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tv   Bloomberg West  Bloomberg  May 12, 2014 1:00pm-2:01pm EDT

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>> live from pier 3 in san francisco, welcome to the early edition of "bloomberg west," where we cover the global technology and media companies that are reshaping our world. i'm emily chang. from ariticism technology company, the fcc is ready to tweak its plan calling for internet's fast lanes. and sir richard branson made his fortune in user before branching out to airlines, space, and more. we get his take on apple's beats
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eel, as well as when a virgin galactic rocket will be carrying people to space. first a check of your top tech headlines. the billionaire is in preliminary talks that would give ritter sky broadcasting tvtrol over fox's satellite units. this may be bolstering his attempts to take over bskyb, which have thus for been stalled. and jim wilkinson appointed the head of international corporate affairs. he served under treasury secretary henry paulson and was a former adviser to condoleezza rice. he would be guiding all about -- itsaba's pr efforts before ipo. and the square has launched a new mobile app, square order which allows people to order and pick up food. right now it is only available for a few restaurants in new
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francisco.n it is also pulling its square wallet app, but will continue to support it for those who have already downloaded it. fcc chairman tom wheeler is revising his proposal for new rock band roles that would -- rod band roles that would create broadb and roles that would create internet fast lanes. they would make sure that it slow not create internet lanes for those who do not pay for access. the fcc will vote on whether to officially start the rulemaking process. editor-at-large cory johnson is with me in the studio and peter new york. bring us up to speed. what is the latest? >> a lot of pushback for -- >> a lot of pushback for tom
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wheeler, as well as from democrats. what he is doing now, he is tricking his proposal. we have not seen the final language. my understanding is it is being shared with his fellow commissioners to read as you said, emily, the idea is it would still allow for fast lanes, four agreements that are commercially reasonable, but basically the bottom line is companies that enter into those have them will offered to competitors under similar terms. that is one of the concessions. but is that enough to get support from the tech sector and the other commissioners to get the three votes he needs on thursday to move this proposal forward. >> hater, is this a question of semantics and a rebranding change -- peter, is this a question of semantics and a rebranding change? if there are fast lanes, there
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are certainly slow lanes. >> if you have anyone with favored speeds, someone else will not have it. traffic moves at a lot of different speeds across the internet in different ways. that simplistic to think all things can't be equal, but equal access is the issue. they will allow someone to pay for the content faster, someone else will be in a thedvantageous position and fcc would have to structure their roles in a way that would make that more open. they have not been able. >> what about the idea of treating the internet more like it,ility? everybody needs don't they? what about regulating it more closely rather than treating it like a private industry? >> that is one of the ideas that will be wrought forward by tom wheeler on thursday. there will be the separate question, changing the classification, making internet service a public utility? the isp's would fight that
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aggressively, but that would satisfy a lot of consumer groups. he wants to have more information on it and have it out there as a threat, if you will. as my rule does not satisfy you, maybe this is the next possibility. >> what about the whole trial balloon floating by -- it is fairly unusual for the fcc, no? >> it is unusual and be as -- the discord within the fcc gives you an impression that maybe he did not hit the -- have his ducks in a row. he has to give a deal that will not only satisfy his critics, but the courts as well. that is what he is shooting for. a very difficult balancing act. >> all right, peter cook, our chief washington correspondent. thanks very much. i want to turn to apple. with reports of apple turning in 3.2 billion dollar
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acquisition of beats electronics. dr. dre was seen in internet -- an internet video boasting that he was hip-hop's first internet billionaire. second editor re: leavy is with us in the -- our tech with usri levy is here in the studio. the beads founder was very close beats founder was actually very close with steve jobs? >> he was one of the people who strategized with steve jobs as could be part of the music industry. >> they would not have launched itunes if these he bled not come up to be with steve jobs -- you may have been listening in the same audience, too.
