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tv   Bloomberg West  Bloomberg  June 22, 2015 8:30pm-9:01pm EDT

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all of taylor swift's music videos interviews, and more. xfinity is the destination for all things taylor swift. emily: apple vows to pressure by taylor swift. -- bows to pressure by taylor swift. i am emily chang and this is "bloomberg west." alibaba reworking their strategy. we will look at jack ma's plan to win over shoppers. and sun shines for solar. all of that ahead on "bloomberg west."
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first, to the lead to we are talking about alibaba. holding its company into -- holding its company into another company. it is the initial foray into e-commerce but it looks like it has not worked out. joining me now, the ceo and cofounder and jeff richards. long time investors in china. i like to shop. i have never used 11 main. it was around four year but did have zero traction? guest: it did not have zero traction but it never really took off and it did not have enough marketing muscle. it was set up as an experiment for alibaba to learn and start to put together a team and vendors in the u.s. and spending
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a lot of resources. hence the fact you have never shopped on the site. emily: is this a failure of 11 main or an evolution in strategy? guest: it is not a failure or obviously not a success. i would say it is a learning experience for alibaba. they have trained the chinese consumer how to think about and purchase commerce. the u.s. is a different market. 11 main was their first foray into a principal position where they were operating. they have been more successful and they have treated -- retreated with 11 main into an investment path rather than operating cap. emily: 11 main was considered part amazon, part etsy but there was this question about whether alibaba would take on amazon or ebay in that way. do you think that will ever happen or is it part of jack
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ma's goal? guest: it is focused on the chinese market. emily: he said he wants 50% of revenue to come from abroad. guest;: in the long run. in the home market they are starting to get competition from the number two and number three commerce players. talking about a large market opportunity. newmarket in places like india where they have said they are committing significant resources and also places like latin america and southeast asia. it is not just the u.s. emily: jack ma was in the u.s. and he spoke at the economic club of new york. he clarified a bit how he sees alibaba's u.s. strategy progressing. take a listen to what we had to say. jack ma: we show great respect for ebay and amazon but the opportunity and the strategy for us is helping small business in america go to china sell their products to china. emily: what does he mean by
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that? everyone seems to be waiting for alibaba to have the answer to amazon but is that it are going to happen? brian: yeah, the short answer is no. what alibaba has been successful at doing is training the chinese consumer to buy through the alibaba platform alipay etc. products they have procured from china or the west. if i have to bet where they build in operating business in the u.s. it will be in a position off the scale business. will small to -- retailers find success selling into china? perhaps. they necessitate direct marketing whether direct or brand marketing and that is not going to be a point of competency for small american retailers trying to sell to 1.4 billion people. emily: alibaba has made
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investments in snapchat and lift -- lyft. jeff: it is the long term focus. one of the things you have to think about in a certain way, alibaba is doing research outside the company. making small passive investments in companies throughout the u.s.. working with the managing teams learn about the industries in strategic categories like payment and messaging and a little bit different from a u.s. company who has had to do the research internally. making investments in the companies and powering those teams, learning from those organizations as they go. i would keep -- expect to see more of those investments both in the u.s. and countries like india and southeast asia. and eventually perhaps you see alibaba looking to buy something that has an even stronger presence in some of those markets. emily: like what? jeff: one of the hottest is
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wish you look at the ratings, those companies are rising up the rankings in the mobile category. emily: jack ma was asked about the counterfeit goods. this has historically plagued alibaba, the number of counterfeit goods. how big a problem is that for alibaba to expand abroad and develop that trust with consumers, u.s. consumers especially? brian: yeah, the irony is the problem more tied to western retailer than chinese consumers so i am not sure if that is necessarily a hurdle for alibaba to expand into western markets where they are not aware of the counterfeit issue. it has caused a monkey wrench in
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relations with western retailers. and a lot of the other major chinese platforms are learning it -- running into the same problems that alibaba did selling into china. this is more than an issue of east and west. where they will find their greatest successes with the chinese consumer, western brand selling into chinese consumers but acquiring one of the businesses they have invested in. it is nice to have plans of dollars on cash to make smart acquisitions in the future. emily: we just heard jeff's thoughts about possible acquisitions. what do you think, what could alibaba buy? brian: they could buy from some of the smaller marketplace platforms that jeff mentioned to something fairly larger that they have shares in already. or something even larger. they are investing in snapchat. there are three or four or five
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pennies that could buy snap shot which is alibaba. i am not saying they will. emily: what about twitter? brian: i think twitter has its own evaluation challenges right now. i'm not sure that alibaba would be the effective operational steward of that business. that is a little outside of my purview. probably a better question for jeff. emily: an investor in twitter told me he thought alibaba wanted to buy twitter. is that realistic? jeff: twitter is more of a media company. we believe overtime and mobile all these things can merge. mobile, social, media and commerce.
