It could be said that hockey is a very Canadian sport. It embodies the Canadian values of humility, camaraderie, sportsmanship, egalitarianism, subtlety, respect for tradition, and conservatism. Inside the confines of the rink, hockey players are larger-than-life: aggressive, assertive, and spectacular. Outside the rink? Not so much.

This is one of the overriding problems that plague the NHL. The personalities of the players, still mostly Canadian, make the sport hard to market because the culture of hockey players eschews taking the spotlight, grandstanding, or boasting. Players tend to walk softly when not carrying their big sticks, and this League of Unextraordinary Gentlemen makes for a lack of players with true celebrity potential.

It is an understatement to suggest that the NHL has a marketing problem. And while this blog is awfully hard on Gary Bettman (justifiably so) it’s not all his fault. Consider the story of David Beckham vs. Wayne Gretzky.

When David Beckham was imported to Los Angeles he brought more than just a bendy shot to Major League Soccer. He and Victoria Becks were soon spotted among the elite, embraced by the celebrity culture that dominates Los Angeles. This made it much easier to market the LA Galaxy and Major League Soccer in general, as each appearance in People magazine, on Entertainment Tonight, or gracing the red carpet at premieres served as a stealth advertisement for the game. This drew fans from unlikely sources. Beckham built his fame in front of the global futbol audience, transcended sport and celebrity by marrying one of the Spice Girls, and managed to remain dignified while making himself into a global brand.

Canadians still love Wayne Gretzky. Arguably the greatest player to ever grace the arenas of the NHL, his jersey number is so hallowed it is verboten to wear it — officially retired throughout the league. No player bears comparison, and his infamous move from Edmonton to Los Angeles was heralded as a break-through for the game. In fact, it was. The Kings, a basement-dwelling team before his arrival, began building a dynasty which, though it never returned a cup to LA, remained competitive and entertaining throughout his stay there. They drew in new fans, and the spillover helped the league to add teams in San Jose and Anaheim.

But Wayne is as much an admirable personality as he is a uniquely modest, humble guy. He shuns the limelight. He doesn’t want to attend glitzy parties, isn’t a trendy dresser, avoids controversy. He married a modestly successful actress, not a megastar. And as Canada’s favoured son, he carries the hopes and limitations of a nation wherever he travels. It’s an enormous burden, one he clearly feels, and one which has ultimately kept him from becoming a global transcendent brand. In many ways this is an opportunity lost. Both for Wayne and for the game he so clearly loves.

What the league needs is a cadre of players that can move the puck like Wayne — casually chucking in 50 or 60 goals a year, let’s say — while simultaneously engaging the popular media.

Sean Avery is no Wayne Gretzky. His style of play is better suited to the beer leagues than the beautiful game. But Sean has engaged the popular media and celebrity culture in a way that no player in recent memory has — and he is poised to drive interest in the NHL because of it. Within the league he’s a constant source of news and controversy, both for on-ice antics and off the ice. Within the game a great source of controversy and intrigue, and a pattern that sees shades of Brett Hull, Claude Lemieux, Shanahan, and Roenick.

But outside the arena he’s raised his game to a whole other level. Avery has had relationships or been linked romantically to a growing list of celebutantes including an Olsen twin, Elisha Cuthbert and Rachel Hunter; has made People Magazine’s “Sexiest Man Alive” list; has appeared on MTV Cribs (bragging about your bling is very non-Canadian!); was weirdly an intern at Vogue Magazine this summer; is poised to star in a fashion reality TV show; can frequently be seen amongst the glitterati at fashion shows and premieres; and is even the subject of a movie presently under development at New Line. He’s even been profiled in the New Yorker. This among a growing list of exploits studiously documented in fan magazines like People and Us, and on TV on shows like TRL and Entertainment Tonight.

Avery recently arrived to a Hollywood party and asked a reporter if The Hills’ resident prick Spencer Pratt was there yet, because he wanted to “kick his ass.” All of this behaviour is very-much outside the norm for your cookie-cutter Canadian hockey player. And in many respects it’s preserving interest in his career as a grinder long after the pace of the game in the NHL has moved past players of his ilk. It’s even conceivable that (female) fans in Dallas this season, where he recently signed another one-year contract, might turn up just to see a glamourous NHL star — not Mike Modano, mind you, but Sean Avery.

