♪ emily: this is "bloomberg technology" and coming up, more questions swirl around tesla after it was a earnings call and ceo elon musk is putting contractors on notice, starting with warren buffett. and this date of streaming, the industry think brought to life and how that rivalry between spotify and apple will play out into is getting paid. and the u.s. midterm elections kick into high gear as for states hold primaries and that

companies prepare to take that fake news and disinformation, or will we see a repeat of 2016? elon musk has locked up contractors, a recent email was sent out to tesla employees warning outside workers worldwide would be denied access to tesla factories. part of the email wrote putting up edition opening night axis to networks on monday morning, supplies worldwide, time to scrub off the barnacles. this is after a bizarre earnings call were mosque could off boring posted analysts asking one of the questions about the company's cash burn, enjoying this with more is bloomberg businessweek's editor covers tesla.

>> as elon musk has said, production has held factory and now scrambling to make model three sedans, and it seems the stress of the moment is beginning to show. emily: he referred to workers as barnacles before, is a goal to produce more cars and not less? >> elon musk said tesla is spending much money and they need to find ways to reduce costs that he called a russian nesting doll, a fun metaphor for this. tesla was relying on outside contractors and acting like a normal car company. he said he is worth to ask everyone to justify their use of contractors and we have this memo are you saying you have to personally vouch. emily: is it because contractors

or production problems? max: the fact is that have been production problems and tesla spending a lot of money. you could read into thought. it is also surprising that you try to make as many cars as possible you try to cut staff, is a had scratcher. emily: investors are still talking about this bizarre earnings call, let's take a listen to his exchanges with analysts. >> we are going to youtube. sorry, these questions are so dry they are killing me. it is something will solve -- next. boring questions are not cool. if people are concerned about volatility, don't buy our stock. do not like it volatility is scary. >> i know you mentioned the kilowatt charger. >> asked questions that aren't boring. emily: he talked about a

millennial focused channel called hyper judge television where they got into 23 minutes of q & a with musk. >> i crowd sourced questions for viewers and subscribers and pitch it to elon at tesla and they let me on the call. >> is the model being disrupted by what you achieved? 23 minutes is a lot of time and he was obviously dismissive of the traditional wall street analyst questions. and those questions were valid talking about gross margins, does it need to raise more money? to think this is a pivotal

moment in that analyst call epoque? >> i think the questions before me were reiterating things that were answered in the shareholder letter and was a perfect storm of elon getting straight and not think the transition went as smoothly as it could. i had 10 or 12 questions prepared from shareholders, and i had the floor and decided to keep asking questions. >> i have so much to ask you. you have this youtube channel that is not making money, and i gather you have sold some of your bitcoin investments to fund the channel. can i ask you, how much it going you owned and what price you bought and sold? you have other cryptocurrencies? >> i got into the going and liquidated and averaged all thousand nine been using those profits to find hyper change all week wrapup revenue for now.

currently i own one other crypto asset. >> can you get back to the tesla call for a moment? i wonder why on the earnings call, if you talk about shareholders, could you have waited for a shareholder day or annual meeting? which is work shareholders was his are heard. the earnings call is typically for analysts. >> i think of myself as an analyst, and although shareholders to get the chance to ask questions, the quarterly conference calls are for updates on the business. i will say i could have got more into the financials, specifically the trajectory of operating expenses is important that going to profitability. there is a place for more strategic questions on the conference call and analysts were not addressing them.

like feedback from the huge energy storage facility in a still yet that elon musk referenced. >> you feel used by elon musk in the sense he is able to give you five minutes takeaway time that analysts could have asked questions? >> about the tesla energy debt is alarming a long-term story at about these questions. emily: that is the host of hyper change television, and to be fair, he did ask questions that a lot of people would look to ask elon. that said, this is a company that hasn't turned a profit in its 15 year history some analysts are right to wonder when that might happen. max: part of the concern when he

saw the start price fall in the wake of this call wasn't so much about having a youtube personality and a fan boy analyst on the call, it was more about the reaction and singly -- seemingly erratic demeanor of elon musk. you have a company that is dependent on this one person, and that is why people are paying attention to him. emily: he was asked about this at a shareholders meeting and let my to things around in some areas but said i don't think he can. there were several tweets about starting a candy company, and he is super serious about it. max: he couldn't resist that candy bate.