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several companies are entering the fray. emily: we are stirring the pot a little. thank you both. now while alibaba looks to gain favor in the u.s., apple is looking to china. ceo tim cook told the chinese language version of hundred business week that his company takes chinese consumer tastes into account when designing its biggest ticket items. the decision to offer a gold iphone was a not too chinese can -- nod to chinese consumers loving gold. and it is expanding 50% by the end of the year. something to remember. greater china is apples second-biggest market making up 29% of sales last quarter. jack dorsey may need to rethink his day job at square. taylor swift tells apple how it will treat musicians in its new streaming music service. what it means for the rest of the industry next. ♪
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emily: a story where watching. oracle chair larry ellison is fielding questions today. announcing more than 24 new cloud services at an event at company headquarters south of san francisco. oracle says new products are designed to move all data into its cloud. last week's earnings miss, cost chairs to fall the most in two years. we will have updates on what ellison says today. taylor swift takes on apple and
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wins. the biggest name in problem is -- music calling out the world's worst valuable company on twitter. she was upset that apple was not going to pay musicians during the free trial of its new music streaming service, apple music. in less than 24 hours, the senior vice president for internet and software change the policy. he tweeted at swift -- "we hear you." the debate over royalties is far from over. joining us, our guests. every time we have a conversation about how much artists, producers, songwriters are paid it is so confusing. there are so many different scenarios whether you're listening on spotify for free, whether you are paying premium. just how exactly should we think about how artists producers,
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and songwriters are paid by the streaming services? guest: we have music -- [indiscernible] spotify loses money on music every single day. they must get licenses for the recording of a song and to the lyric and melody. two distinct, separate copyrights and make those payments versus the old model where people would buy prerecorded music. there is his major transition occurring and apple could change the entire market overnight with 800 million credit cards on file, the infrastructure to deliver the music at the click of a button, it could shift consumer behavior. it could strip mine and decimate an entire culture of the music industry and not give us a viable future for the artists, musicians, and labels. emily: there may be something fundamentally wrong if apple thought at the beginning they
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would not have to pay for three full months. i do not get this. jeff: it is a precedent set by the major record labels and dates back 10 years. we had free trial subscriptions and what was wonderful about taylor swift is she brought this behind-the-scenes thing to the public so we are talking about it. you are right. what was being asked is for artists, labels, songwriters, music publishers to observe the cost of customer acquisition on behalf of a technology company because that is the way it has always been. this is about the entire music industry fighting to be monetized. emily: why are we on the hearing from taylor swift? why are we hearing from other artists? why is and everybody complaining? >> that is who pays you so you want to be careful who you pay -- complain about. she is powerful enough to make a great statement but the point that jeff made is a great one. this was set many years ago
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before the internet, before napster, before all these things came up -- came along. it added the digital streams. the physical goods are going away. it is the digital music is this that is the business. they are running on roads that are really not made for the new technologies. what apple has done especially what eddie did in responding expressed that apple is a partner. that is an opportunity for them to build a bridge and work not just with apple but with spotify and all the other streaming services as well. emily: what does this mean for spotify? should spotify be terrified that apple has deep pockets and can do whatever artists want whereas spotify is a startup and cannot necessarily pay artists when they complain.
