If you are like the majority of people, you likely listened to some sort of music during the day and definitely during the week. Music does many things including bringing people together which is why free concerts work whether they are performed. For the most intense form, many people go to concerts and festivals and that is wonderful. Another way to listen to music is use the streaming service Spotify.

In an article by Maria Sherman of the Associated Press, the writer discusses how Spotify works. For a musician some sort of music streaming accounts for 84% of the money generated by the music industry in the US. This statistic is from the Recording Industry Association of America (RIAA). For the world, the number falls to 67.3% according to International Federation of Phonographic Industry which tracks global sales.

The biggest streaming platform with a 31% market share is Spotify with a reported 626 million users and 246 million subscribers in more than 180 markets.

Spotify pays roughly 2/3s of each dollar it collects to the rights holders of the music on its platform, paid out between recording and publishing agreements. The rights holders paid the musicians, the rights holders include record labels such as Sony, Warner, Universal and companies such as Merlin which represent independent labels.

For streaming services, subscription dollars are collected in a pool and paid out via stream share, a number Spotify calculates by adding how many times music owned or controlled by a particular rights holder was streamed in a month.

Linking to dividend paying stocks, while everyone listens to music, the real money is made in the most popular musicians’ rights holders. Once in a while, there are news articles about a deceased musician rights being sold and as long as the music means something to those listening, a royalty is received. Every once in a while, a movie or advertisement will bring more people to the artists and royalties continue to be constant. In every industry, there are sectors which tend to bring in more money on a consistent basis easier. In the music it is owning the rights to the music, if you can invest in companies such as this you can listen to the music and collect royalties all day long.

There are more questions than answers, till the next time – to raising questions.

Every company in the world offers some free services, they may have started as free because they were additions to the brand but overtime, someone will also consider that is an asset that can be monetized. The process is easier to see in the software world, where there are free add-ons and eventually numbers build up and someone will ask will people pay for the service? If the answer is yes, how much? If the answer is no, will they move to alternative software? No one knows the answer, but people keep trying to add fees.

In an article by Greg Bensinger of Reuters, a good example is Amazon revamped Alexa due to be released before the holiday season.

Amazon plans to charge $5 – $10 a month for the new “Remarkable” version of Alexa. The “classic” version will be free. Alex will use powerful generative AI to answer complex queries.

To ramp up Alexa has taken a lot of work and setbacks, which is why Amazon has turned to Claude, an AI chatbot developed by startup Anthropic. (Amazon has a $4 billion investment in Anthropic).

Alexa has been around for a number of years and can be accessed through Amazon TV or Echo devices. It can set timers, play music, act as central hub for smart-home controls and answer one-off questions. Can it do more?

Bank of America analyst Justin Post estimated in June that there are about 100 million active Alexa users and if 10% opted for the higher fees that bring in $600 million in annual sales. Amazon does not release active users but it has sold 500 million Alexas.

Amazon is the same company which now charges $139 for Prime memberships, is used to be less a $100 a few years ago and more than 76.6 million households have an account.

Linking to dividend paying stocks, finding the correct amount to charge for a service or product is both an art and science. If you get it correct, addition fees flow into the company because people see value. Over time as long as people see value, increasing the fee increases cash flow.

There are more questions than answers, till the next time – to raising questions.

We all pay insurance partly because as individuals we have to. If you want to drive, the police will ask you for license and insurance (to see they are up to date). If you have a mortgage, the bank will need the insurance number, or you can find another bank. One thing the insurance companies will do is to ensure that either lessen their risk by reinsurance, but they will know exactly how much it will cost them if they have to pay a claim.

In an article by Noor Zainab Hussain and Carolyn Cohn of Reuters, in August one of the super yachts owned by a billionaire sank in a storm. Some people died, but this story emphasis is on the cost.

The British-flagged yacht the Bayesian cost around $40 million.

The hull of the boat was insured against physical damage by yacht insurance provider OMAC and others including Travelers Companies Inc., Navium Marine and Convex.

The Protection and Indemnity (P&I) which typically covers 3rd party liablity claims incuding for envrionmental damage, injury and death was provided by British Marine.

The hull was likely insured between $40 – $50 million, while the P&I cover would be several multiples larger in the range of $200 – $300 million, according to Marcos Alvarez, managing director global financial institutional ratings at Morningstar DBRS.

For the insurance companies, every time there is an increase in storms due to climate change, rates rise. Premium rates have risen by 4 to 5 times in the past couple of years in parts of the US and the Caribbean. Yacht insurers have cut the amount of cover they provide because of the higher risks.