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two less fanfare. is there the sense that hollywood in the music industry is still mad at apple about the deconstruction that came out of itunes? >> there is a sense that we have evolved since then because apple's dominance in the music industry has become so commonplace. remember, this came after a time in which music downloads were not even business for it. it was recently stealing. apple created a market for something that previously was viewed as theft. industry, even though they may not like the pricing structure, they like that apple was willing to work with the industry to create a model. >> so, how much does apple have music insiders now -- dr. dre jimmy iv, being part of the product? >> they have not had product getting the licenses. where they have had difficulty is their streaming product where .andora dominates or spotify
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they have not been able to get the users in a competitive market. eats to geting b more muscle behind it with branding and marketing dollars? vine is staying on, will dr. dre be part of it? on.ord is iovine will stay dr. dre -- he is the first hip-hop billionaire, so he can do whatever he wants. the world is his oyster now. -- very much against this deal, finding out that beats is its own iconic brand, it is a higher business, and you may not expect apple to have this year? >> i have been hearing for years the question, why does apple not get into the hardware business? never did i hear the name beats
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,. people like that they are getting into the business. this just may not be the way there were hoping. >> i wanted to ask about samsung. the chairman had a massive heart attack over the weekend. how much is he involved in the day-to-day? what is the latest on his condition? >> obviously it's a very serious situation. there is a lot of analysis of the future of samsung given that the family has so much control. his son has stepped in to take control, but there is a huge ownership the us. there is been a lot of discussion about what the succession planning is. also with regard to these things, they probably know a lot about the sales of beats because they saw so much not just on the website, but the apple store as well, being the principal retailer for these headphones. >> yeah, but it also raises the question, what is this happens to competitive headphone players in the market? that is not a question being
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asked a lot, because it is a smaller market than streaming. >> all right, thank you for those updates. still ahead -- sir richard branson talks to us exclusively about the future of space travel and what he thinks of apple's deal to buy beats. and you can find us streaming on your phone, your tablet, fire tv, and apple tv. ♪
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>> i'm emily chang and this is "bloomberg west." editor-at-large cory johnson set down with sir richard branson. branson of course the chairman and founder of the virgin group. he talked about a lot of things. he has a long history in the music business. he touched on apple and beats, as well as virgin galactic. >> he is an interesting guy. he is involved in everything from transatlantic flight to the music industry. i asked him what exactly does he look for in an interesting new business to start. listen to what he had to say. >> we are having a lot of fun.
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it is hard work. this year we shall finally succeed. i suspect virgin galactic will end up being the first, you know, the umbrella for the rest of the virgin group. haloe have a fantastic effect, i think, for the rest of virgin. wanted to ask you about your plans, but you anticipated that question. what are the next hurdles to get up and over? >> we think all of the hurdles have been fixed now. we are really hopeful that we are almost there. we have it all pieced together. we will not go until we are 100% sure it is obviously safe. and i would be very, very disappointed if it does not happen this year. >> i was actually they are wednesday ship one -- when launched ine was
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the desert. is that something you have carried through all these years? >> i am still fascinated by space. a tiny dots. and space is infinite. is a place to explore. it has so many possibilities. and not just the possibilities of putting people into space, but what you can do with satellites from space, how that can transform things back here on earth. at what we can do with intercontinental travel. the sky is not the limit. not just about space tourism. you see that as a beginning? of peoplethink 80% would love to go to space if they could afford it. the market is enormous for space tourists who want to go and want to experience space travel. and that will help us fund
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things like point to point travel. that will help us fund things like our satellite program. it will help us fund hotels in space. it will help us fund deep space exploration one day. mining asteroids. there is a lot to do. g thingt up in the zero at cape canaveral two months ago. it was really cool. have you done that? >> i have done it. you're in the bottom of the plane and you feel yourself lifting up to the ceiling. there is nothing like it. i think the exciting thing about virgin galactic, instead of it being a 10-second wonder, you're going to be floating around for 10 minutes rather than seconds. and there are magnificent windows. virgin america