In any event, if you believe that half of good marketing is just being seen, he engages the popular media with the NHL in a way that is hugely constructive to its image as a major sport with dynamic, cool, exciting players. The revelation here is that what makes a hockey player exciting in this multimedia world is not limited to what he does on the ice. What the die-hards among us will need to accept if we expect the league to grow and flourish is a lot more guys like Sean Avery.

Apparently, the NHL is recruiting “celebrities” (and I think we need to stop ascribing this title to everyone who has a TV show, given that these days practically everyone does have a TV show) to blog about the NHL during the playoffs.

I guess, in some boardroom somewhere, this seemed like a grand idea. Among the celebrities teeing up to blog are Lauren Conrad (only known to MTV fans), Jason Reitman (who has directed one noteworthy movie), Kevin Smith (who brought is “Gigli”) and .. uh .. well, a list of people I honestly can’t be bothered to look up.

This is the same year when the NHL, which tries to centralize everything, unilaterally declared that all the teams had to abandon web properties they’d spent years evolving, and have their web sites and services consolidated and templated under a single umbrella– built and maintained by IBM and Cisco because of some sponsorship program. Many teams were angered by this decision. MSG Entertainment sued the NHL because of it.

In this “blogging” strategy, the philosophy of Centralization appears to be the recurrent problem. These Celebloggers (most of them) already have their own blogs, on their own web sites, where they have aggregated their own audiences and are driving readers every day. In their wisdom, however, the NHL is forcing these bloggers to post messages … uh … on the NHL web site, nested behind half-a-dozen menus, in the ironically-named “blogger central“. Of course, these “blogs” don’t really look like blogs … they’re difficult to read, difficult to navigate, and (big surprise) it’s a daunting task to even dig up the RSS feed link.

So, instead of capitalizing on the opportunity to introduce the NHL to new audiences via the celebrities and their channels to their own fans, the NHL has once again squandered the opportunity to gain exposure by centralizing everything on its own web site, which of course is almost exclusively (though infrequently) visited by.. you guessed it … existing NHL fans.

So what results are they expecting, exactly?

-Ian.

—- http://www.newsday.com/news/local/wire/ny-bc-ny– rapperkilled1031oct31,0,7789769.story

Jam Master Jay, founding member of Run DMC, shot dead at studio By AMY WESTFELDT Associated Press Writer

October 31, 2002, 9:16 AM EST

NEW YORK — Jam Master Jay, a founding member of the pioneering rap trio Run DMC, was shot and killed at his recording studio near the Queens neighborhood where he grew up, police said.

A small group of fans gathered near the studio early Thursday, and some had placed flowers, candles and remembrance messages next to a fence.

Two men were buzzed into the second-floor studio shortly before shots were fired inside the studio lounge at 7:30 p.m., police said. As of early Thursday police had made no arrests.

The 37-year-old rapper, whose real name was Jason Mizell, was shot once in the head in the studio’s lounge and died at the scene, said Detective Robert Price, a police spokesman. Urieco Rincon, 25, who was not a member of Run DMC, was shot in the leg, police said. About five other people in the studio at the time were not hurt.

The studio’s entrance was cordoned off by police tape, and next to the candles and flowers, someone had placed an Adidas sneaker _ a reference to the group’s hit song “My Adidas” _ with “R.I.P JMJ” handwritten in marker.

Fan tributes also were posted on Run DMC’s official Web site, which featured a picture of Mizell captioned, “Rest in Peace Jam Master.”

“Jay, your legacy is one of beauty, beats, love, hope and funk,” wrote one fan. “You were the King.”

Mizell served as the platinum-selling group’s disc jockey, providing background for singers Joseph Simmons, better known as DJ Run, and Darryl McDaniels, better known as DMC.

The group is widely credited with helping bring hip-hop into music’s mainstream, including the group’s smash collaboration with Aerosmith on the 1980s standard “Walk This Way” and hits like “My Adidas” and “It’s Tricky.”

“We always knew rap was for everyone,” Mizell said in a 2001 interview with MTV. “Anyone could rap over all kinds of music.”

Dozens of fans who gathered Wednesday night near the studio, located above a restaurant and a check-cashing business, included many people from the Hollis section of the borough, where the members of Run DMC grew up.

“They’re the best. They’re the pioneers in hip hop,” said Arlene Clark, 39, who grew up in the same neighborhood. “They took it to the highest level it could go.”