Linking to dividend paying stocks, in the world of climate change, the insurance industry is on the forefront of examining higher risks. An insurance company collects more money than it pays out or it is out of business and insurance companies do not like risk taking. When you look at climate change, look at insurance premiums or lack of insurance coverage, then make your decision. The insurance companies have a wealth of data to examine to make their decisions.

There are more questions than answers, till the next time – to raising questions.

All companies are involved with mergers and acquisitions, it is a way for a company to grow the solidify their markets and occasionally buy assets for less and add value to shareholders. In every large organization there is a group which reports to the President examining potential companies and most of the time the decision is not to go forth. Once in while, the time is to make a decision.

In an article by River Akira Davis of the New York Times News Service, US Steel Corporation’s Board decided it would accept offers to buy the company out. A number of companies in the steel business examined the assets of the company and one thought it was a lifeline for it. Nippon Steel of Japan saw an opportunity: the home market of Japan demand was anemic, the global business of steel is dominated by China and India, buying US Steel could help Nippon Steel compete better. Nippon Steel agreed to a $14.9 billion, a 40% premium to US Steel’s stock price.

Long time shareholders thought it was wonderful and then the backlash began to happen.

US politicians from both parties condemned the deal because of what it represented. At the start of the 20th Century, US Steel was the most powerful Steel producer in the world. The company was the stuff of legends, but the past 30 years have not been great for the company. However, in a politician belief an American company being acquired by a foreign company was not good.

Over the past year, Nippon Steel has said it would invest over $2 billion into US Steel, but still. The race to become President is dependent on some close races that happen to have US Steel facilities in the area.

The union or the Union Steelworkers did not like the deal. It like a deal with a company US Steel had rejected. Cleveland-Cliffs.

In addition, in every merger or acquisition, a limited number of people are in the decision making process but once a decision is made, it can be made public and outreach to stakeholders is done. When the decision was made public, the President of US Steel David Burritt phoned International Steelworkers President David McCall. After the call, Mr. McCall was taken back because he thought he would be in the loop considering the past offer was rejected.

In every foreign investment, there are different agencies which have to sign off to ensure national security regulations are okay and both sides have made arguments to the agencies.

Part of the issue is Nippon Steel sees Chinese steel as the biggest threat while those against the merger see US Steel as being non-American owned as the biggest threat. After the elections in November we will see the outcome of the merger.

Linking to dividend paying stocks, prior to the announcement of a merger, there needs to be confidential information keeping secret until released to the public which means everyone has the potential to see the information at once. Then decisions can be made, some will accept the higher price and move to alternatives. Some will want to maintain a position but smaller as a wait and see but liking the industry. People act in various manners and partly based on length of holding and how attached you are to the stock. That is all perfectly reasonable and happens all the time. When price is the biggest issue, raising the price is the solution. When many intangibles are in the way, then patience is the solution.

There are more questions than answers, till the next time – to raising questions.

In every country, who runs the biggest banks and who is on the Board of Directors of those banks are important part of the how the system works. The banks lend money and it not surprising some of the bigger clients are on the Board, although with most companies they always deal with more than one bank. Often times the relationships of the economy can be seen through the Boards.

In an article from Reuters, the relationship between the government and the banks is clearly seen through the policies of the government. In China, because of the economic slowdown and lower property prices, the economy is suffering and one method is to blame corruption.

Former Bank of China Chairman Liu Liange stepped down in March 2023 and was placed under investigation by the anti-graft watchdog accused of accepted bribes of $22.9 million.

Bank of Chain Vice-Chair and President Liu Jin resigned for personal reasons. The state-owned lender said its Board approved Chairman Ge Haijiao to serve as acting President.

Mr. Jin had been President since April 2021 and was previously President of China Everbright Bank from January 2020 to March 2021, and VP of China Development Bank September 2018 to November 2019. Mr. Jin had also worked for state-owned Industrial and Commercial Bank, the world’s largest lender by assets, as head of investment banking.

Linking to dividend paying stocks, clearly Mr. Jin was a rising star in China’s banking world and you can read what you want into why he left, except he left quickly. It is also important to note the Board selected a successor in a quick time. One of the prime functions of the Board is to look at succession plans and access talent in the organization to take over from current management. As you do your homework, you may be attracted to or like the stories of people in the company. As they move through the ranks and you believe they are doing a good job for investors, you own stock. Understand everyone in the company can be replaced and it a crisis they often are.

There are more questions than answers, till the next time – to raising questions.