emily: a moat is putting a buffer on your business. max: elon musk said they are boring and uncool, and despite the view is innovation rather than building barriers of entries is where they are. on the other hand there is a focus question going on here. emily: is this behavior going to have a long-term impact on his reputation and likeness for investors to back him up? max: yet to take the good with the bed with him because he is good at making news and creating a scene, part of what tesla has been able to successfully is get people to put money down for these cars. part of the way you do that is by making noise and trolling warren buffett or bringing you to press not these on the call. yet to take it both ways and the stock is recovering today. we will have to see what the numbers show at the end.

emily: max chafkin, thank you so much. coming up, estimates success and how to music industry is writing this to make waves of success. and if you like bloomberg news, listen to us on the radio at and on sirius xm. this is bloomberg. ♪

emily: the music industry is experiencing a boom in revenue one not seen in a decade. revenue had $8.72 billion and that number is steadily rising since 2015. less than the music industry was

getting numbers like that was 1994 when growth was around 20% to the tune of $12 billion. analysts point the finger at stomach as his habit of the business and goldman sachs for this is to make industry will grow by 2030 and invest majority will be paid from subscribers. joined us to discuss his analyst at the marketer. it was it long ago taylor swift was pulling out of spotify and she is back, what is happening in the last couple of years to make streaming work better for the industry itself? >> with this happened is

assuming services have wrapped up and people have latched on to that model. up until a couple of years ago that there was a tension between cd sales and streaming and paid downloads. on this trimming site you had side, yound streaming had services like pandora that they played list based streaming and you had on demand streaming like apple and spotify. now on demand model is taking over some people basically choose what they want to listen to and they have access to a lot of these services that are affordable and offer pretty much everything under the sun with very few exceptions. people are good to go. emily: we recently spoke to the ceo of sound cut and take a listen to what he had to say about this explosion and growth. >> spotify is a fantastic development ultimately for the streaming space. we are at the moment now which many of us may not have envisioned a couple of years ago. we are on path of having hundreds of millions of consumers paid for assuming music. we see that return to the industry overall, i think citing development for all parts of the chain. emily: revenue paid in 1999, at goldman sachs says it will get

to $41 billion by 2030. how? paul: the goldman sachs figures is for global business and we're talking but u.s. business. the u.s. being the biggest market and driver for the industry, i think that streaming does have the potential to continue to grow the overall pie. and executive from apple estimated the total potential market for paid streaming customers is about 2 billion people around the world, and only 100 million, or 5% are being served by either apple or spotify. emily: we also have the vice president of amazon music, take a listen to what he had to say about alexa and how it is compelling the transformation. >> we see exponential growth.

we don't discuss numbers publicly what i can say in a short period of time, caps on has become the third biggest streaming service globally and some figures we have seen just this year alone in 2018, listening on alexa in the last two months is more than it was the year before, which is also 2x what it was before. we are really different than any other music service, which is all about mobile. emily: how do you see that type divided among apple, spotify, and amazon music? paul: i agree with the comments from amazon about alexa and home speaker technology. wherefore to see that with google because they have a similar technology. apple has siri.

the ability for people at home to the other smart speaker's template a playlist or radio station will power a lot of listening at home and the mobile side of it has taken off with services on smart phones and people using spotify and apple and pandora when they are working out or driving. that extends it into the home the same way that connected tv extends video to the home, will also watch on smart phones. emily: paul, thank you for joining. i want to look about what company in particular is using music.ogy to up and

cobalt music is part label and digital platform, and gary trent the power music industry back into the hands of performers. it has been a rough 2000, and adjusted revenues of $21 million while featuring some of the biggest artists today, that ariana grande day, back, sting, and more in its stable. joining us now is they ceo and founder. i am curious what the feeling is -- among artists. how do artists feel now? >> that the lord moment, people -- i remember that particular moment. were quite upset come but the artists have a right now are platform -- and all of it came from streaming. kobalt transformed music streaming industry. emily: talk about how you do that? >> with a regional system, 80% is put in a separate

organization with a global platform. straight into spotify or apple and big players into the world and we put it all together in are global platform. we see in real-time what is going on in the world with the data, revenue, demographics. emily: you are a musician and play the saxophone, i am curious what that brings to the table? >> being a musician that could code, i have experience in the music industry and i realized that when i saw the transformation individual happening, was clear for me i wanted to achieve two things, take the music industry into the digital age.