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here in san francisco, and i wonder what your take is -- some of these entrepreneurs have been at google and apple, all focus really on the movement of electrons at some level, to change. what is your take on silicon valley? theh, it is maybe one of most exciting spaces in entrepreneurial space in the world. with extraordinary people, extraordinary ideas. add to the resources to go out and put those ideas into practice. and with the resources to go out and put those ideas into practice. i think a lot of the problems in the world can be solved from silicon valley. whether it is feeding the poor of the world, pulling people out of poverty. the world will be a lot better place in 10 years time than it is today. >> the music industry, you're deeply involved with that --
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nonetheless, you have survived. apple is about to make a big investment in beats in the industry. when you look at that business now, what you see the sort of difficulties are? >> i think we were very fortunate to sell out of a record company when we did. we were right at the peak of the industry. since then, largely due to apple, the industry has imploded . live music is still there as well. merchandising of music as well. artists to make money out of the sales of their music is pretty abysmal. apple's new move -- it may be a small way of giving back what they have taken. it would be great if they could stick to it and artists could make a bit of money out of his. >> with virgin america -- do you
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see an ipo in the future? it seems like it has been on the edge of that for a while. allowedot sure what i'm to say, which most likely means something is up. [laughter] yeah, there are -- yeah, the big movements are an ipo. we will see what happens there. we will continue -- we are hoping. i think we might be able to get a decision today and we are obviously hoping, hoping ultimately the right decision normally gets made. hopefully the right decision gets made and that will be a great day for virgin america. so, the right decision. he mentioned that he expected that on friday. he said "something is up." be watching for
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something. thanks very much, cory johnson. it is bob barker's worst nightmare. the price is always right. the technology used by some of the biggest names -- that is next on "bloomberg west." ♪
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and in my hands i have the actual retail price. the actual retail price is $250! you are the winner. >> i think it's a little different these days than the era of bob barker and "the price is right." now it is all about algorithms. cory johnson to take a look at how technology is changing the online shopping experience. part of our series called wiring the world, where we are looking all week et al. technology is
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changing -- looking all week at how technology is changing the landscape. >> these are algorithms that are used across the web in increasing levels of detail. part oftally understanding of algorithms work, how people gather data, how people crunch so they can have these algorithms. you start with data mining and then the pattern recognition. figuring out how people buy and estimating demand. fundamentally you start with the data set. you find out if it is raining, people will buy more umbrellas. the question is, how can you arrange that, and that is where the heart of the science lies. >> what companies are using algorithms? is it increasingly popular? >> it is across the board. if you think of ways that the webworks, the set rices that are not easy -- if you think of the way that the webworks, they set
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prices that are not easy. if you think of auctions like ebay, they use pricing algorithms in their own way. the computers figure this stuff out for companies like amazon -- they take it to a whole another level. >> are they just generally cheap ? the industry has been under pressure with extra competition and the move online -- our price is just better? >> there is more price discovery online for consumers. but you have so much more happening online at the ability to dynamically set prices online every quarter with more and more retail happening online, it allows for more pricing algorithms to go to work. so, we're seeing more and more of this. >> does it work off-line? do you see it in the physical store question marks about it is much harder. the best example is google taking those algorithms in the radio business. it was done in typical google
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way. they had a 24-year-old astrophysicist in charge of the project. it was kind of a disaster. they got limited feedback from the industry. the ability to dynamically change prices just did not work because they did not have the feedback to know which ads were working. >> all right, cory johnson, our editor-at-large. we will be right back talking about pinterest. ♪ >> it is 26 minutes after the hour and that means bloomberg tv is on the markets. i'm alix steel. still looking at a rally underway. the dow jones industrial average at a record high. take a look within the s&p, really tech, industrials, materials leading the way higher. been upocks that have the last two months are doing pretty well. it is merger monday and deals are definitely help boost stocks as well. he'll shyer rands -- hillshire
