The Big Money

Hulu Users Are Pro-Life

Chadwick Matlin — Mon, 08 Feb 2010 21:32:02 +0000

Hulu has started a nice little tradition of hosting Super Bowl ads after they originally air. This year's "AdZone" feature comes with a ranking system in which viewers can tell Hulu whether they like or dislike an ad as they're watching them. And Hulu has opened some of the data up for all to see. Which means it's time for Hulucination to extrapolate large insights from small data points.

Of most interest is Tim Tebow's Focus on the Family spot. The ad was a direct-issue spot; it didn't try to be funny or entertaining. Nor did it try to be controversial. But the hubbub about the ad—should CBS have allowed it to be on TV or not?—helped raise awareness about what the ad was really about: supporting pro-life policies. As a result, one's like or dislike of the spot is far more about one's like or dislike of the product/issue than a normal spot for Doritos or Bud Light. By looking at Hulu fans' reactions, it's reasonable to think we can glean their thoughts on abortion, as well.

The ad is by far the most disliked of all the Super Bowl ads. And yet more people like it than dislike it. Hulu doesn't release the actual number of likes or dislikes, but it does provide convoluted ratios that theoretically correspond to users' votes. (Hulu calls their nonsensical ratings the "Hulu Power Index.") Because Hulu's metrics are so weird, we can only make relative conclusions. The Tebow ad—and thus, in Hulucination's reading, pro-life sentiment—is less popular among men than women. Young people ages 13-17 seemed especially charmed, but the 18-49 bracket had a far more mixed, and largely disproving reaction. Once people 50+ started voting, though, the responses once again turned positive.

Geographic differences were what you'd expect, with red states favoring and blue largely opposing. Of course, Florida, the greatest swing state of them all, had a biased reaction. It largely favored the ad. But Mr. Tebow had a bit of a following down there.

App-etizers, Feb. 8: How To Spoof Your Mobile Caller ID

Kevin Kelleher — Mon, 08 Feb 2010 21:25:59 +0000

Apps that hide or fake your mobile phone’s caller ID are on the rise, but Congress may restrict them. (WSJ)

Helicopter parenting more efficient than ever thanks to AT&T's kid-spying FamilyMap app. (GeekSugar)

AppMakr, the DIY app engine from PointAbout, has churned out 3,000 apps since debuting last month. (Digits)

Motorola Droids will receive the Android pinch-to-touch upgrade that Nexus Ones received last week. (MobileCrunch)

New VC firm AppFund will seed up to $500,000 for developers creating iPad apps. (Epoch Times)

Broken Sword, Grand Theft Auto: Chinatown among January’s best iPhone games. (TouchArcade)

Toyota Recall: The Digg Dialogg

Matthew DeBord — Mon, 08 Feb 2010 20:33:58 +0000

Toyota’s U.S. President, Jim Lentz, will be taking on the Digg community today at 5pm ET. The subject, as if you had to ask, is the Mutha of All Recalls. So far, the questions are rough. Buckle up, Mr. Lentz. Here’s our fave question, and it’s of the inevitable “How could you?” flavor:

”I have a Prius. I use it to drive around both of my children (ages 6 and 4 months), sometimes our family cat, and our family to the mountains. We drive in the snow, we drive it everywhere. Needless to say, we love this car. Why would you wait for so long to say anything and put all of the above in danger? As a consumer, I purchased a Toyota product because it had a conscience - because it was a thoughtful product. How are you going to right what's happened and alleviate the concerns about Toyota's integrity?”

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The iParanoid Scenario

Frederic Filloux — Mon, 08 Feb 2010 20:15:54 +0000

I live in a country (France) where censorship is a big deal. It comes mostly from greedy celebrities; they use a legal system that largely favors them. Often, they find a compassionate judge to rule on the issue of extracting money as compensation for a supposed privacy violation or for some other unauthorized disclosure. Convictions are frequent and expensive and can lead to the seizure of a magazine or even of a book. France has a long history of such practices. In the early ’60s, the country was waging a colonial war in Algeria. Then, for the most avid news readers, the game was to get the weekly magazine L’Express at the kiosk as early as possible before French authorities seized it (no such risk with today’s Gallic newsmagazines).

Imagine this scenario in an upcoming iPad era. An iPad newsmagazine publishes an investigative piece that triggers a legal injunction: Remove that from the publication or face a $10,000 penalty per day. No, says the publisher, who has guts and money (proof that this is a fiction): We want to fight in court. The plaintiff then turns to Apple (AAPL). Same threat: Face a huge fine or remove the offending content. Furthermore, says the plaintiff’s attorney, thanks to the permanent and unique electronic link to your proprietary devices and the fact that the electronic kiosk now resides on the device, you must extend the deletion to each user’s tablet. Just as you keep pushing updates and various contents bits to these gizmos, you can push a delete instruction code.

