Ben Gilbert: evaluation

Transcript context

…God, the parallels to Spotify are just amazing with the two different tiers of customer experiences and vastly different implications of that for their back-end costs. A hundred percent. Okay, you're leading the horse to water. I'm the horse, here's the water. Because there are very real marginal costs in this business just like Spotify, at the end of the day, this actually does have the same incentives that an old school gym membership, which is to sign you up, keep you subscribed, but really no incentives for you to actually go to the gym all the time. They want you to do the minimum amount to stay subscribed, stay engaged enough with us, but don't cost us any money. We want to minimize the amount that we have to pay the music labels on your behalf, which is interesting. I was thinking about this. I'm preparing for the episode and I slept on it. When I woke up this morning, I realized, because they're bragging about all their earning stuff increasing user engagement over time and having internal KPIs around, we want people to use the service, I came to the conclusion that they have to have a pre-negotiated revenue split with the music labels rather than paying per stream. because Peloton could end up in a really tough position if their own incentives are for you to stay subscribed but not ride. I bet they did some kind of blanket license type thing where 20%, 25%, or whatever it is ends up of all subscription revenue no matter what ends up going to the labels. If they don't have that, they probably have a new CEO who could help make that happen.…

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