Doctor Dre, a deejay for a New York radio station who said he had been friends with Mizell since the mid-1980s, said, “This is not a person who went out looking for trouble. … He’s known as a person that builds, that creates and is trying to make the right things happen.”

Chuck D, the founder of the rap group Public Enemy, blamed record companies and the advertising industry for perpetuating “a climate of violence” in the rap industry. “When it comes to us, we’re disposable commodities,” he said.

Leslie Bell, 33, said the band members often let local musicians record for free at the studio, and had remained in Queens to give back to the community.

“He is one great man,” said Bell. “As they say, the good always die young.”

Publicist Tracy Miller said Mizell and McDaniels had planned to perform in Washington, D.C. on Thursday at a Washington Wizards basketball game. Mizell had performed on Tuesday in Alabama, she said.

Mizell was married and had three children, she said.

Run DMC released a greatest-hits album earlier this year. In 2001, the rappers produced “Crown Royal,” breaking an eight-year silence.

In 1986, the trio said they were outraged by the rise of fatal gang violence in the Los Angeles area. They called for a day of peace between warring street gangs.

“This is the first town where you feel the gangs from the minute you step into town to the time you leave,” Mizell said at the time.

___P>

On the Net:

http://thadweb.com/rundmc/

Copyright © 2002, The Associated Press

———–

Hit Charade The music industry’s self-inflicted wounds. By Mark Jenkins Posted Tuesday, August 20, 2002, at 8:19 AM PT

2001 may not be the year the music died, but the pop biz did develop a nagging headache, and it’s not going away. The recorded-music industry’s first slump in more than two decades continues this year; the number of discs sold is slipping and so is the appeal of last year’s stars. Britney Spears’ latest album has moved 4 million copies—a big number, but less than half what its predecessor did.

The Recording Industry Association of America, which represents the five major labels that dominate CD retailing, would like to blame much of the slide on Internet music-file swapping. Yet there are many other causes, including the fact that the big five are all units of troubled multinationals—AOL Time Warner, Vivendi Universal, BMG, EMI, and Sony—that are focused on short-term gain and have no particular interest in the music biz. There’s also been a recession, of course, and resistance to CD prices that have grown much faster than the inflation rate. Perhaps the most important factor, however, is the major labels’ very success in dominating the market, which has squelched musical innovation.

In 2001, U.S. CD sales declined 6.4 percent. Sales have continued downward this year, and a Forrester Research study released last week projects a 6 percent decline in 2003 as well. Yet the report disputes the RIAA’s assertion that the now-bankrupt Napster and its successors are responsible for the downturn. More than two-thirds of CDs bought in the United States sell to consumers who rarely or never download music files from the Web, Forrester concludes. Another market research company, Ipsos-Reid, reported in June that 81 percent of music downloaders buy as many or more CDs than they did before they started getting tunes from the Internet.

The RIAA, of course, has studies that say otherwise. But anyone who rewinds to the last major music-biz slump will find some interesting parallels. In 1978, record sales began to fall, and the major labels blamed a larcenous new technology: cassette tapes. The international industry even had an outraged official slogan: “Home taping is killing music.” The idea was that music fans—ingrates that they are—would rather pirate songs than pay for them, and that sharing favorite songs was a crime against hard-working musicians (rather than great word-of-mouth advertising). Cassettes were so anathema to the biz that Sex Pistols Svengali Malcolm McLaren could think of no more provocative way to launch his new band, Bow Wow Wow, than with a ode to home taping, “C30, C60, C90, Go!”

By the time Bow Wow Wow bowed in 1980, however, the crisis was almost over. It turned out that home taping had not killed music. Instead, the central problem was the collapsing popularity of dance-pop—lively, sexy, but personality-free music whose appeal was broad but thin. They called it disco back then, and the name has never recovered from the era’s backlash. Although usually termed teen-pop, the music of ‘N Sync and Britney Spears is not unlike disco: Both are intellectually underachieving, cookie-cutter styles that have made stars of performers not known primarily for their skills as singers, songwriters, or musicians.

In addition to cassettes, late-’70s industry apologists blamed video games for undercutting record sales. There may have been something to that, and the biz faces even more multimedia rivals today: cable TV, the Internet, and DVDs, as well as much more sophisticated video games. Perhaps more important, younger consumers live in a world where popular music is ubiquitous (and therefore less precious) than in the ’60s and ’70s, when rock was rationed, semi-subterranean, and generation-specific. Some older music fans may hate hip-hop, nu-metal, or techno, yet in general rock today defines parents as much as (or more than) their kids.

