on ad-tech companies to maximize and measure those spends.  We see a number of significant ad-tech exits like Yahoo!’s recent acquisition of BrightRoll for $640 million.  Several brands go further and invest big to become digital-first lifestyle media companies themselves a la Red Bull, developing and aggregating content.  GoPro, Pepsi and Marriott have proudly announced such ambitions.

THE REALITY, 30 DAYS LATER -- No major developments here ... yet!  But, keep reading ....

III.  PREDICTION (3)  -- Seeing all this activity, Silicon Valley investors increasingly make pilgrimages down South to the epicenter of media content – LA.  

THE REALITY, 30 DAYS LATER -- I am based here in LA.  I see this happening before my eyes.  In fact, I saw it immediately out of the gates of 2015 at CES, where NorCal VCs were seen canoodling with LA based new digital-first video companies up and down the Strip. 

IV.  PREDICTION (4) -- YouTube is increasingly under siege by new competing video platforms like Facebook and former Hulu chief Jason Kilar’s Vessel.  These “off YouTube” platforms lure content creators away with promises of more compelling care, feeding and economics (including the tantalizing prospect of real subscription revenues).

THE REALITY, 30 DAYS LATER -- Vessel officially set sail against the YouTube tide in private beta just in the past week -- and Facebook video is at the center of digital media exec conversations everywhere (I know, because I have been in many of such conversations).  Oh yes, and don't forget Snapchat.  Snapchat is now officially a media company, having launched an alternative video platform under the name Discover just this past week.  I'd say this prediction already has been satisfied -- and we're only going into our second month!

V.  PREDICTION (5) -- Traditional pay TV packages likewise increasingly are under fire in the “Great Unbundling” that began in 2014.  What was unthinkable just one year ago (even 6 months ago!) became reality as HBO, CBS, Starz and others announced stand-alone over-the-top (OTT) services.  A parade of others follow suit in 2015.

THE REALITY, 30 DAYS LATER -- And so it goes .... Even the kids aren't safe!  Nickelodeon just yesterday announced its own stand-alone OTT service, joining this ever-growing list that we will need to re-visit continuously throughout the year.

VI.  PREDICTION (6) -- Traditional media companies facing these tectonic shifts in long-established business models – and major tech companies (Apple, Google, Amazon, Samsung) for which content is increasingly critical to fuel their own – take M&A seriously and one pulls the trigger as media and tech converges … literally.

THE REALITY, 30 DAYS LATER -- We're only 30 days into the year!  Just you wait!

VII.  PREDICTION (7) -- On the music side, massive moves are made away from business model-challenged stand-alone services (Spotify and Pandora both still operate at a loss).  Like Apple buying Beats (which was never about the economics of Beats Music), numerous potential behemoth buyers exist.

THE REALITY, 30 DAYS LATER -- Yet another massive move just reported yesterday (a very busy day indeed in the world of digital media).  Looks like Spotify is looking to find itself some extremely wealthy private buyers (not the anticipated IPO).  Just reported that Spotify has hired our friends at Goldman Sachs to raise a $500 million round.  Now watch as reactive sparks fly amongst the remaining stand-alone services that have any kind of mass.  Spotify sings.  Now the other guys dance.

VIII.  PREDICTION (8) -- Gamers see real action too, as app developers increasingly focus on story-telling and compelling characters to build multi-platform media companies a la Rovio with Angry Birds.  Rather than take traditional media properties and “gamify” them, these companies flip the model with an Apps-first approach.  Finnish-based Silvermile and Seriously are two companies with Rovio roots to take … well … seriously.  VR also enters the ring with gamers at mass in 2015.

THE REALITY, 30 DAYS LATER -- Yes, this is happening ... at an ever-accelerating clip.  But, it is happening behind the scenes for now.  No single story earth-shattering news just yet.  But, like I said, we're only 30 days in!

IX.  PREDICTION (9)  -- Which leads to wearables, where we see an Oculus under every hard core gamer’s tree next year, alongside their parents’ new digital health/fitness watch.

THE REALITY, 30 DAYS LATER -- 2015 already marked a major milestone for Oculus and VR in general.  Not directly on the gaming side.  Rather on the cinema side, as Oculus unveiled the world's first major cinematic VR "experience" at the Sundance Film Festival.  In my book, this qualifies at least as being on the right track.  And, remember, we still have about 330 more shopping days until next XMAS -- so plenty of time to slip one under this coming year's tree.

X.  PREDICTION (10)  -- All of this leads to the big one – a concept I floated 1.5 years ago.  Apple buys Tesla and installs Elon Musk as CEO.  Now THAT would be a headline for 2015 … and for the ages!

THE REALITY, 30 DAYS LATER -- We're not quite there yet, but Musk just announced a new software update -- read again, SOFTWARE UPDATE -- that actually makes Teslas go faster.  That's still pretty damn cool!

No matter what you think about my Top 10 predictions -- or how the digital media world is tracking to them in the early days of 2015 -- it cannot be denied that there is a frenzy of activity.  And that we are living in exciting and transformative times for the world of media and entertainment ... which is a world in which all of us live.