What would Apple do? This is a question of balance of power. If the legal action involves some neuron-challenged celebrity, chances are Apple won’t balk. But what if Nicolas Sarkozy or his whispering-singer wife are the plaintiffs? The truth is that, given the pattern of legal actions against the press in France, it is more than certain a French judge will be tempted to request an immediate remote deletion of presumably infringing content. Then we’ll see a replay of what happened last summer in the 1984 case in which Amazon (AMZN) remotely deleted a copy of George Orwell’s novel in the Kindles of buyers because of copyright issues.

With the iPad structure, Apple is creating absolute control for product, delivery, and even ownership that can be revoked at will. Apple allows or rejects the application (the container), it can remove all or part of any content from its servers, and it can even remotely delete the stuff you purchased. Imagine: You go to a bookstore and spend $25 on a book that a court of law later finds illicit; a bookstore employee then goes to your place, takes the book from the shelf, and leaves some money on your kitchen table. Wouldn’t you be slightly uncomfortable with this?

Such a mechanism poses no risk for music or entertainment material. But it does for news. News consists of deploying ways and means to obtain the best and most balanced set of information collected on things that somehow, some way, somewhere, an individual or an organization is willing to conceal. This is the essence of journalism.

Therefore, it requires money to collect the information, edit it, and package it. And it requires channels of dissemination that cannot be vulnerable to any kind of leverage. For content to be free (as in free speech, not free beer), platforms and networks must be neutral. Any closed, proprietary system contradicts this imperative.

Some will retort that your content could still be freely available on the Internet and therefore in a neutral platform/network environment. Yes and no. Yes, of course, I might be able to post hot stuff on a blog. But let’s project five years from now. I’m the publisher of a digital-only magazine. The iPad and the iNews Store have become the de facto standard for paid news distribution with a market share of 74 percent, equivalent to what the iPod had in 2010. Most of the news that’s fit to be pixelized has found refuge under Steve Jobs’ umbrella.

One day, we publish a piece that a triggers an irate response from the story’s subjects. Inevitably, a judge finds it objectionable. Since my editors are careful professionals, we know exactly what our writers are holding up their sleeves and we are ready for a legal fight. But if Apple balks, we are screwed. Of course, we have the option to go on the Internet, but it is exactly as though, in the ’60s, the journalists of L’Express had mimeographed and distributed their Algerian war stories by hand in the streets of Paris. Nice move, but tiny audience and no money.

That’s why Apple’s choice for a closed system changes the game. In Steve Jobs’ mind, the iPad is meant to become the ultimate personal computer, replacing most of the devices that we currently use to get music and entertainment. And news. And knowledge.

For the publishing community, the choice is therefore:

a) Go for it with a flurry of applications—and thus contribute to erecting a tightly controlled, gated-content community; the more publishers will join the fray, the better the iPad will fly.

b) Put some eggs in other baskets (Amazon’s or PlasticLogic’s, for instance) that are neither neutral nor philanthropic. In addition, each of them has its own standard. It might be economically tricky to design write-once, publish-everywhere content that fits every platform.

This leaves us with three conclusions:

1) Undoubtedly, the iPad could be a fantastic publishing platform with a powerful transaction system attached to it. As many do already, I’m personally considering a purely digital magazine built on great content, beautiful layout, and supported by a mixture of paid-for and clever and graphically attractive advertising. But we’d have to bet that Apple will always position itself as a neutral platform. It is likely to be the case, but it’s a bet.

2) It might not be economically feasible to publish on several platforms just to hedge such a remote risk. The variety of formats, the technologies (LCD display, like the iPad, or e-Ink, like the Kindle) would make such on-the-fly content adaptation far too costly.

3) Therefore, it is a good idea to keep considering Web-based paywalls—whatever the forms—and mobile applications on multiple platforms. After all, the Internet is the one vehicle that is the most likely to remain open and neutral.

Pace Slowing But Mags Still Dropping Circ Numbers

Marion Maneker — Mon, 08 Feb 2010 19:47:09 +0000

Stephanie Clifford at The New York Times's Media Decoder blog runs down the latest magazine newsstand and subscription numbers. Noting an overall decline of 2.23 percent for overall circulation, Clifford has these headline numbers. Following an 11.12% drop from 2007-2008:

Newsstand sales for the 472 U.S. consumer titles measured by the Audit Bureau of Circulations declined 9.1 percent, to 39.3 million, in the last half of 2009 versus the same period a year earlier, the organization reported this morning.

So, as reported previously, the rate of decline is slowing, but not by much. Clifford also taks a moment to cleverly update us on a few of the magazine dramas that have been unfolding recently:

Harper’s Magazine, where editor Roger Hodge was dismissed a few weeks ago, saw a decline in newsstand sales of 28.5 percent and an overall circulation drop of 7.2 percent. Bloomberg BusinessWeek, which is in the midst of a makeover from new owner Bloomberg L.P., had a newsstand-sales drop of 26.1 percent along with a slight drop in overall circulation.