The major labels have snubbed older music fans in recent years, yet over-40s now constitute 44 percent of the CD market, up from 19.6 percent in 1992, according to the RIAA’s 2001 annual consumer profile. Unfortunately for the majors, the tastes of graying Beatles and Stones fans have fragmented, making them difficult to reach via mass-marketing. These consumers help support the many smaller labels that market alt-rock, world music, new age, reissues, jazz, folk, bluegrass, post-minimalism, and other niche genres.

Meanwhile, younger fans lose interest quickly and often don’t develop strong loyalties. They’re less likely to investigate a breakthrough act’s previous albums or buy its next one. The genres that appeal to under-25 music fans continue to sell, but individual performers fade quickly.

This is a huge problem for the big labels, who still base their marketing on long-term stars who release multimillion-copy blockbusters. One album that sells 10 million copies is more lucrative than 10 that sell 1 million, because once a CD takes off, the only fixed costs are manufacturing and shipping, which are trivial compared to production and marketing. And long-term careers make each album less of a risk, since the most loyal fans will buy everything an artist releases and profits are high on back catalogs that keep selling.

Yet maintaining superstars is hard and getting harder. They require large advances, high royalty rates, and massive production and marketing money. And they keep demanding such things even when their careers tank (notable recent examples: Michael Jackson and Mariah Carey). The risk that a contemporary superstar’s latest album will bomb is high, since attempts to reach the widest possible audience can easily lead to banality and overexposure.

In 1980, when the same sort of listener burnout bedeviled the biz and its superstars, salvation came from an unexpected source: MTV, an upstart cable channel that began broadcasting clips by a new generation of British bands simply because the established U.S. performers weren’t yet making video clips. Groups like Culture Club, Duran Duran, and the Clash—whose label didn’t even release the original version of its first album in the United States till 2000—broke through to a novelty-starved audience. Suddenly, home taping wasn’t an issue anymore.

This is just the sort of shock that the music industry needs—and labors so hard to prevent. Since 1980, the mainstream music industry has only consolidated: Five companies control CD sales, MTV owns a multi-channel music-TV franchise, and a single company, Clear Channel, dominates both the concert business and Top 40 and rock radio. Ironically, if unsurprisingly, the biz has suffered from its near-monopolistic control. Short-sighted labels and tightly programmed radio have bolstered the success of certain styles and performers but prevented anything fresh from breaking through.

In the past, there were many ways to crack the biz: local radio stations, strong indie labels, regional clubs and promoters. Today, there are only a variety of separate-but-unequal circuits (alt-rock being the biggest) whose performers rarely break into the big time. (Of course, many of them don’t want to, and some are major-label refugees with no intention of going back.) In erecting bulwarks around their domains, the major music businesses have left no entrance for the serendipity that kept the pop industry lively (and profitable) for decades. Yet the barbarians at those padlocked gates are the only people who can save the major labels’ dwindling empires.

Mark Jenkins reviews music and film for the Washington Post, Washington City Paper, NPR’s All Things Considered, and others.

———–

Soundbreak.com, which develops music Web sites, has shut down operations, according to Acacia Research, an incubator that invested nearly $10 million in Soundbreak.

“Soundbreak CEO Paul Ryan said in a statement that the company was unable to raise additional capital. He added that Soundbreak will return remaining capital to shareholders.

“In March of 2000, the company raised $19 million in its Series C from investment banks, private equity funds, and individuals.”

The struggling company had already pinkslipped half of its 50 employees earlier this month, according to Internet Stock Review Online.

In January 2000, Soundbreak announced their impending launch (see RAIN coverage here) and the appointment of radio and MTV veteran Mark Goodman as VP/Music Programming. In August the company made news again when they broke from the pack of online music sites in arbitration with the record industry to determine a fair payment structure for streaming music, and set up their own deal with the RIAA (RAIN coverage here).

At that time, then-CEO Lisa Crane explained that cutting the deal with the record industry was the right move to make, in order to progress with their business plans. The company had hoped to make music available for download, and expand into other music-related e-commerce opportunities that would require record label cooperation.

-Ian.