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togetherguild brings log cabin syrup and jimmy dean sausages. we will be back in 30 minutes. more "bloomberg west" up next. ♪
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>> live from pier 3 in san francisco, welcome to the early edition of "bloomberg west," where we cover the global technology and media companies that are reshaping our world. i'm emily chang. today, pinterest is launching its first paid test of promoted pins. they will have over a dozen ,dvertisers like the gap lululemon, and target. the pins will be targeted using gender, whate, kind of device they are using. you guys have been testing this for >> months, unpaid. what have you learned about what
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works and what doesn't work? >> what we have learned is brands they to pin love. it is really a visual discovery tool for pinners. and france have many different ways to tell the story of their brands. if you are banana republic, it may be about dressing for work. if you are kraft, it may be planning a birthday party. the marketers are using in organic platform. and they are very excited to use a paid roddick because it will help them scale. >> are there any brands that do well on interest versus others? for some work better than others? >> that is one of the things we're trying to figure out your raid we found in our early test betteromoted pins worked or the same, so we believe there are opportunities for markets to scale and pin also is a
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different things. if you are lululemon, you might food, travel ideas, as well as your products. >> how do you get the brands on board? what i have heard about pinterest, more brands what in, but you have not been ready. had six months. we have been hiring a team. the team is really analytic striven, data-driven. they have to be creative to help marketers tell that story. they do three things on pinterest. they put the button on the site. and they should be aligned with the brand rhombus. and the last thing -- brand promise. and the last thing they will do is use the promoted pin products. we picked brands that have started that journey, who have been using pinterest pretty well, and we're trying to help
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them figure out what are the best kinds of content they should put on there and what should be a promoted [inpin. everything from aspect roadshow, to what sort of pin you put on there. to look good. >> we wanted to look good. we wanted to be useful. as people use interest as a discovery tool, we want them to be able to search and find an look at categories. experiences pinner the most important thing we do. we can teach marketers to make great, great pins. >> will i ever see a promoted pin when i logon to my homepage? >> there are no plans for that right now, because we think there's a lot within the categories that it gives context. >> how much is the pricing? >> it varies. right now the price is based on the full breadth of services we
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bring forward and we will figure out what the correct way should be in the market. right now we are doing cpm-based pricing. it includes a lot of help from our team to make sure your pins are working really well. >> from what you've seen so far, how much money making potential do you really see? do you see it as when to get this up and running it will be easy to rake it in? >> we hope it is a scale business. 75 cent of our users are on a mobile device. we think -- 75% of our users are on a mobile device. we think that is really important. and for advertisers -- if you are trained to redecorate your home or plan a vacation. i was looking for a vacation for and is on spring break, ended up going to a national park because i was inspired by a board i saw. you can do a number of things and we would hope that this would scale over time. >> what this pinterest have to
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offer that facebook or twitter does not? why should i pay for a promoted pin rather than a sponsored story or tweet? said but we are a discovery tool really -- >> we are a discovery tool that is really thinking about your future. we will help you plan your trip. redecorate your house. we will help you discover things you want and need and that is different than the other social networks out there. >> i am curious since you have had such a long career in tech and media, what your experience has been like moving to pinterest and how you are liking it so far? >> i love the product in the brand and when i met the team, they are all very smart, very focused on the experience, on the consumer experience. i think in technology, the very best thing you can do is put your consumer first. even with our promoted pin, we
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take feedback from our consumers. that was really attractive and where the company is in its growth stage, i really love to build things. i love the advertising business. i love the reinvention of the format. it was kind of a great domination of many things. >> what was it like working with ben silverman? he has such an inspiring story. i wonder if he is different than other ceo's to work with? >> he was very much about the experience for the pinner. he also knows what he does not know and has built a great team to help with that, and i felt lucky to be part of that scene. he is really a very smart thinker about how thepinner experience -- the pinner experience comes across? >> how do you think about your sales team? i know there must be a lot of people knocking on your door.