Nexus One Picks Up Key Endorsement

Chris Thompson — Mon, 08 Feb 2010 19:38:07 +0000

In the form of none other than Linus Torvalds, the creator of Linux. Although, we have to admit, it's an odd one.

Torvalds is the Salinger of programmers; he's famously cranky and anti-social. So naturally he hates cellphones and the constant pressure to be available, and he's hardly likely to embrace any smartphone. But it was the Nexus One apps that won him over, particularly the Tom Tom clone navigation service.

"I've wanted to have a GPS unit for my car anyway, and I thought that google navigation might finally make a phone useful," he writes on his blog. "And it does. What a difference! I no longer feel like I'm dragging a phone with me "just in case" I would need to get in touch with somebody - now I'm having a useful (and admittedly pretty good-looking) gadget instead. The fact that you can use it as a phone too is kind of secondary."

Obviously, this is a big deal for Google (GOOG), at least among the techies. "In many ways Linus Torvalds is not 'just a programmer,'" writes ZDnet's Dana Blankenhorn. "He’s a brand name. He is, however reluctantly, a celebrity. So a simple blog post can read like an endorsement. Put it this way. If Steve Ballmer picked one of the many Windows Mobile phones and said, 'this is the one I like,' other makers of Windows Mobile phones might be upset. So he doesn’t. Linus just did."

And today marked another at least potential coup for Google. The company's engineers announced that they're working on a new service that will automatically translate foreign languages spoken over an Android-based phone into English, or whatever language you prefer. The project will take a couple of years—an eternity in tech terms—but Google already has a number of products that could serve as a foundation. "The company has already created an automatic system for translating text on computers, which is being honed by scanning millions of multi-lingual websites and documents," writes Sunday Times reporter Chris Gourlay. "Google also has a voice recognition system that enables phone users to conduct web searches by speaking commands into their phones rather than typing them in."

Others, however, are not so sanguine. "Speech to text is imprecise on phones we've used," warns Silicon Alley Insider's Jay Yarow. "Web-based translation services are also imprecise. Add them together and you have a great opportunity to be misunderstood."

British Library Gets into Publishing Biz with Amazon

Marion Maneker — Mon, 08 Feb 2010 18:31:03 +0000

The Times of London ran an op-ed by Dame Lynne Brindley, Chief Executive of the British Library, yesterday that discusses the Library's many public-private partnersips, including this new joint venture with Amazon:

Making 19th century fiction available for free through the Kindle ebook reader opens up a new global readership for forgotten literary gems. Kindle users will be able to download, free of charge, 25m pages of digitised books, from noteworthy editions of well known authors like Dickens, Conan Doyle and Thomas Hardy to rare early 19th century fiction and even the UK’s best collection of ‘penny dreadfuls’. People who want their own copies can also have them despatched direct through Amazon’s print-on-demand service. Super Saver Delivery meets the gothic novel.

What Happened Between Boxee and Hulu, and When

Chadwick Matlin — Mon, 08 Feb 2010 18:21:47 +0000

Last week, Jeff Zucker, the CEO of NBC Universal, told Congress that it was Hulu’s decision to ask Boxee to remove Hulu content from Boxee’s video player. Hulucination first broke the news that Zucker’s response contradicted what Hulu and Boxee had said about the situation. As best as Hulucination can gather, this is the timeline of what happened. I’ve culled this from official blog posts and discussions with Boxee. Hulu and NBC continue to not respond to requests for comment.

Oct. 20, 2008: Boxee releases a Hulu app for its video platform. Boxee’s software aggregates streaming content from across the Web and makes it easier to put TV-on-the-Internet back on your TV. In order for Boxee to succeed, Hulu was a must-have. Boxee says that it told Hulu it was integrating Hulu into Boxee. At that time Hulu did not take issue with it.

Sometime between November 2008 and February 2009: Hulu’s owners, News Corp. (NWS), and NBC Universal learn that Boxee is airing Hulu video, but outside of the hulu.com packaging. All of Hulu’s ads continued to air on Boxee, but Hulu’s surrounding infrastructure did not carry over. In his congressional testimony, Jeff Zucker would later call what Boxee was doing “illegal.” Recently, Boxee CEO Avner Ronen told Hulucination, “We don't think we have ever done anything ilegal with regard to Hulu.” (sic) At the time, Boxee says it was delivering hundreds of thousands of streams to Hulu, and thus its advertisers. Thus it’s dismayed at Hulu’s obstructionism.

Someone makes the decision that Hulu should request Boxee take down its Hulu app. Jeff Zucker says it was Hulu’s management team. Hulu says it was the “content providers who requested that we turn off access to our content via the Boxee product.” To reiterate, neither NBC nor Hulu has responded to Hulucination’s request for comment.

Around Feb. 4, 2009: Hulu calls Boxee and tells Boxee its content providers have asked that Hulu block Boxee from integrating its content. Boxee protests, but Hulu stands firm.

Feb. 18, 2009: Boxee voluntarily takes down the Hulu app to maintain its relationship with Hulu.