Escape From Silicon Valley

As I stared up from under the sweat-soaked crown of my badly scarred goalie mask I saw the opposing line take shape around centre ice: Sun Microsystems¹ CEO Scott McNealy, flanked by San Jose Sharks wingers Scott Thornton and Matt Bradley. Only in Silicon Valley would a CEO stack the roster of his company hockey team with NHL prospects. Sun, as a major sponsor of San Jose Arena and the Sharks, usually had no problem recruiting ³ringers² during the off-season.

But the daunting prospect of facing the now superbly stacked Sun Dukes (with their alluringly cute Java ³Duke² logos proudly portrayed on their jerseys) was the least of my problems. In fact, having two-pound pieces of rubber hurtled toward me 40 or 50 times over the next hour was a welcome relief from the more inescapable punishment of daily life in Silicon Valley.

I first moved to the Valley with the prospect of eternal dot-com glory and visions of stock-option-supported sugarplums dancing in my head. As a young, underpaid, underappreciated employee at a big telecom company in Canada I was an outsider, looking in on a technological revolution as my peers in their khakis and Kenneth Coles marched on to early retirement.

I was recruited by all of the biggies: Netscape, Cisco, Sun, Yahoo. In the end I went with Cisco because I thought they were changing the world and because I thought that their future was secure. With my NAFTA work visa in hand I hopped a plane to the Bay Area and reunited with my furniture a few months later in the suburbs of San Jose (which itself is a suburb).

Cisco greets its employees every morning in more than 30 nearly identical buildings that shun all known schools of architecture and design. The parking lots are littered with the signifiers of any successful startup ­ on rainy days you can walk from building to building on the hoods of Mercedes, Lexus, and Porsche automobiles and never get your feet wet. That is not to say that you ever have to, mind you, because rain in Silicon Valley is as hard to come by as property.

On the subject of property, it took me several weeks to locate an apartment, in a characterless gated community located in the ³Golden Triangle², an area of San Jose known for its high property costs and higher traffic. Once I finally found a home, I was sucked into a beauty contest and bidding war with other potential occupants, each vying for the affection of the property manager. After reviewing my banking and investment history, my employment terms, my assets, and checking all of my references and previous landlords I was finally deemed worthy of residence in my new enclave. With a vacancy rate of less than 1%, finding a domicile in the Bay Area is an act requiring superhuman finesse, persistence, and extreme patience.

Once there, I began adjusting to the small frustrations of Silicon Valley life: endless commutes, infuriating airports, freeway drivers with severe behavioral disorders, lineups for everything from the bathroom (think 5 guys for every girl) to the local Costco parking lot ­ all indignities associated with any city but amplified by the fact that the Bay Area, quite simply, has too many people.

All the while my life centered around the routine drudgery of technology workers in Silicon Valley ­ 12-16 hour weekdays were not uncommon, which left little time for much other than some MTV, email, and occasional sleep. The corporate environment, designed to immerse employees in a community of.. well.. work, encouraged employees to spend as much of their time as possible on the company campus through the provision of gym facilities, restaurants, free snacks and drinks, and even a company store.

The result of all of this is that so-called ³lifestyle workers² all but slept under the supervision of the company. This was a culture in which workers proudly proclaimed the abandonment of their families and personal interests in slavish devotion to The Company with pride. Weight gain, pallid complexion, and poor hygiene were worn as badges of honor and garnered muted respect among peers. After all, who had time for such frivolities?

Any moments of low self-esteem or mild depression were dispersed by unsolicited calls and emails from persistent recruiters. These scavengers were more often than not unable to conceal the fact that Boolean search terms had led them to my resume, rather than actual interest in connecting me to the right job. This too, was part of the equilibrium of Silicon Valley life.

I welcomed these New Values because, of all things, Silicon Valley workers are motivated by one, unifying cause: greed. After a year, greed took me from Cisco and into a whirlwind of startups as the valuations of such companies reached hundreds of times their earnings. We all bought into the vision that the illusory market would continue to drive our option growth forever ­ or at least for long enough for us to get out and buy our mandatory Boxster and retirement palace in Carmel-By-The-Sea. Frankly, for Valley workers, most of whom are under 30, it was a chance worth taking.