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>> we interviewed -- sometimes i do four or five interviews in a day. right now we have 20 open positions and we hope and -- we expect to open more as we grow. we are looking for the right fit. we are looking for people who know how to use data and have a real vision around marketing and have a passion for pinterest. we are hiring a lot of people to make sure our marketers have great partners working with them. business, isf the this something that will be open to businesses of all sizes? pinterest is discovering smaller businesses -- you are planning a wedding and you discover someone in the middle of idaho you did not know about. can those brands get in? >> we have to service brands of all sizes. one of the things i like to do is shop at independent boutiques in san francisco. i have found a lot of them are great pinners. we have a product that can serve
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them as we grow. >> all right, joanne bradford. thanks for sharing your vision with us. >> thank you so much. >> coming up, could computers be the retail salespeople of the future? one company at how is teaming up with ibm to change the way consumers make purchases. and you can watch us streaming on your phone, your tablet,, fire tv, and apple tv. ♪
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>> welcome back to "bloomberg west." i'm emily chang. turn back to our wiring the world series. we are looking at how ibm is changing the retail business. could watson be working in your favorite retail store? they are partnering with ibm to launch a personal shopping app. allow customers to
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ask questions like "what kind of jacket do i need for a trip to tahoe next week?" it will respond with a list of related products. the ceo is here with us. how does this work? if i could use anything, it is a personal shopper. >> if you think about agile technology, it brings you angst -- price, convenience, selection. think about that when you work into a fashion store, walk into rei. they ask questions. they quickly get you the right product through the online experience is very self-directed and requires the end-user to do a lot of work. >> and there are so many choices, it makes it even harder. >> how do you find that right experience? if you go to amazon, the shopping experience is not that great. you do not have anyone to help you figure out where is that exact right product? the right product for my specific needs. this has a couple of different
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our full components of technology, but one is to engage in dialogue. it can ask you questions. it can ask you clarifying questions. just like if you would talk to an individual. go through data, social media posts, the contents of wikipedia, product reviews, call center logs. it can take all that information and help you find the proverbial needle in a haystack. comew did that go about -- about? >> we have been part of ibm's smart commerce team for years, helping them develop the experience for their digital retail client. they wanted to look at how they could commercialize it. they had some success in health care. we looked at retail. it really is a broadly applicable technology that can solve a lot of different problems. so, they engaged us, we came up with a couple of concepts. there were very interested in how we could come up with this
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technology to create a differentiated shopping experience. >> how does the partnership work? what does watson bring to you that you do not have? >> what watson brings to fluid -- this is something very progressive of ibm. corehave taken their watson technology and created what they call the cognitive cloud. tapompanies like fluid can into this incredibly powerful artificial intelligence technology. then our team is building out the interfaces. getass on the information, the results back, feet and the content that makes it intelligent and smarter and then create the consumer experience as to how the information is presented, how the products look, that sort of thing. >> how much does the consumer -- how much do i need to tell the app? sometimes they do not realize. they may like something different.
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suppose totally dependent on the individual -- >> totally dependent on the individual shopping experience. if you are looking for a jacket for a tahoe ski trip, that is probably a relatively short conversation. if you are taking a family of four to bali, that is a longer conversation. >> does it take the weather data? >> it can take the weather data. we are actually looking to roll out the first zimmer beta-test in q4 of this year. >> i feel like it has taken so long for the retail is this to be truly disrupted and personalize. i like to use the j.crew experience. it is a place i have been shopping at since high school, and it is still not tailored to me, even though i have purchased many things over 10 years. >> the fundamental process of how you purchase things online is static.
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we think what is missing from that process is the ability to have a dialogue with somebody, actually engage in conversation to learn about their needs. it is not just about the data, what products you are purchasing. and a good sales rep in any store, any real-world environment is able to, based on your personality, how you're asking the conversations, guide you down the right path. and more importantly, a good sales rep in a store makes you feel confident about your purchase. they make you feel good, like you made the right decision. a lot of times when you buy something online, it you --you .o hmm, i'm not 100% >> do you think this technology could replace salespeople? >> we talked about it. we think that it can make salespeople better. you dot see a time where not need physical salespeople in a store.
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i think this tool can make those better bys reps providing information they cannot access in a seamless fashion. ceo can'tht, fluid deborah, -- kent thanks for joining us. one silicon valley innovator in court over a beach. and you can watch us streaming on your phone, your tablet,, fire tv, and apple tv.
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>> welcome back to "bloomberg west." i'm emily chang.