one hit today has 10 billion transactions. number two, i wanted to serve creators. that means we don't take people's rights, we are a music service provider and give you. historically you have to pay for the data. today we are getting hops from all our curators. emily: what could disrupt this increasing growth that is predicted but not short? >> i am excited since i saw spotify open stockholm in 2009. we have 90% of privacy and the traditional record labels close down. he supported since they won because we believe in transformation. at that time, we were convinced. the challenge is to continue to

support the platforms that like to sell our music and also money feeding back to the artists. that is a challenge. emily: five years from now, what is the pie going to look like? >> it is going to be a dutiful environment. -- a beautiful environment. i believe will have a billion people on smart phones. we had 90% privacy in emerging markets as well like china, that with billions of platforms, the artists and curators can see what is going on and you as a fan, we will create 20 times more artists. by increasing the pie, we significantly lower the cost on the global scale. that means so much more when he comes down to creators and more parents can play music and have

a living on it. for example, a musician came to our platform, and his first single was worth $30,000 from think about entrepreneurs and creators struggling, and that is data and money and you and i are the beneficiaries. the big tech companies today are supporting us. emily: let's talk about tech companies, i spoke to tim cook last week and asked about spotify given that while there are other players it is a two horse race between apple music and spotify. he said i don't think about it that way and i think about the potential of getting all the people out there who aren't

subscribed yet tasty music service, and that is the opportunity. to support the month the edge being exclusive content. is that going to be the differentiator? >> first of all, the potential, if you think about it, 2 billion people can afford to pay for music. emily: is a commodity? >> in comparison to tv, i don't leave and exclusive content is -- in comparison to film and tv, i don't believe in exclusive content. to consumer different things, and you want 30 million songs from your favorite band. the difference is all like different interfaces. also believe that wasn't traction will come in. emily: kobalt music ceo, ask for stopping by. coming up, billionaires bash but going into of the richest man in the world speak out about the world's largest cryptocurrency. that is next.

this is bloomberg. ♪

emily: to of the richest people in the world are short no love the bitcoin, bill gates at it at the coin is an asset class that is not producing anything. a reversal from what gates said four years ago when he caught exciting. and warren buffett calls it probably wrapped poison squared and a going words that his business partner in 2014 also compared bitcoin correct poison. coming up, over-the-top programming and what kind it west is heading to the simi service and what it means for gibbous services. and are tech companies prepared for the spread of misinformation? will discuss. this is bloomberg.

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emily: the new front presentation has come to an end on the east coast and that euro plans a second week of presentations later this year in the la. this years event is refined, and one thing that continues to appear this court cutting and , and programmers are ready for the over-the-top offers. joined us now is andre swanson of a computer about the only audience measurement of from that works across the entire entity echo system including connected tv. and join this is lucas shaw, both attended multiple

conferences. you see somebody changing trends in the landscape, what is new and how her audience is reacting and what do they want to watch? >> what is most interesting over the last four months is the continued occupation of over-the-top connected tv. two or three years ago, roku had the dominant market share and providers like who had the vice chair of audience for as supported them out what you see with the tv everywhere apps from all of that traditional cable and broadcast companies as well as traditional digital players when nursing more competition for the simi audience. -- the streaming audience. emily: how is it presented? >> people are focused more on the show and less on the

trend. there is an acceptance that cord cutting has happened and audiences want to be online. disney will bring out mickey mouse and a teaser for "reckitt 2." stars on its blood from, and twitter announced sunday like 30 or 40 different missions on monday. who can convince advertisers wherever they are selling, there is a phrase of too much tv. emily: it is the golden age of tv, but there are so many shows, i don't know who has time to watch them all. is a definition of a hit changing? do you need to have as big of an audience or is the audience becoming more fragmented when you consider each show and not the platform it is watched on. andre: more and more advertising is going to audience advertising. traditionally a was that i hope my audience like a certain type of show, and assume based on some music rating that the