In the theory of business, particularly with a public company, the saying of you can fire the President if they underperform. People say it, they half believe it, as the reality is unless the company is also losing money, it is rare for a CEO to be fired for underperformance, but it does happen.

In an article by John Revill and Richa Naidu of Reuters, the world’s largest food-maker Nestle SA CEO Mark Schneider was ousted in a sudden decision relating to the underperformance of the company. Mr. Schneider was the CEO for 8 years and is being replaced by Laurent Freixe.

Chair of the Board of Directors, Paul Bulcke said the Board had assessed the current environment and together agreed to make the change.

Berstein analyst Bruno Monteyne said the suddenness of the move means it was not a planned transition and was clearly not Mr. Schneider’s choice. Mr. Monteyne suggested that he probably would have managed a smoother transition.

Nestle shares hit a record in January 2022 but since then have decreased. There has been a series of mishaps, earnings misses and guidance downgrades.

Sales volumes increased by 0.1% in the first half of 2024. There were worries about product development with new products taking longer to be devised and rolled out. The virtuous cycle of introducing new products, which generated cash for new products was slowing down.

Freddie Lait, managing director of Latitude Investment Management believes, Nr. Schneider loved to make deals to chase growth, but few worked out or were expensive acquisitions.

The new CEO has pledged to grow organically rather than through acquisitions. Mr. Freixe has worked for Nestle for 40 years is from the sales and marketing side of the firm.

Linking to dividend paying stocks, when a company makes a quick change at the top, it is not unusual for analysts or outsiders looking in to suggest all the things that have gone wrong and need to be fixed. Some of them are true, it is also true at the executive level of compensation, executives negotiate their contracts which means to let someone go early will involve potentially millions of dollars. Is it worth it, maybe or were there other issues?

There are more questions than answers, till the next time – to raising questions.

For most of us in the developed world, as long as people have options or reasonable choices, how they make the choices is not really something we spend time thinking about. If people have very few options, then we might be concerned, some will be outraged, and most will think who benefits and is that good? In many parts of the world, the population depends on subsistent wages and hopefully they are doing ok relative to those around them.

If you think about the sugar industry, it has been a very labor-intensive industry since people found they like the final product. Most people likely eat too much sugar, but we like it and when we eat it we do not really think about where the raw ingredients came from.

In an article by Megha Rajagopalan of the New York Times News Service, it seems the sugar industry in Maharashtra, India has not changed a great deal over the decades it has been growing sugar. An investigation by the New York Times and The Fuller Project revealed a wide range of labor abuses. At the heart of the manner is how people are paid. Instead of wages, migrant workers receive an advance each season. They function as loans are repaid through work. The documentation is thin and workers are often in debt which means they need to come back the following year to return to pay off their debts. Workers say they make about $5.00 a day.

Mill owners said the workers have always been paid that way and changing the practice would hurt the business as workers would find it easier to leave and not do the work.

Sugar producers and buyers have known about the practice for years but have not little to change it. One mill profited off the abuses received a seal of approval from Bonsucro. Major brands such as Coke, Pepsi, Unilever and General Mills have used Bonsucro endorsements to bolster the images of their supply chain,

Bonsucro CEO Danielle Morley had been aware of some of the concerns of the workers but no one told inspectors to look for it. Pepsi said relative to its overall sugar buying levels, the amount which comes from Maharashtra is a small amount.

Linking to dividend paying stocks, the companies listed above are some of the most profitable companies on the planet and the margins in the product made from sugar are and still remain high. Even Warren Buffett owns as a core holding Coke. If you owned shares in Pepsi, you would have enjoyed healthy returns as well. Every company which is profitable likely has some element which is not great for everyone, but they are profitable and people in society use their products and services. As an investor you can ask if the company should do more to mitigate the negative, but most investors are concerned with profitability which leads to paying dividends.

There are more questions than answers, till the next time – to raising questions.

When a company makes a profit on a consistent basis they have many options of what to do with the money including paying dividends and buying back stock. One of the options which investors like to see is investing in other companies to understand them as they are doing something the company is not doing. This is called vertical integration or having a say from the raw materials to the finished product to the sales floor. All countries evolved a little bit different which means as a company moves beyond its borders on the founding country, it needs to understand and buy the best in the breed companies to increase its presence in the new country.

If you think about the US and China, after World War II, in the US suburbs developed with shopping malls as a center piece of the development. This led to stores developing into the model first it was Sears who took a leadership position. Later the shopping experience is led by Walmart. In China, which is the second largest economy of the world, the internet and mobile phone apps led to the normal pattern which people shop.