Sometime between Feb. 18 and March 6, 2009: Boxee, Hulu, and Hulu’s content providers meet to try to iron something out. No agreement can be reached. Boxee later says, “[T]he fact that it’s becoming easy to consume Internet video on a TV brings into question many of the industry’s business models that developed before the web. [T]hat’s part of the reason why Hulu asked to be removed from boxee.” (sic)

March 6, 2009: Boxee finds a workaround to Hulu’s restriction. It builds a video player that essentially works as an RSS reader. It grabs content from Hulu’s public feeds and then plays it inside of Boxee.

March 6, 2009: Hulu changes its technology to block Boxee’s new solution.

Jan. 7, 2010: Boxee publicly releases its new beta software, which includes easy-to-access Hulu streams. Boxee now circumvents Hulu’s protests by accessing Hulu through a Web browser. For now, Hulu and its content providers have not publicly taken issue with Boxee’s latest workaround.

Teenagers Could Flock to Facebook Mail

Caitlin McDevitt — Mon, 08 Feb 2010 18:16:01 +0000

Late last week, TechCrunch reported that Facebook is planning to launch its very own e-mail service in the near future. If the rumors are true, Facebook Mail will be accessible without logging into your Facebook account, and your e-mail address would consist of your Facebook username @facebook.com. According to the post, the product is officially called “Project Titan” within the company, but it’s also been optimistically dubbed a Gmail killer.

Facebook Mail has to be pretty phenomenal in order to lure people away from Gmail. Switching e-mail addresses can be a pain, and, aside from occasional outages, it doesn’t seem that many people have huge complaints about Gmail. In fact, most people I know who use Gmail really like it. And if you’re a high-volume e-mailer (like me), Gmail is a dream. I can intuitively filter floods of e-mails into neat little folders. My bottomless archive—that’s not something I’d readily give up—is easy to search. And I rarely get any spam at all. Even if Facebook Mail could do all of this for me, it would be a headache to part with my Google Calendar or Google Documents. Besides, I associate my Gmail with productivity. Facebook is for fun. These are not two realms that I’m ready to combine just yet.

That being said, if I wasn’t a Gmail user, I bet Facebook Mail would be pretty tempting. Case in point No. 1: my mom, a recent Facebook adopter who uses Hotmail. She doesn’t get a ton of e-mail, and she regularly checks Facebook. I can see her opting for a one-stop log-in, especially if the service is better than Hotmail.

Case in point No. 2: my 15-year old cousin, a high school freshman who is on Facebook (constantly.) I know that she must get a ton of e-mails from Facebook on a daily basis at her current e-mail address, which is a slight variation on pinkpolkaspots@aim.com. Teenagers typically ditch juvenile-sounding e-mail addresses once they want to be taken a bit more seriously, like when they apply for college or jobs. Once my cousin outgrows this e-mail address, I bet she’d switch to Facebook Mail because she’s so absorbed in the site already. And if Facebook could win over her entire generation of e-mailers, that’s a pretty big win.

Democrats Want To Ban School Junk Food

Dan Mitchell — Mon, 08 Feb 2010 18:12:31 +0000

The New York Times on Sunday reported that the Obama administration will soon introduce legislation to restrict junk food in public schools. Agriculture Secretary Tom Vilsack is talking about the proposal in a speech in Washington, D.C., today.

This sequence from the Times' article caught my attention:

Orange County High School has vending machines with Pepsi, Mountain Dew and Dr Pepper, but even more popular among students is a candy cart wheeled into the school’s central hallway three times a day by Betty Almond, a school secretary.

The cart is laden with Pop-Tarts, Skittles and Reese’s Peanut Butter Cups, and Mrs. Almond and helpers barely keep up with demand from students on their way to class. Sales are between $400 and $500 a week, which Mrs. Almond uses to buy uniforms and equipment for school sports teams. Her most recent project was to outfit the wrestling team, on which her grandson competes.

'The football team wants me to buy them a seven-man sled, but with this new legislation, they’ll never get it,' she said sadly.

Principal Gene Kotulka said he planned to write his congressman to complain about a ban. 'It’s not so much the money as the service it offers to the kids,' said Mr. Kotulka, who has a Santa Claus belly and is known as 'Poppa K' to students. 'I’d like to give our kids all the opportunities I can.'

At a meeting in his office to discuss food offerings, Bette Winter, director of the Orange County schools wellness committee, suggested that selling candy to students was not a good lesson. 'What's the best way to teach children? By example, no?' she asked.

But Mr. Kotulka responded that it was parents' responsibility to forbid children at risk of obesity to buy candy."

The whole thing encapsulates so well what advocates of childhood health are up against: The Orange County laissez faire guy with the Santa Claus belly implicitly believes that it's OK for schools to teach algebra and—more to the point—health and physical education. But at the same time he believes teaching that eating garbage is bad for you should be left solely to parents. But he doesn't want to make it too easy for them, so he sells the kids all the junk food they want. Should we assume that Orange County High School's health classes avoid all discussion of nutrition?