-- some nielsen rating that the audience is life from the cross over the top and connect to be there is expectations of actually knowing the audience and not just only the age and gender but also do they drive a luxury vehicle and are they in market for international travel? the content is becoming a proxy to go out and get audience. if you have a coveted audience , you don't have to have a large amount of viewers to be able to monetize that content. emily: are you seeing anything given the extra data you have that conflicts with what we see with nielsen? with the nielsen ratings? andre: absolutely. there is evidence that what correlates well with when your television often is not the most popular content on connected tv. party that has been do with the on-demand nature that people can watch whatever they want whenever they watch it as opposed to the bulk of the near television is watching live. there is more affinity to episodic and longer-term conditt

-- longer content on ott that even on the near. strategy has to be focused on the screen that people watch it on because the behavior is not always the same across different platforms. emily: how is this changing the kinds of deals getting done? and how they are getting them? lucas: the kinds of deals are different and that everyone wants to own all their sure spread is to be that if you are a paper this or you are sell a show and make billions of -- make millions of dollars when that show gets syndicated. netflix now twice the rights at the beginning so you get an estimated act and you don't have the crazy upside if you are taking this or that used to. most of our traffic copy that because studios what sell to other networks and overtime we have not just online but traditional tv networks cannot move selling to themselves and what did the control from the beginning to end because it allows them to do what they want online are better compete with netflix.

emily: what does it mean for advertisers? andre: the opportunity for advertisers is better than it has ever been. there are more screens and opportunity to reach audiences than ever before. i think it does mean advertisers and to be smart and one of the things the industry needs to be careful of, and i say this in a nice way, not to dumb down to connected tv into the old tv standards. emily: i see some things and i wonder, who is the audience? andre: making reasonable to the right people as opposed to assuming because this works 20 years ago, which is keep doing that. emily: are people making more money or less? lucas: netflix is making a lot of revenue, no profit. you to is making a lot of

revenue, no profit. the revenue model is precarious and still there but they are under pressure. if you are a big-time producer, you are still making a lot of money. if you are a mid-level producer there is probably more opportunities wimbledon ever -- opportunities than ever before. made isws are being good for content creators. emily: when it comes to viewing, they have a huge hit and handmaidens tell, are these networks going to be make or break the and it on whether you -- depending on whether you have a hit or not? andre: i think they have a different strategy has a lot of the content, think about "handmaiden's tail.' sometimes it can be a show that doesn't win awards that people haven't heard of there's 3 million, 25-year old males out there.

lucas: almost nobody watched madmen, it wasn't one of the most-watched shows, but walking dead is one of the most-watched shows but does it when any awards. andre: the other thing i would say about money being made is that it is not as concentrated as whatever is having the highest nielsen ratings isn't making hundreds of millions of dollars. because there's so much content that revenue is more spread out and is a lot of over-the-top platforms like people tv that people haven't heard of that millions of viewers on a daily basis. i think that is something that will be interesting to watch. emily: is this sustainable or will there be consolidation and will we see more m&a? lucas: disney is mike fox, -- we already see consolidation. disney is trying to buy fox.

traditional guys collecting the scalp is their turn to compete with the tech companies. these digital media companies, yet cycles of media companies that achieved higher valuations, and they either fail or get gobbled up and pushed together. the same will happen with the companies that on the is talking about. emily: earlier with talk about music streaming, but in five years, where the see the content that's where do you see this business? andre: i think in the next 30 or 36 months want even called -- we won't even call it connected tv or part cutting because it will be the majority of television consumption will happen that way. i skimp bloomberg all the time. -- i skim bloomberg all the time. emily: thank you. andre: it is also live content, sporting news, everything is shifting to a new dissolution platform and will change the way we think of television. lucas: i think it will be fragmented, because think five years from now, disney will introduce its on disney branded