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just weeks after disney agreed to buy maker studios for a billion dollars, time warner has decided on youtube stars. they acquired full screen, a popular youtube video network. that is according to a person familiar with the matter. yahoo! is said to be looking into a possible acquisition of full-screen. -- erlichman joined this wrote the story and joins us from l.a. what is the thinking here? >> i think a lot of the traditional media companies are looking at some of these businesses that are fast-growing here in l.a. that are almost the new cable channels, emily. they take all sorts of youtube channels, how some under one roof, and they become more powerful. you have millions of subscribers, in some cases billions of video feeds. i think that was part of the appeal for disney and maker studios and it is it goalie of
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appeal to time warner with full-screen. time warner has been looking at this base or a long time -- this space for a long time. warner bros. is also an investor in machinima. we do not know how this will work out. but we know they are watching where young people are consuming their video and saying we need to pay some attention to what is going on here. >> you also have interest from other players, right? yahoo!, aol? we want tog highlight with yahoo!, yahoo! has been hot -- talking to full-screen on a couple of runs. one is the potential of having them as a partner. in creatingterested something youtube-like. they are very interested in video and high-end content and signing up people to produce videos for them. but they are also interested in stealing thunder from youtube
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and creating their own video network. partnering with full-screen is one of the ways they could make that happen. maybe have one of those stars come over to a yahoo! platform. >> but how much are businesses like maker making? >> these are young businesses, so for the most part they have not been making money. fullwould argue that screen could more easily make money or turn on the tax compared to make. what you will say is way is that they will try to bring out the advertising dollars. right off the top, youtube is taking its slice of ad revenue. $70now that they generated million in ad revenue, but they did not have to share that with our partners. this is less about profitability, and more about the eyeballs, the number of people using these platforms. and the number of technology companies interested im this.
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can they build something faster on their own, or is it isn't -- is it better to be involved with these other players? >> so, there's so much happening in the content landscape, so much happening in the cable and tv landscape. how does this all move forward? >> one of the things -- we just highlighted how challenging this is news could potentially be because you are sharing so much of the space with youtube. a lot of the players are interested in moving this to a subscriber model. if he can get enough people using one of these different tools or services, if you can get enough people to pay for that, that is a better lasting business model. it feels like that is the direction they would like this to go, but right now they're trying to figure out how to get their toes wet in this. the funny thing about this whole situation and disney buying maker, a lot of people were questioning whether these businesses could survive six months ago, and now we're
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talking about half $1 billion price tags. >> all right, stay with us. it is time now for the b-west byte, one number that tells a whole lot. cory has the b-west byte right now. >> a legendary venture capitalist will appear in court in a fight over a land grab. he bought a beach property, part of half moon bay for $37.5 million. break known as martin's beach. they put up a gate, bar of the gate, painted over the billboard, hired a secure card -- a security guard. it publicl act makes property for everyone. >> this is something that has been going on for >> years, right? >> quite a while. >> key is only now trying to block access?
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>> it is built on the notion that he made changes in the changes were not licensed and that constitutes development and that should've gone through a review process. that is the argument. the foundation exists for this purpose. it's really interesting. in "sports illustrated" back in the early 1990's. >> having been to half moon bay many times, these surfer community is very passionate. imagine, if someone cut off access to the hottest surfing spot in malibu? >> it is not happening in santa monica, that's for sure. maybe silicon valley entrepreneurs will have to learn to surf to show they can perform with these folks. >> this actually happened with david geffen, the exact same
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argument. >> oh, yeah? we will have to watch to see how this develops. thanks. thanks to all of you for watching "bloomberg west." ♪ . .
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>> from bloomberg world headquarters in new york, i'm mark crumpton. this is "bottom line does quote -- the intersection of business and economics. the european union imposes tougher sanctions against russia. lobby tobedfellows make drones legal in the u.s.. tv executives raise for ad dollars in her newest primetime lineups. to our viewers in the united states and those of you joining us from around the world, welcome. we have full coverage of the stocks and stories making headlines today. phil mattingly looks at cashin


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