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Mon, 08 Feb 2010 18:12:31 +0000

Fear the Obamamobile

Matthew DeBord — Mon, 08 Feb 2010 17:40:05 +0000

At the WSJ, Holman Jenkins walks readers through the modern onslaught on complex computing power in cars. This is one of the things that could be to blame for Toyota’s current recall woes, as Shifting Gears and others have suggested. However, Jenkins does make a sort of strange link to the impending generation of what he calls “Obamamobiles”:

”But with cars like the Prius, the forthcoming Chevy Volt and other Obamamobiles, electronic complexity will take another quantum leap. We're not just talking about more sensors, algorithms and look-up tables for the purpose of optimizing emissions, but to coordinate two completely different power systems, electric and gas-powered. And coming next are "modular" engines, which use clutch-like devices to link and delink cylinders depending on how much power is needed.”

Oh, come on, Holman! These cars were under development long before Obama even became a viable candidate for national office. Increasing electronic complexity has been a trend in the auto industry for two decades, genuinely leading to cars that are smarter and safer. This is completely independent of politics and wholly connected to the automaker’s desire to produce a better product that they can sell to more people. Say what you will about the industry, but over the years it has generally tended to move in the direction of innovation.

It’s worth noting that automakers could easily build Obamamobiles by simply dropping more 4-cylinder and V6 engines under the hoods. Making the billions in investments in electric cars and hybrids is all about remaining competitive in the 21st century. That’s expensive and requires vision. Cynics need not apply.

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Don't Forget The Google Books Case

Marion Maneker — Mon, 08 Feb 2010 15:55:13 +0000

The New York Times reminded us last week that there's still no settlement in the 16-month old Google Books case that is attempting to resolve the issue of copyrights and orphaned titles, as Google (GOOG) attempts to make books available online and sell ads against the content.

How quaint that idea now sounds ,as Kindle and iBooks continue to generate readers and sales. Unfortunately for Google, the Justice Department still can't get its arms around the settlement. It offered another bleak opinion on the settlement, according to the Times:

The revised agreement “suffers from the same core problem as the original agreement: it is an attempt to use the class-action mechanism to implement forward-looking business arrangements that go far beyond the dispute before the court in this litigation,” the department wrote.

The department asked the court to encourage the parties to continue discussions on further changes to the settlement, which it said had many public benefits.

So the Author's Guild and Association of American Publishers still have a lot of work left ahead of them, unless Judge Denny Chin surprises everyone during the hearings scheduled for Feb. 18th.

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Penguin CEO Needs a Good Editor

Marion Maneker — Mon, 08 Feb 2010 14:52:44 +0000

John Makinson, the CEO of the Penguin Group, has a rambling op-ed in the Wall Street Journal today. It's hard to discern his point. But the essay tries to cover a lot of ground, including defending book prices, claiming e-books are no different from paperbacks, and worrying about digital piracy.

Almost none of it is relevant to the current state of e-book publishing or the challenges posed by the launch of the iPad—the nominal subject of the column. On that subject, Makinson makes some odd pronouncements:

How will we book publishers respond to this opportunity? With anxious enthusiasm is the honest answer. New channels of supply have always created new markets for the work that we publish. This was true of book clubs, of superstores, and of online retailers, and it will be true of digital platforms. [...]

Publishers will flourish in this new economy so long as they keep these issues in perspective and understand that it's fruitless to stand between the reader and his choice. If a consumer wants that Jane Austen novel in downloadable audio, or in large print, or in red ink, or in a digital edition with recipes from the period, we'd better provide it. And of course we will, just as we'll sell travel guides by the page and classic literature by subscription.

Travel guides by the page? Classics by subscription? Are these trial balloons or Penguin pilot projects? Makinson gives no hint. The executive seems to be saying that his company will rise to the challenge of digital distribution with new products that make the most of the medium. But neither one resonates as a killer app.

While you ponder those left-field ideas, let's go back to some of Makinson's other assertions. He worries that piracy will hurt authors' sales. But recent evidence on digital piracy presented at Digital Book World suggests it is primarily a pre-publication phenomenon. Moreover, any discussion of digital piracy of books would need to be counter-balanced by a discussion of the used book market.

Makinson also repeatedly makes the claim that publishers only save 10 percent of their costs by not printing books and, conveniently, that 10 percent also matches the margin necessary "to keep investing in new writing and new ideas."

Yet, as we've tried to illustrate numerous times before, the "investment" idea of publishing—that publishers buy the risk from authors in exchange for the reward—is exactly the economic model that is collapsing for publishers, with or without the threat of digital distribution. Makinson seems blind to the basic facts that his industry is facing a crisis of oversupply and too much risk. As publishers pull back from buying the rights to as many books as they try to husband their capital in fewer, more successful titles, they will open the door for new hits to be developed outside of their control.