streaming services in two years, it will take over the years of its existence, and will be vulcanized between the direct digital players and the different bundles that are offered online because you have people trying to keep their money growing lots of different ways given the traditional model is under threat. emily: two competing views of the future, it is good for debate. thank you both for joining us. speaking with television streaming, the bbc and itv have held discussions about joining forces to create a british streaming service. the early-stage talks focus on how the uk's made by esther can -- main broadcasters can work together to create a streaming rival to heavyweights, netflix and amazon. netflix has a plan to millions -- netflix has a link to million

subscribers in the u.k. and 4.3 million households are signed up to amazon prime video. coming up, google is wrong about the new policy about purchasing election ads, but is it enough to prevent interference in meddling that we saw leading up to 2016 elections? we will discuss. this is bloomberg. ♪

emily: for some political junkies, this week kicks off the start of u.s. midterm elections with primers in 40 states and the major issue going forward -- with primaries in 40 states and the major issue going forward will be whether technology forms are up to the task of taking down misinformation, affecting meddling from political ads. for a refresher, here's what representatives from google, facebook, and twitter is a fight for congress in october of last year. >> we found for an actors used fake accounts to place ads on facebook and it's about that reached millions of americans over a two-year period and those ads were used to promote pages which in turn people shared these posts, spring that further. many of these ads are inflammatory. some are downright offensive. >> we have uncovered more accounts linked up to a russian-based agency as a result of our review. inertising by russia today seven small accounts was related to the election and violated either the policies that existed at the time or have since been

implemented. >> we believe the relative limited activity due to the safeguards in advance of the google's products do not lend themselves to the viral dissemination that these actors seem to prefer. we are committed to continuing to improve our security measures to prevent that kind of abuse. emily: since the companies have announced new policies and have hired workers to flight fake -- to flag fake news. but is it enough. for more, i begin bloomberg political reporter sahil kapur, and we began tom giles. nor speak with lawmakers on a long, what is their level of concern about meddling going into these midterm elections as these primaries takeoff? sahil: no election meddling is an just something that happened in 2016 and might happen, we know it already is happening to

the extent there are shown on's and trolls online were tried to take advantage of divisions in the political conversation and try to amplify them and excite passions on both sides. the government has been slow to respond to this and is -- and is essentially outsourcing the task to tech. you played clips of executives from companies like google and mark zuckerberg at facebook, talking about their platforms being exploited. to them, it is a pr problem. it is not their jobs necessarily work about election meddling. their job is to worry about the bottom light and shareholders -- bottom line and shareholders 's job is the government to root out election meddling and preserve the integrity of this. they have been slow to do it. emily: i would argue with that, else say it is google, facebook, twitter struck to make sure the sixth of happen. tom, google today announced it will require election at buyers to come from their residence or a permanent resident, are there things that they are doing too little too late? tom: facebook is going to incorporate more disclosure so

you know when you are looking at a political ad. some of the things social media companies have never been required to do up until now, there's a bunch of disclosures that tv, radio companies papers, -- radio, newspapers have to incorporate when they are running political ads. social media has not been subject to that and that is something that social media has objected to and tried to keep it at bay. at this point, they realize they have no choice. so far, to have done very little, although that is changing. 2018 midterm elections are going to be very much a litmus test of whether twitter, facebook, google are ready for 2020 elections. so far it has been minimal, and up until recent weeks, we have been stories and shown that some of these fake news sites are still very active on facebook.

emily: mark zuckerberg was asked about this several times during his testimony and to reassure lawmakers over and over again there are doing as much as possible to make sure this doesn't happen again. listen to what zuckerberg had to say. >> we will take a number of measures to employ new ai tools and grow asked security team to more than 20,000 people and making it sure we verify every advertiser who is doing political ads and make sure that kind of interference in russians were able to do 2016 will be much harder for anyone to pull off in the future. emily: yet, the meddling is already happening and have best intelligence chief warning russians could repeat these attempts. some are asking the national guard to be on the lookout for cyber threats. are lawmakers doing anything different knowing that these threats are more real than ever? sahil: in addition to what you pointed out, we have debt and sha saying the president hasn't given a clear directive to cut

