Why You Still Standing Here? Hey Hey Hey Hey, Just Walk Away
Why You Still Standing Here? Hey Hey Hey Hey, Just Walk Away
Elon Musk complains about Apple, AMC Networks layoffs, BlockFi bankruptcy, Adidas cuts Kanye West partnership
Elon Musk Complaining About Apple’s Cut of Revenue
Elon Musk made a series of tweets complaining about Apple’s cut of revenue on purchases made through the App Store and lamenting the fact that Apple has pulled a significant portion of advertising from Twitter
Musk said that Twitter was losing $4 million a day and advertisers were leaving Twitter on concerns about Twitter’s ability to moderate content and a host of executives leaving the company.
In 1Q22, Apple was Twitter’s biggest advertiser, contributing $48 million of revenue to Twitter. It’s a fair assumption to say Twitter needs Apple more than Apple needs Twitter.
It appears Musk is pulling the Apple hates free speech card in an attempt to put pressure on lawmakers to go after Apple in an effort to get them to reduce their fee on App Store revenue. Every little bit saved helps Elon repay the $13 billion of debt that he incurred when buying Twitter.
Whining over Apple’s cut of revenue is silly. If Elon doesn’t like what Apple charges in their App Store, he can remove Twitter from the App Store. There are other phone software platforms for Twitter to host its app on, Apple’s not the only choice for Elon Musk, it’s not Apple’s fault that it has the most popular smartphone ecosystem.
Someone should tell Elon that Apple has the right to just walk away and not advertise on Twitter. Shoutout to Kelly Clarkson for that hit song from 2004.
AMC Networks Lays off 20% of U.S. Workforce
AMC Networks has decided its needs to “conserve resources at this time” and is laying off about 20% of its U.S. employees.
The Chairman of AMC James Dolan was quotes as saying, “It was our belief that cord cutting losses would be offset by gains in streaming… This has not been the case.”
The CEO of AMC, Christina Spade has stepped down less than three months after taking the role.
AMC has a few hits like “The Walking Dead” and “Mad Men”, but they are a small fish bordering on anorexia in a big lake of streaming players with a ton more money and resources than they have. AMC can’t compete with Netflix, Disney, Amazon, Warner Brothers Discovery, etc.
If the economy heads into a recession and TV ad revenue across the industry continues to decline, I wouldn’t be surprised to see someone make a bid to buy AMC outright. I don’t think it has much value as a standalone company.
BlockFi Bankruptcy
Crypto company BlockFi has filed for bankruptcy. BlockFi blamed the bankruptcy on the collapse of the FTX crypto exchange, formerly run by disgraced investor Sam Bankman-Fried (also referred to as Scam-Bankman Fraud by some people on Twitter, which seems more appropriate.
FTX’s affiliated trading firm, Alameda Research defaulted on $680 million owed to BlockFi earlier in the month.
BlockFi lends money to customers using crypto as collateral.
With chapter 11 bankruptcy, BlockFi said it’s hopeful they can quickly exit chapter 11 and provide recovery for customers, although in a court filing said the “full extent of the fallout from FTX’s collapse remains to be determined.”
BlockFi’s top 10 creditors are owed close to $1.2 billion according to filings in U.S. Bankruptcy Court.
As the crypto market started declining this year, customers pulled assets from BlockFi from $12 billion in lendable assets, down to $2 billion.
BlockFi then went to FTX to raise some cash to help BlockFi’s financial problems. FTX lent BlockFi $275 million in stablecoins, but BlockFi didn’t get the additional funding it requested from FTX.
Containing Kanye was Always a Fool’s Errand
It’s come out after Adidas has parted ways with Kanye West that executives have talked about as far as four years back the risk of continuing a business relationship with Kanye West.
Executives including the CEO Kasper Rorsted and the head of HR highlighted the risk of employees interacting with Kanye and went into detail over mitigation strategies for their business relationship. (It’s almost like they knew beforehand what they were getting into, what a shock).
Instead of just getting rid of the problem and cutting ties with Kanye altogether and replacing him with any number of music celebrities that have widespread black cultural appeal with a young audience and will cause less problems, the senior executives at Adidas said in effect, “We’ll just come up with ways to try and keep Kanye happy because we don’t want to lose our revenue.”
Kanye met with Adidas executives in September and asked for more money and control over the Yeezy brand. Soon after, Adidas agreed to some of Kanye’s demands: Adidas offered Kanye the ability to sell Yeezy footwear directly to consumers, ownership of future designs, a cut of the sales from lookalike Yeezy products and to continue the partnership through 2026. Kanye wasn’t satisfied with that and wanted as much as $3 billion.
Weeks later after requesting $3 billion, Kanye wore a “White Lives Matter” t-shirt at his fashion show and posted anti-Semitic comments on Twitter, after which Adidas ended the Yeezy partnership.
Adidas last week said it was launching an investigation after the company received an anonymous letter about alleged years of misconduct toward Adidas staff by Kanye West which alleged Adidas management ignored his behavior.
Is that any surprise, as long as the money rolled in, Adidas would put up with Kanye’s actions for as long as they could. Well until they couldn’t.
Kanye had licensed his Yeezy trademark to Adidas in exchange for a 15% royalty on sales. Adidas was responsible for manufacturing products and getting them to consumers, and Adidas also maintained ownership of the designs.
Among the allegations Adidas employees have made is that they were berated in front of colleagues, Kanye watched porn at work, Kanye made occasional anti-Semitic comments in front of staff, including when he suggested naming an album after Hitler.
Earlier this spring, Kanye called out Adidas execs in Instagram posts, accusing them of stealing his designs and trying to get him to fork over the Yeezy trademark for $1 billion.
Adidas wanted Kanye to give up an annual $100 million marketing payment in exchange for Kanye getting ownership of new designs, royalties for copycat designs and increasing his royalty payment to 20% on existing Yeezy designs after 2026. Kanye wasn’t satisfied with that and wanted Adidas to give him ownership of existing designs, wanted Adidas to sell the designs without the Yeezy branding, AND pay him a 20% royalty. Plus, Kanye wanted $1 billion worth of Adidas stock once sales of existing products hit $5 billion and an additional $2 billion in stock if higher sales targets were reached.
I can’t tell who is more delusional. Kanye for thinking he’s being exploited by Adidas for a deal he agreed to, or Adidas executives for thinking that they could reap the benefit of the revenue and profit that Kanye brings without being exposed to any of the foolishness and childish behavior that comes along with him. Adidas really wants something to help elevate their sales in the U.S. since they have long fallen behind NIKE in terms of popularity with consumers, but Kanye West isn’t it. Adidas finally smartened up and stopped standing with Kanye and just walked away.