Amazon's new 70 percent royalty opens the door for enterprising authors—and authors are shockingly enterprising—to invest in themselves. If Makinson thinks this can't or won't happen, he should look at the last 20 years' transformation of research and development in the U.S. economy. Corporations once accounted for the vast majority of new ideas and technology. But the venture capital revolution of the 1980s and 1990s created an entirely new economic landscape for the launch and creation of new products and technology.

Now companies find it more efficient and productive to buy established companies. Self-published authors have been doing a version of this for decades, too. Amazon and Apple (AAPL) are now making that much easier. Through a combination of forced circumstances and a desire to limit their exposure to failed book projects, publishers like Penguin will continue to chase the book projects that come with the most publicity attached, leaving the rest to self-fund through digital distribution.

Already agents are threatening to pre-publish e-books and sell print distribution rights to publishers on their big fiction projects. These twin forces will leave publishers distributing print books in the future and trying to exploit the remaining library of copyrights that they hold.

For Penguin, which has a lot of its brand (if not revenue) tied up in publishing books that are in the public domain, there's an important message here about the future of the company. It's a shame that Makinson didn't address those issues.

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Stream Room Feb. 8, 2010: Conan Goes Missing From Hulu

Chadwick Matlin — Mon, 08 Feb 2010 14:42:09 +0000

Conan O’Brien disappears from Hulu. Over the weekend, Peter Kafka discovered Conan O’Brien had been kidnapped from Hulu. All of Conan’s first and only season at the Tonight Show was on Hulu, and just a few days ago Hulu’s CEO was promoting Conan’s final show in a USA Today interview. But now Conan is gone with no trace remaining. Kafka assumes NBC asked Hulu to take Conan down. Hulucination agrees.

Olympics fans without TVs better brush up on their curling. Because that’s one of the only two sports that NBC is going to stream live online. In a turnaround from the overwhelming amount of ping-pong, diving, and trampoline NBC Sports streamed during the 2008 Summer Olympics, NBC Sports will show only two Winter Olympic sports online. The rest will come through after they’re aired live or in primetime. This doesn’t make a whole lot of sense. These are live sporting events, and if somebody—read: a Neilsen family—has a computer and a TV in front of them, they’re likely to watch on TV, not the computer. But NBC is already losing money on the Olympics for the first time, so they’re all skittish about keeping advertisers happy. And advertisers are both demanding and easy to please. They don’t ask for much, but what they do ask for is always a dealbreaker.

Video now Slinging through 3G. AT&T (ATT) is finally allowing Sling Media, a nifty little company that sends video from your TV and TiVo to far-away computers and phones, to send its data over its 3G network. Previously, iPhone customers who wanted to use the Sling Media app had to find a WiFi network to stream their home TV libraries. Whether AT&T’s 3G network is stable enough for this amount of video streaming is a separate question. A very important one, but a separate one nonetheless.

Coming up on the blog: Seriously, honestly, this USA Today fact-check I’ve promised for the last five days! The most in-depth timeline of the Boxee-Hulu spat ever assembled! You’re in Feb. 8’s Stream Room. The Hulucinations are just beginning. Come on back later on. The blog will still be here.

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Why Ads Will Triumph in Mobile Media. Or Not.

Marion Maneker — Mon, 08 Feb 2010 14:14:13 +0000

Mediapost quotes yet another market research firm on the potential for ads in mobile media. If you've been paying attention, you'll note that one of the under-remarked aspects of the migration to electronic media is that ads don't make their way from print to tablet very well.

We know that online ad rates are much lower than print. But the problem gets worse when you port content over to smartphones or through apps to tablets like the iPad. There just isn't as much ad space in these new distribution systems. And if the ads are going to be less effective, that presents a real problem for ad-supported media like, well, almost all mainstream media.

So it is with some surprise—and no little amount of hope—that one reads this from Joy Liuzzo, senior director of marketing and mobile research at InsightExpress: "High levels of engagement, the explosion in technical capabilities, low levels of clutter and the novelty of mobile advertising all likely contribute to increased brand impact."

Mediapost goes on to rattle off these numbers:

Within mobile media, the Internet has proven to be the most effective branding option compared to SMS text and mobile video. Mobile Web campaigns led to increases of 9 percentage points in unaided and aided awareness and 24 percentage points for ad awareness. SMS generated increases of 5 percentage points for unaided awareness, 10 for aided awareness and 18 for ad awareness.

Mobile video is still emerging, but shows strength in boosting brand favorability, delivering an increase of 13 percentage points compared to 12 for the mobile Web and 7 for SMS.

How mobile media will stack up as an advertising platform once it stops being novelty is anyone's guess. But the intimacy that everyone—including Steve Jobs—is raving about when it comes to mobile media may end up being a huge advantage for advertisers.