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keith: the great thing about what taylor swift has done along with others who are managing a lot of these different type of artists, they are looking while the cement is still wet let's look at this business model. let's take a good, hard look at how this business model is being cut up. let's not forget, it is the music is this but music is an art. it takes artists who make them. it takes artists to make this whole thing work and you have to show respect to that. emily: jeff, obviously, prerecorded sales are declining and taylor said herself she is making her music from life tours and performing. what does the streaming industry look like in five years? jeff: that is the question that needs to get answered now. spotify is about getting an exit. kleiner perkins invested money and they want their tenant return and there is nothing wrong with that. the business model -- is it the right model or what we have an
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exit for a technology company reaping billions while decimating the industry by setting the bar too low. apple raised the bar. what it did inadvertently is a way to create a second wave of publicity by saying we will pay for these subscriptions and looking like a good guy. what they have is this new product and they want to get everyone into try it. everyone in the planet can try this for 90 days and if they like it it will continue. the revenue for -- will skyrocket and if the model works correct the, there will be more money now through recorded in streaming music than ever before. you ask the right question. what will it look like in three years because right now as the top line revenue is going up the amount of money we are making is going down. people are making less money as spotify grows its topline revenue and that scares me a lot. emily: keith you are nodding
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there so i see you agree. a debate that is far from over. it is time for today's edition of "status update. " the board is looking for a replacement for dick costolo. it is considering internal and external candidates. the chief executive must be able to "make a full-time commitment to the company." why did twitter release the statement? was it an attempt to reassure investors? twitter closed down a little less than 1% today. coming up, stumping up some cash.
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as much as $20 billion to solar energy in india. the next big investment opportunity? we will take a look. ♪
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emily: today's number is 80. the number of hours you can expect to work week as a spacex in turn. they hire from california to houston to washington, d.c. the interview process is very unusual. you could be faced with this frightening scenario. if elon says he needs hundreds of this one part by the end of the week but the supplier needs three months to make it, what would you say? the interns are compensated
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well. they get to watch rockets take off live in the get to meet elon musk. that sounds pretty cool to me. a heat wave in the solar industry? softbank announced it will make a $20 billion investment in india's solar power sector. the aim to create 20 gigawatts of solar power capacity. that is 20 nuclear reactors worth of power. the indian government is looking for investment in renewables targeting 100 gigawatts of solar capacity by 2022. here to discuss more, kenny kennedy. and bloomber'sg's new [inaudible] you have this trio of billionaires looking to make an investment in solar and india. guest: we are seeing solar going
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gangbusters. last year we did 40 gigawatts. we are growing in leaps and bounds. india was fairly a market a few short years ago. it will become a very substantial market. just to point out the cabinet only agreed to go for this 100 gigawatts goal by 2022 last week. hot on the heels of that, the politicians say go and the money comes in. emily: it is interesting. the power situation in india is dire. 400 million people do not have access to round-the-clock electricity. but is it achievable to create 20 nuclear powers' worhtth of solar energy so quickly? >> we are optimistic about what india can do and our forecast i 70 gigawatts by 2022 pales in comparison to the 100 that the
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government is promising. it is a very ambitious plan. we do anticipate strong growth in india. emily: there is also rooftop and village level and installations. can you explain how you see this playing out? danny: the government's goal is to do it in a distributed fashion. so that 40% of rooftop and rural electrification schemes is that really exciting stuff to bring electricity to hundreds of millions who do not have it in india and that is the big entrepreneurial moment. that is where businesses will floors to create new models. just like cell phones 10 years ago. they are having more cell phones per person than there are people. and that is what we will see with solar. emily: cooperation with the government will be key. the government not necessarily known for moving in saint. do you think this is an achievable goal? guest: they have gone from one
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gigawatt total in solar a couple years ago to four gigawatts today, now ramping up. if china is any measure, they went from zero to hero over the last five years ended 16 gigawatts in the last year and plan to do 18 this year. can it be done, can you build that many power plants in 12 months or five or six or seven years? you can. will india get organized and allow that to happen, that is the big question. one of the stumbling blocks would be capital. this is the great start, as i say, one week into the race to do it to have $20 billion out of a $100 billion total committed. emily: definitely something to watch. thanks for being here. thank you both so much. "bloomberg west that does it for this edition of"bloomberg west -- that does it for this edition of "bloomberg west."
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all of that from san francisco. ♪
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announcer: from our studios in new york city, this is "charlie rose." charlie: mr. president, it is a pleasure to be in your city, where you started your political career. to be here in russia which is a great country with a historic past and the important role it plays in its future, military, and the possibility of giving a big role. there are problems that only can solve differential participates and you will play a role in that. help us understand, as you see it, where are we? how do we get there and where do we go from here?


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