In an article by Kane Wu and Summer Zhen of Reuters, Walmart recently sold a $3.7 billion dollar stake in JD.com of China. Walmart had bought the stake 8 years ago and since then has changed the manner in which they operate and will focus on its own operations in China.

Walmart invested in JD.com in 2016 by selling its Chinese online grocery story Yihaodian to JD.com for a 5% stake in the company. Later Walmart increased its holding to 10%.

According to Thomas Hayes, Chairman at Great Hill Capital, Walmart wanted to get exposure in China in 2016 and learn the retail business. They now have their own exposure through Walmart and Sam’s Club stores and no longer need a minority interest in JD.com when they have a great business themselves.

In terms of Sam’s Clubs business grew 26% and there are now 48 Clubs in China.

Linking to dividend paying stocks, while the emphasis on the stock is what their core business is, most dividend producing stocks have investments in other companies as options for the future. The key is the future, due to the profits they can have a long-term outlook, and it is possible those companies will grow in value. In similar fashion, many companies own real estate which if all sold would lead to shareholder gains, but the real estate is not being sold at the moment. When you are doing your homework, those other holdings help protect your investments which is good thing.

There are more questions than answers, till the next time – to raising questions.

If you were in the marketing world and wished to appeal to young adult males in turns of the myth of marketing, you would like to pick James Bond and some of the movie roles played by Cary Grant. Both of the people easily moved in society parties; each were well dressed and carried themselves well. The women were attracted to the characters and each had a dark side which the audience typically cheered for. In the case of James Bond, he was working for the British government or a spy to stop bad guys. In the case of Cary Grant one of the roles in the movie To Catch a Thief was he stole jewels, but nobody was injured. The owners might be alarmed and ordered more security and made insurance claims but Cary Grant did not kill anyone.

In a book called The King of Diamonds by Rena Pederson published by Pegasus Crime, New York, 2024, the author investigates the mysterious case of a jewel thief stealing diamonds in Dallas, Texas.

Dallas, Texas is the banking center of Texas founded on cotton farms and cattle ranches. The cattle ranches are some of the biggest in the US because everything is big in Texas. When oil was discovered, the center of financing of oil cemented Dallas over Houston where outside the city the refining of the oil is done. The huge deposits of oil in Texas made many millionaires and eventually they bought large homes and enjoyed social gatherings. Often times there was a gala season for money to be raised for arts and culture and men wear tuxedo and women were gowns and jewelry. If you are wealthy, the jewels were worth thousands in the 1960’s and would be worth millions today.

In Dallas, someone was going to the most expensive homes in the city, breaking into the homes, and stealing some jewelry but not everything. The person(s) was very particular about what they stole and many times left expensive jewelry. Often times, the thefts occurred after a gala event where the owners would come home take off their jewels and leave them on the table to put them in safekeeping the next day. This led to many questions of information needed to do the heists.

The author of the book, Rena Pederson was a former journalist, and she looked back at the events and tried to piece together what were the circumstances that led to nobody being convicted on the heists? If you think about oil and gas industry, for those looking to drill it is a process to determine where the best place to drill is to find oil that pumps out in commercial amounts. In some ways it is gambling. hopefully with more information, but nevertheless it is gambling. In Dallas as well as every large city there has always been the lawful side of the city (where most of us live) and the unlawful part and prior to the legalization of gambling – there were plenty of places to gamble. They were often referred to as clubs. Who ran the gambling joints, it tended to be the mafia or those connected to crime. If you live in Dallas, legalized gambling was a 3-hour flight away to Las Vegas or a day’s drive.

In Dallas and every other city, when the wealthy become wealthy, they have a different relationship to the police and most of the time it means having all the protection but no publicity about their affairs. In politics, all politicians are dependent on raising funds and when the wealthy give it is not only to influence potential laws, but to run interference to stay out of the limelight. Sometimes it works, sometimes the activities become public. In the book, the author comes to the conclusion that the thief was likely someone that came from a wealthy family or wealthy neighborhood and they were not really stealing to raise money by selling all the jewels, it is likely they were keeping it, perhaps to admire the jewels or the thief was one of their own.

Linking to dividend paying stocks, most of us own stocks to become wealthier and have the income on a consistent basis. For some the money can be spent on a lavish lifestyle because the quarterly dividends come up to pay money that is spent to maintain a lifestyle. It is one of those individual choices people can make, knowing the dividends are coming quarterly. Having the option from a financial point of view is the most important element of the financial plan. After you have the option, you can debate how the world works or should work for the better?

There are more questions than answers, till the next time – to raising questions.