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Superbowl Ads: Manhood Sucks, Dodge Doesn’t

Matthew DeBord — Mon, 08 Feb 2010 14:04:03 +0000

Fans couldn’t have been faulted yesterday if they thought they were watching the Hyundai Bowl. The up-and-coming Korean carmaker seemed to have spent about nine trillion bucks on the big game, and the takeaway was certainly that it’s Sonata model is worthy of consideration. Really. They mean it. After all, they spent 9 trillion bucks propping it on the frikkin’ Superbowl. However, it was Chrysler that stole the show, with its one lousy spot for the Dodge Charger neo-muscle car. Chrysler caught some flack earlier this year for even thinking about a Superbowl spot, as Ford (F) and GM stayed away. The Pentastar’s justification was that, sure, this might not be overtly considered the best use of public funds (Chrsyler is still partly owned by the U.S. government), but the company needs to reintroduce itself to the public, post-bankruptcy.

And reintroduce itself it did. Chrysler’s most recent TV spot, for its Ram truck brand, invited ridicule. But the Charger spot has some good chops and should set off the kind of a old-school water cooler banter that makes Superbowl ads worth the spend (viral action on YouTube should aid in spreading the discussion far and wide). The inner monologues of defeated men echo in the narration, until a Patrick Bateman-esque gent launches into a silent tirade against...well, it’s gotta be the castrating little wife or girlfriend, right? And then declares that for all his suffereing he should get to drive whateve he damn well pleases. The snarling black Charging with its Hemi engine a-snarlin’ becomes his Mad Maxian chariot of liberation: Man’s Last Stand.

Hyundai had the volume. But Chrysler won on sheer cussed cleverness and the ability to craft a spot that directly engaged the male reptile brain at its moment of ultimate stimulation: during the annual biggest of Big Games. The retro hotness came from Wieden and Kennedy, the Portland-based agency that’s best known for its Nike work.

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Et Tu, Google?

Chris Thompson — Mon, 08 Feb 2010 13:54:14 +0000

Yesterday's Super Bowl violated two key laws in Silicon Valley: Google (GOOG) never advertises, and tech companies that blow a wad on Super Bowl commercials wind up dead in 12 months. Yes, the company that lets its product speak for itself decided to dump a ton of money letting the world know that there's this thing called Google, and you should really check it out. And it didn't showcase its new phone or a Web browser or any other emerging product, but the search engine itself. CEO Eric Schmidt wrote that he and other top Googlers just really loved the piece and wanted to show it off. "Our goal was simply to create a series of short online videos about our products and our users, and how they interact," he wrote. "But we liked this video so much, and it's had such a positive reaction on YouTube, that we decided to share it with a wider audience."

Whatever the reason, it's kinda sweet, a break from the usual lineup in between the slant passes. Check it out.

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Frustrated Wall Street Donors Turn Away From Democrats

Kelly Faircloth — Mon, 08 Feb 2010 11:51:01 +0000

The days when Obama could solicit a record $89 million in campaign funds from the financial industry are over, the New York Times reports. After the White House's months of harsh rhetoric and attempts to tighten regulation, even Wall Street’s big Democratic donors are turning on him. His proposals, especially the Volcker rule and the “financial responsibility tax” on bigger banks, are angering many in the industry. For example, JPMorgan Chase (JPM), formerly friendly to Democrats, has shifted donations to the Republican House and Senate campaign committees. Meanwhile, Republicans are actively working to take advantage of “buyer’s remorse” on Wall Street. Says one source: “If the president wanted to turn every Democrat on Wall Street into a Republican, he is doing everything right.”

This week, Ben Bernanke will start laying out the Fed’s plan for tightening credit once the economy begins to recover, according to the Wall Street Journal. Any action is several months away, but after dumping huge amounts of cash into the system in 2008 and 2009, the board is already considering ways to pull back safely. The Journal says one key weapon in the central bank’s arsenal will be the “interest on excess reserves,” which charges interest on banks’ money on reserve at the central bank. The paper says a “higher rate would entice banks to tie up money they otherwise might lend to customers or other banks,” reducing the amount of money in the economy.

With sovereign-debt worries escalating, thanks to the troubling balance sheets of Greece, Portugal, and Spain, it’s falling to Central European Bank president Jean-Claude Trichet to handle the crisis, the New York Times reports. Technically, the bank is only responsible for controlling inflation. But the troubles are exposing the downside to the EU’s weak political arm, which can’t enforce debt limits or other financial agreements. And so Trichet is taking an outspoken leading role, reminding EU member governments, “When you share a single currency with others, the counterpart is that you have to have a sound fiscal policy.”

The feds are cracking down on companies that turn to bribery to secure overseas defense contracts, according to the Washington Post. On Friday, defense contractor BAE Systems cut a $400 million deal with the FBI on allegations related to the Foreign Corrupt Practices Act, which forbids bribing officials to win contracts. The settlement comes shortly after the highly public arrest of several businessmen in defense and law enforcement on FCPA-related charges—most of whom were at an industry trade show in Las Vegas at the time.