But then came March 2000. The cataclysmic downturn of the dot com economy (if it ever was one) brought with it more than its share of nervous anxiety. But the worker bees still believed in their Stock Market Prophets, who proclaimed that a bear market was a buying opportunity. We kept our noses to the grindstone, accepting the inconvenience of a delayed IPO. Boxster orders were placed on hold, but plans went ahead to redecorate the guest bedroom.

The days of reckoning came shortly before Christmas. The stock market, unsatisfied with their prior grumbling regarding unprofitable dot com companies, resorted to a sucker punch. Dot com companies, especially those without actual business plans, and their employees could no longer cling to fuzzy notions of early exits. They learned that it would be a long grind.

Silicon Valley is now a much different place. The $100,000.00 per month billboard ads touting online shopping sites, which flanked the 101 Freeway through the good times, have been replaced by those of boring, uncool infrastructure companies. The recruiters don¹t call as often and aren¹t as persistent.

I left in October, along with others who saw the writing on the wall. Collectively, we realized that the self-sacrifice was not sustainable, and the sacrifices without the reward carried the penalties of our youths. We emerge from the experience as seasoned veterans of Generation X¹s best opportunity to get what our parents got, and more. Some of us succeeded, some of us will try again.

Returning now, from my new, reasonably-priced home in the Hollywood Hills, is like arriving at the party after everyone has left, and being asked to clean up. The detritus of the dot com revolution still trudge down the 101 every morning and evening, still making the payments on the Land Rover, but the tone and the conviction is not the same.

The blind optimism is gone. For now, it¹s back to business.

-Ian/2001

Ian Andrew Bell is a technology consultant and writer living in Hollywood, CA. Reach him at scoop [at] ianbell [dot] com

“>http://www.apple.com/DTDs/PropertyList-1.0.dtd”> date-sent 980297164 flags 570686593 original-mailbox local:///Import/foib sender Ian Andrew Bell <hey [at] ianbell [dot] com> subject @F: Escape from Silicon Valley.. to <foib [at] egroups [dot] com> ]]> 3431 https://ianbell.com/2000/12/06/red-herring-blackberry-picked-to-be-the-american-i-mode/ Wed, 06 Dec 2000 22:33:17 +0000 https://ianbell.com/2000/12/06/red-herring-blackberry-picked-to-be-the-american-i-mode/ http://www.redherring.com/companies/2000/1205/com-rim120500.html

Blackberry picked to be the American I-mode By Om Malik Redherring.com, December 05, 2000

Michael Dell has one, Marc Andreessen does not leave home without it, and it is a must-have accessory for every Wall Street investment banker. It’s not the American Express Platinum Card; it’s a lowly two-way pager, which also sends and receives email.

The esoterically named Blackberry — a cross between a personal digital assistant, wireless email device, and pager manufactured by Research in Motion (Nasdaq: RIMM) — is one of the hottest devices in North America, with more than 200,000 sold, mostly to on-the-go corporate types. And those sales have happened primarily through word of mouth, a marketing coup that might be considered the hardware equivalent of Napster’s success.

At a recent Churchill Club gathering in Santa Clara, California, Kleiner Perkins Caufield & Byers partner John Doerr — arguably the second-most powerful man in technology, behind Bill Gates — described the Blackberry as “the I-mode of North America.” (I-mode is the popular wireless service from Japan’s NTT DoCoMo; with handsets that resemble the smallest American cell phones, I-mode devices are the most common method of accessing the Internet in Japan.)

Mr. Doerr was pretty much on the mark. Soon, with America Online (NYSE: AOL) and Yahoo (Nasdaq: YHOO) pushing the consumer version of the device into the market, the Blackberry is likely to become a household name. Last week, AOL said it will use Research in Motion’s hardware and customize it as the AOL Mobile Communicator series of handhelds. AOL subscribers can purchase the device for $329.95 and pay a monthly $19.95 subscription fee to access the wireless service. Given AOL’s reach, that could add a few hundred thousand Blackberry devices into the market. PC makers Compaq Computer (NYSE: CPQ) and Dell Computer (Nasdaq: DELL) have signed up to push the device to their customers for a piece of the action.

For Jim Balsillie, chairman and co-CEO of Research in Motion (RIM), these are the salad days. For nearly 12 years, the Waterloo, Ontario-based company has struggled in anonymity, hoping that one day it would become the darling of the Silicon Valley crowd.

His wish has been granted. RIM stock has been on fire for much the year — rising 44.6 percent, giving the company a market capitalization of about $5.3 billion.

