CAN SPOTIFY SAVE ITSELF?

The music industry continually views the year 1999 as both its crowning achievement and the beginning of the end. That year saw peak sales of compact discs, the first digital form of music, totaling $14.6 billion. That same year, Napster was launched, allowing free digital music downloads until it was sued out of existence in 2001. But the damage had been done, and the music industry found itself in a downward spiral of continually diminishing revenues. But in 2011, a solution appeared that promised to reverse this trend. That year, Spotify launched its application in the United States, and by 2014, music revenues were growing more than 6% every year. This is how Spotify saved the music industry.

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TESLA'S FUTURE LOOKS LIKE THE PAST

On February 6, 2023, an investor named Charlie Bilello posted a tweet comparing the financial performance of Tesla with GM and Ford. The post compared figures from 2012 and 2022. In 2012, GM and Ford revenues exceeded $130 billion, while Tesla revenues were $413 million, less than 1% of the automotive juggernauts. By 2022, Tesla revenues had increased to 52% of GM and Ford, but more importantly, its profits had surpassed its competitors. Tesla CEO Elon Musk retweeted the post with the caption "How times have changed." Various media outlets repeated the figures with headlines like "Tesla Makes Twice as Much Money as GM and Ford Combined" and "Tesla Will Overthrow GM and Ford by 2027." The news doubled Tesla's market valuation to nearly $800 billion, 16 times more than both GM and Ford, which were valued at $49 billion. So is the hype warranted, are the analyses true, and most importantly, is the data complete?

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WHO KILLED THE POST OFFICE?

In 2006, Congress passed the Postal Accountability and Enhancement Act. Instituting a number of changes, the most interesting one was the mandate that the United States Postal Service must fund in advance the health and retirement benefits of all postal employees for 50 years. Numerous articles have been published over the past 17 years citing this one requirement as the downfall of the Post Office. The argument is that Congress took an organization with $6 billion in profits and turned it into a massive failure with $160 billion of debt. According to the data, is that what really happened?

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COLLEGE ON A CURVE

The familiar A through F grading system seems to have been invented at Mount Holyoke College in Massachusetts in 1884. By the 1940s, this system had been mapped to corresponding percentages and was the dominant form of grading used in most U.S. educational institutions. The scale was centered around 70% as an average level of acceptable performance, granting a letter grade of C. Anything below that was considered unsatisfactory, and anything above that was considered superior. Work that was in the top 10% of all students was deemed excellent, and awarded an A. This empirical gauge, originally conceived as a standard bell curve with most students in the middle, held true through the first half of the 20th century. But something changed around 1960.

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THE OLYMPICS BANKRUPTCY MACHINE

In 1970, Denver, Colorado, was awarded the 1976 Winter Olympics. Everyone felt the location would be ideal to celebrate both America's bicentennial and Colorado's centennial. Despite the fact that the previous Winter Olympics had cost over $1 billion to produce, Denver boasted that they could do it for $14 million. But the citizens of Denver disagreed, and after two years of protests and pushback, Denver became the first, and only, city to rescind their bid to host the Olympics. The move forced the International Olympic Committee (IOC) to scramble for a new host, and in three months, the group chose Innsbruck, Austria, the Winter Olympics host twelve years earlier. The 1976 Games ended up costing over $100 million, more than seven times Denver's original estimate. Montreal's Summer Games that same year came with a $6 billion price tag and a $1.5 billion loss, bankrupting the city and saddling its citizens with 30 years of debt. Denver and Montreal sparked a discussion that continues to this day. Is it ever worth it for any city to host a megaevent like the Olympics, and if not, why do we keep doing it?

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UNTYING THE DATA FROM THE KNOT

The Knot is the number one wedding network in the United States with over 11 million monthly visitors, and reaches 8 out of 10 brides. In 2022, the company surveyed 12,000 of its users to provide its annual wedding statistics. Among dozens of data points, that survey reported that couples in America spent an average of $5800 on engagement rings. As the wedding authority, this statistic from The Knot is cited by numerous media outlets, including Vogue and American Express. There's just one problem: that figure isn't true. That same year, Today's Wedding Jewelry Consumer, an independent market research firm dedicated to the wedding jewelry industry, released the actual purchasing data for engagement rings, and it was significantly less: $3670. The fact that The Knot's figure is so far off and gets cited far more often reveals a lot about us as a culture and the wedding industry as a business.

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KODAK'S WILD RIDE

The Eastman Kodak Company was officially formed in 1901, right after the company invented the first inexpensive, portable, personal camera. By 1992, Kodak was a $20 billion company, and the 18th largest business by revenue in the United States. Twenty years later, the company filed for bankruptcy. Kodak's story has become a classic, cautionary tale about a business that developed tunnel vision, refused to diversify, and actively fought technological developments. It's an overly simplified story that is easier for us to understand and repeat, but the actual data tells a different story.

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THE DATA BEHIND THE BUSINESS

Data not only provides a more accurate view of things; it can also tell better stories. In a world of catchphrases and memes, we'd all like a more researched and robust picture of the business world. What factors were most significant for the meteoric rise and fall of certain companies, and was their trajectory truly meteoric? How true are the organizational narratives we've all been conditioned to believe? Were the most celebrated advertising campaigns actually as successful as everyone thinks they were? Every month in The Data Behind the Business, we'll look at hard numbers and statistics to get a better understanding of how industries are actually shaped. The truth will surprise you, and may also change the way you look at your own business.

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