wewe have the and sha -- have the down on election hacking or meddling to go after who they believe the culprits were in 2016. zuckerberg and his message to congress was to trust us, i think this seriously and i'll take this more seriously than i have in the past. that is my summation of what i heard from him. it is not quite clear to me that congress is up to the task of relating facebook. those hearings proved the extent lawmakers the letters that technology and how far behind they are with the dynamics and -- lawmakers do not understand technology and how far behind they are with the dynamics and trends in technology and how far ahead the bad actors and people who want to meddle in the elections are in terms of knowing how to exploit it. there is a mismatch there and is not there to meet at a government, this current government that is run by people who are predisposed against regulation is going to necessarily do something. put it in will be a major test to see what message the united states sense and what types of

the actors for the deductibility probably do and what the consequences will be going forward. emily: this of course is not just an issue in the u.s., but in europe and u.k.. european officials are worried and take a listen to this quote from european commissioner for justice back in march. >> i am not happy at all about this case because in my view, is not only about data protection, this is about the threat of democracy and individual freedoms of people. emily: has been excess that it that it: facebook says was on the ball with some of these elections happening in europe, and things didn't work out there. what are the concerns remaining from the european officials as well? tom: there is a lot more emphasis on privacy there than

there is in the united states, all of the culture and society does seem to be coming around more to that here. does the democratic process go on without hindrance? those are not just european concerns. there are concerns that a lot of people here in the u.s. share. you see some results, germany is one that facebook will point to as, we have gotten a better handle on it. and i don't think anybody is under any illusion that in 28 it will get every instance. we will see instances of misinformation getting spread around by bots, and they are being very creative and getting around the safeguards that facebook and twitter create. i don't think you are going to see all of it rooted out but there is some progress been made. emily: i want to talk about whether big tech is becoming a

lobbying point on the campaign trail? we know president trump is critical of amazon. but all of these lawmakers are lobbied heavily by the tech community a. have they been making these tech issues -- by the tech community. have they been making these take issues a point in the campaign? sahil: i don't see much evidence that technology is a major issue in 2018 elections. i don't see candidates vying for that in their primaries saying this is what my platform is. doesn't crack the top high because there is not a pocketbook issue that affects voters and their wallets and back accounts and likelihood of a day-to-day basis. -- and their livelihood on a day-to-day basis. having said that, there is a sense of passion among democrats in particular to do some thing about this because they feel it personally and if elected last election because the government failed to place relation and allowed malicious actors to run amok online october to facebook. -- online on platforms like facebook. the truth about this is facebook

can be criticized has been criticized significantly for not doing enough about this. at the and of the day their responsibility will be to shareholders in the bottom line . the government may have to step in trying to do something about this, whether it does and how it doesn't form takes place always -- all remains to be seen. emily: sahil kapur in washington and tom giles in san francisco, thank you both. coming up, highlights from the microsoft conference including its partnership with amazon and it was control assistance the markets. this is bloomberg. ♪

in a demonstration at the marks of conference, alexa was used for their milk and have existed pickup cortana to check her email and sent her schedule. this project stems from a collaboration announced last august. a startup providing analytics to transportation energy and utility companies like american water, young, and fedex, market -- nokia and its rival ericsson look young wireless in response to a logan saloon for such are spending. an uber has hired the former chair of the initial safety board to advise the company and is important investigating the attack becoming arizona -- investigating the tempe, arizona collision that killed a woman as she walked across the street in march. the accident shows the driver

looking away from the accident and the car colliding with the pedestrian without visibly at that because stop. in the meantime, a report in tech news publication says that uber's internal investigation determined the sensor's spider woman ever cracking software to avoid unnecessary braking to the car to continue. that does it for this edition of "bloomberg technology" in the -- technology." on tomorrow's show, we talk with the founder and ceo of social capital. that is all for now. this is bloomberg. ♪

yousef: this is "bloomberg daybreak: middle east ." he isl announce whether pulling out of the nuclear deal. hereon warns -- iran warns a mistake. bloomberg markets should prepare for a serious shift in benchmark yields. there is a possibility inflation accelerates. it is higher than you expect. the fed raises rates more than you expect, both in the short and you can view 4%.