COMPETITION HEATS UP The Blackberry created a market that everyone else is chasing. Motorola (NYSE: MOT) is hoping for similar success for its new Timeport pagers. But even its neon colors, lower price, and Hollywood push (MTV veejay Carson Daly is a pitchman for the product) may not be enough for Motorola to combat its Canadian rival. Palm (Nasdaq: PALM) and Handspring (Nasdaq: HAND) are also adding such features to their products, but RIM has a nice head start.

Looking to expand quickly, the company has just expanded into Europe. BT Cellnet, a subsidiary of British Telecommunications, is going to sell the device in England and Europe. All this expansion is, of course, going to take a big bite out of the company’s profits.

While sales are expected to rise to $189.3 million in fiscal 2001 (ending February 28, 2001) from $85 million in fiscal 2000, RIM will report a loss of $9.7 million for fiscal 2001 versus $10.1 million in net income in fiscal 2000, according to Merrill Lynch estimates. Merrill analyst William Crawford predicts that by fiscal 2002 RIM will be in the black again, posting a net income of $9.5 million on sales of $344.4 million.

Red Herring recently caught up with Mr. Balsillie and talked about the future of RIM and the viral marketing of the Blackberry pager.

Q. Can you explain what makes Blackberry so hot?

A. There are two reasons why Blackberry has become so popular. First of all it, is always on and always connected, so you can get your email anytime, all the time. Secondly, it is an extension of your desktop. Everyone else wants you to have another email address, while Blackberry does not require [it].

Q. Why are you simply focusing on the hardware device and not offering services on top of your platform?

A. Part of our value-add is that we do not contend or compete with the existing player. If it is an Internet service provider (like AOL) or a portal (like Yahoo) we simply extend their platform. We do one thing — the hardware — and we do it very well. I think the embedded antenna, long battery life, and ease of use are because of our focus.

JAVA IS KEY Q. So what are the new applications currently under development that will give more oomph to the Blackberry?

A. Since we use a Java virtual machine at the core, half a million Java developers can develop applications for Blackberry quite easily. More than 10,000 of our software development kits have been downloaded so far. So you will see people like Aether Systems (Nasdaq: AETH) and ETrade (Nasdaq: EGRP) develop stock-trading applications. Others are developing a personal wallet for the device. Of course, Yahoo and America Online are offering their own services (such as instant messaging).

Q. Java seems to be the key here.

A. The developers do not know what environment to write for, and they are confused. I think that is why a lot of wireless devices are embracing Java, so that developers can write applications which can run anywhere. We were the first, and now other wireless devices are doing the same.

Q. You must be coming under a lot of competition, especially since Palm and Handspring have started offering their own wireless services and are working with the wireless ISP Omnisky (Nasdaq: OMNY). And they seem to be cheaper.

A. I think the comparison is unfair, because we are a personal information manager, wireless email device, and pager all rolled into one device for $399. Now if you took the others and added the cost of a modem, their solution is more expensive than us.

Q. What about Motorola, which has new two-way pager-wireless devices on the market that are being touted by Hollywood celebrities?

A. Motorola is selling a pager, a very simple device, which runs on a legacy network and has limited functionality.

Q. What’s next for RIM?

A. I think with the America Online and Yahoo thing, the consumer push is a huge area. Secondly, we are about to start integrating with Lotus Notes. These are two major developments for us, and of course there is the expansion into Europe.

Looks like the uprising of consumers against the Music Industry has taken a fairly heavy blow. The Music Industry equivalents to Che Guevara and Fidel Castro have both been snapped up by legitimate companies with similarly legitimate (and legal) intentions.

http://dailynews.yahoo.com/h/ap/20001102/tc/scour_sale_1.html http://dailynews.yahoo.com/h/ap/20001102/tc/napster_2.html

As Bertelsmann (AKA BMG) moves into the MP3 realm with a subscription-based model, what is the significance of this for the industry? I think it’s too easy to cry foul and to discount these actions as the “end” of something which could have been better. Nobody’s selling out to the man, here.

BMG is in a much more solid position to deal with the RIAA (they are, after all, a member) and fend off the types of reactionary responses that have been coming from the industry so far. The subscription-based model being discussed is actually good for artists who, via ASCAP & BMI, would get compensated based upon their popularity and the number of transfers from within Napster.

