Hello! Just a month into 2024, approximately 115 tech companies have already laid off a total of more than 30,000 employees. Today we're exploring:
The sound of silence
The world’s largest record label, Universal Music Group (UMG), has started pulling its music from TikTok, after the 2 heavyweights failed to sign a new deal following extensive contract negotiations.
There’s no love lost between the pair, with UMG citing TikTok’s lack of protections against AI in a scathing open letter, as well as deriding the app’s compensation rates for being “a fraction” of what other major social platforms pay. In response, TikTok slammed UMG’s “false narrative” and “self-serving actions”.
Universally labeled
TikTok users will no longer be able to soundtrack their videos with songs from UMG’s mind-bogglingly extensive catalog, with the work of Taylor Swift, Rihanna, Adele, The Beatles, and Drake, among others, being removed from the app.
With a presence in 74 countries, UMG makes up nearly one-third of the industry, spending big to sign artists to one of its 100+ labels. All told, the company accounts for nearly double the market share of competitor Warner Music Group, and greater than the combined share of all independent record labels.
The dispute brings to light the complicated economics of an industry that has been in an almost permanent state of flux, with 5 major format changes (vinyl, cassette, CD, download, and streaming) in roughly as many decades. Although TikTok’s power comes from its ability to popularize music from emerging artists, with songs trending on the app often breaking into the charts, it’s not been exactly clear how the power dynamic between social media behemoths like TikTok and artists, labels, and publishers has changed in recent years — but with UMG’s departure, we might be about to find out.
UsTube
While there’s a lot of talk about generational divisions in everything we do, from how we work to whether we switch subtitles on when watching TV, it turns out that there’s at least one great leveler across the age groups in America: YouTube.
According to a newly released Pew Research Center survey, which ran from May through September last year, the video-sharing platform is the most-widely used social media for every generation surveyed. Indeed, a staggering 93% of US adults aged 18-29 said that they use YouTube’s site or app, as well as 92% of 30-44 year-olds and a still substantial 60% of over 65s admitting the same. More generally, there are few signs of anyone becoming less addicted to their phones.
Indeed, most platforms saw significant rises in reported use amongst adults of all ages since the last time Pew Research ran a similar survey in 2021. TikTok, perhaps unsurprisingly, has jumped furthest in that time frame, with 33% of US adults now reporting using the platform, compared to 21% just 3 years ago. Interestingly, Facebook and X (or Twitter, as it was then) were the only platforms to show declines across the surveys.
The Pew update comes as the CEOs of 5 large social media companies, including X’s Linda Yaccarino, Meta’s Mark Zuckerberg, and Snap’s Evan Spiegel, testified in Congress earlier this week, pressed with questions on how they’re tackling child safety issues on their platforms.
Uphill struggle
If you’ve ever wanted to buy a Peloton bike, but never wanted to part ways with the ~$2,000 required to get one, you might be able to justify the expense to yourself knowing that the company likely won’t be making any money from your equipment purchase.
Indeed, yesterday Peloton reported another strained set of earnings, slashing its outlook for the coming year and sending its shares down 25%: an all-time low for the company once hailed as the pandemic’s fitness savior. The high-end bike and treadmill maker reported that, in its latest quarter, it made just a sliver of gross profit ($13.8m) on actual product sales — that’s profit only derived from the sale of the item itself. Once sales and marketing expenses, general & administrative expenses, research and development costs, or any other “overheads” were accounted for, Peloton remained deeply in the red.
Shifting gears
Current CEO Barry McCarthy took the reins in February 2022, when gyms were fully reopened and product issues were shaking Peloton. Cutting prices helped stem the losses, but it left the subscription business as Peloton’s financial backbone, relying on the famously energetic live online classes to pedal the company forward. However, despite deals with Lululemon and TikTok — as well as new distribution channels through third-party retailers like Dick’s Sporting Goods and Amazon — Peloton just hasn’t been able to grow subscriptions meaningfully in recent months.
On paper, the business model isn’t inherently flawed: Costco, for example, has a wildly successful subscription-based service, selling a wide array of products for close to cost but profiting enormously on the membership needed to shop there.
• The Messenger, a media startup, shut down this week just one year after its launch, as its $3 million revenue in 2023 fell far short of its long-term target of $100 million.
• Whether you're a royal memorabilia enthusiast or just a fan of "The Crown", you can now own the late Queen Elizabeth II’s custom Range Rover for $285,000.
• Facebook is going to be 20 years old on Sunday.
• In celebration of today being Groundhog Day, Frito-Lay is airing 8 different versions of the same ad throughout the day on ABC, a marketing stunt the company came up with 2 weeks ago.
• Charting world leaders' approval ratings in a year when over 4 billion people will head to the polls.
• Visualizing every time a color is mentioned on a Taylor Swift album (no surprise, Red dominates).