What’s more, such a model points out more than ever before how the Record Label’s role as promoters and distributors of music is becoming quickly outmoded. Record labels do, however, have a role to fulfill.

I had dinner with a friend of mine, Adam Hurstfield, in Vancouver a couple of weeks ago who has achieved some success in the music industry as a producer. It occurred to me, during our conversation, how much his language is like my language — talk of investment, upside, and dealmaking. I realized then and there that record labels are the Venture Capitalists of the music industry. They sink the money to get the music produced, paying for studio time, pizza, and limos; and they help to push the artist to the next level — bigger financiers and bigger promoters, and bigger labels. Their investment should not go unrewarded.

But just as the VC business (who had heard of these guys before the 80s?) evolved out of the banking and finance industry, so boutique record producers (ie. indie labels) are spinning out of the music industry and driving margins and insane profits down. The result: a more equitable distribution of the profits among artists and producers on the up side; and fewer and less risky investments being made by the majors on the down side.

So the old problem remains: MTV and Radio are still the big dogs of the distribution and promotion model — and they suck. While MTV becomes more costly and more successful, and Radio becomes less and less profitable and undergoes consolidation, the window for programming creativity begins to close. Music is now “Researched” and “Tested” before making the playlist and Indie labels can’t break into this cycle because it’s too costly.

Now, along comes the internet not only as an alternative to Radio, but also to the CD store. Napster’s pretty cool these days, but it’s no MTV… and it doesn’t help out indie labels at all because there’s no effective device to return upstream revenue to the producer and the artist.. (in fact there’s no mechanism to return revenue to Napster, either). If anything, this exacerbates the problem: it’s the industry cannibalizing itself. And because it’s IP it’s NOT mainstream.

Napster may have made things even worse now, as it is today, because labels get more and more conservative as they fear that lower-threshold artists could get “Napsterized” and have pirated copies of a CD outstrip the sales in the store. In this light, Christina Aguilera becomes even more favourable because you can be dead certain that she’ll sell enough product to hit critical mass and pull way out ahead of the pirated and bootlegged material. So in an ironic way, Napster has made the music industry suck even more… and Napster is (even more ironically) ultimately dependent upon that industry to generate and promote content.

Now, for a recipe. Take 1 cup Napster, 1 cup MP3.com, 2 cups ASCAP/BMI, and stir:

http://dailynews.yahoo.com/h/nm/20001102/tc/napster_ascap_dc_1.html

Build into the Peer-2-Peer model AND the centralized distribution model a subscription-based pricing model with upstream revenue to artists and producers through ASCAP and BMI, just like what has been in place for decades with Radio, and you’ve solved the problem. More powerfully, you have created an alternative medium to MTV and Radio that is self-sustaining, and which is more open and more free to inexpensive promotion by a more diverse range of musicians. And you’ve cut out all the fluff and margin that has made the music industry so polarized.

And now for my Buck Rogers vision of the future: If IP can spread far and wide enough that the internet distribution model, with its lower cost and greater diversity, Internet-based music srevices can begin to appeal to audiences more effectively and more widely than MTV and Radio. With that, you have ghettoized those two institutions and created a medium which is no longer alternative, but hopelessly mainstream — without all of the hangups of alternative media. Britney Spears has to get a day job as a hairdresser.

The difference between this vision and the original Napster vision? Nobody gets screwed. Audiences pay less for the music they want, artists get what they deserve every time, and labels don’t get to be greedy bastards anymore because there are no barriers to entry for new “Music VCs” to enter the game — money and creativity is the only ticket to ride. Record labels are forced to get big and stay big through diversity and breadth, not pushing cookie-cutter imitations and force-feeding Backstreet Boys onto every radio and TV station until we relent and head over to express.com to buy the CD.

One thing’s for certain: the Record Industry’s high times are numbered. But there’s a fundamental role that labels serve and should continue to serve. BMG should be commended for recognizing this and being brave enough to face it with vigor and creativity.

Napster was never meant to be. That should be obvious to anyone who knows what their revenues are. It’d be interesting to know what the Return On Investment was for the VCs that pumped cash into Napster, as a result of the deal.

Stay tuned for my post which theorizes that Napster was built-to-flip and that this “surprising” move of selling out to a major label was part of the plan, all along. Was Napster’s Luciferic logo intended to scare the industry into submission?

-Ian.