Ever tried to buy something online—say, a DVD player or piece of jewelry—and had to add it to your cart to see the price? The hidden price tags are part of the growing conflict over e-commerce pricing, which isn’t limited to book publishing, the New York Times reports. After years of deep Internet discounting, many companies and manufacturers are experimenting with ways to keep prices higher. Once, they would have encountered anti-trust issues, but a 2007 Supreme Court decision allowed manufacturers more leeway to dictate prices and set a higher legal bar for retailers to prove the behavior hurts consumers.

A devastated securities market is thwarting Citi’s (C) efforts to improve its balance sheet by unloading unwanted assets, the Financial Times says. The bank is in talks with private-equity firms and hedge funds to sell $3 billion worth of car loans, but some potential buyers are hesitating. According to the head of capital markets at a big firm, “Private equity can’t make a bid on anything where the business model requires a bet that the external funding markets and securitisation comes back.”

Other than the Saints, who were the big winners at the Super Bowl? According to the Wall Street Journal, which surveyed ad execs and consumers, the best ads came from Snickers, Denny’s (DENN), and Coke (KO). For those who missed the big game: The candy company's ad put Betty White in a rough game of football, while Denny’s relied on petrified chickens and Coke featured The Simpsons’ Mister Burns. Doritos' violent, fan-selected ads were also popular.

Finally, if you think your week ahead looks rough, think of Toyota (TM) U.S. head Yoshimi Inaba. The Wall Street Journal reports Inaba is popular with American dealers but has faced an uphill battle returning the North American division to profitability. The 6-million-car recall has dealt a blow to the company’s reputation for safety and reliability, and he’s unlikely to face a friendly audience when he visits Capitol Hill. Wednesday’s hearing title: “Toyota Gas Pedals: Is the Public at Risk?” The company is expected to add the 2010 Prius to the recall, the New York Times reports.

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How Apps Will Bring Apple’s iPad to Life

Kevin Kelleher — Mon, 08 Feb 2010 02:58:48 +0000

When Apple (AAPL) unveiled its iPad, we argued two main points: That the company saw the tablet as a way to make the Web as immersive and close to a real-world experience as it’s ever been, and that whether Apple pulls this off depends on how well-done and innovative the new iPad apps are.

Now that Apple has reached out to its community of developers and presented its Human Interface Guidelines for the iPad, it seems we weren’t too far off the mark. You need to be a card-carrying member of Apple’s iPhone Developer Program to see them on Apple’s site, but UX magazine has posted them for everyone else to see. Together, they offer a tantalizing look into what Apple wants to create—an experience of the online world that is at once familiar, innovative and more lifelike than ever.

Here are some highlights:

There will be no “top” or “bottom” to the iPad. Apps should operate like a compass and work no matter what angle you’re holding it at. Some iPhone apps already shift between portrait and landscape modes, but this is taking it an interesting step farther. The iPad will be the first computer device you can randomly spin around in your hands and navigate the Web regardless of orientation.

The iPad won’t do new tricks, but old tricks in new ways. Apple’s philosophy toward products like the iPod and the iPhone is to take a very familiar task—listening to music, say, or using a mobile phone—and explore new ways to experience it. It’s encouraging developers to embrace that philosophy with apps and avoid a bunch of new features that dazzle at first but are rarely used.

Apps will be primarily designed around intuition. One of the quickest ways to alienate users is to confuse them. Apple is urging apps that keep people from having to guess where they are or work too hard to get the content they want. People want to interact with content, not have to futz with a bunch of controls and navigation features. Subtle and simple are words that appear in Apple’s guidelines.

Apple wants the iPad to offer a cozier Web. Those warm, inviting bookshelves in iBooks weren’t just designed to appeal to publishers and readers; they send a message to developers as well: Make your apps feel like the real world with physical touches and simulations of experiences they already know. Upgrading iPhone apps will mean, in many cases, adding in a tangibility that simulates interaction with the real world.

Other guidelines: The high-resolution screen will allow for graphics that deepen the sense of engagement. The iPad can connect with other devices, and apps will provide the tethering. Popovers and multi-finger gestures are other tools that can enhance apps' usefulness. But the overriding idea is to create a way to experience the online world in a way that’s more immersive than it’s ever been.

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Loan Shark U.

Mark Gimein — Sun, 07 Feb 2010 23:14:06 +0000

When the president proposed his education budget this week, there was a lot for both the poor and the upper-middle class to like. For low-income students, the budget includes a substantial increase in Pell grants (government money for college). For the upper-middle class, it's even better, with a $2,500-a-year tax credit for students or parents paying for college.

One thing, however, was conspicuously missing from the education plan: an increase in the amount of money students can borrow via federally subsidized loans.

Now, maybe students aren’t in the mood to borrow more—aren’t college graduates already terrifically overburdened with enormous loan payments? That's certainly what you might think from the public discussion of excessive corporate profits and crushing student debt. The reality, though, of the federal loan program is more complicated. It's not the story of failure that many folks would imagine. It's a story of how neglect and the interests of private lenders—and to some extent, those of a small group of for-profit schools that have abused the system—have smothered one of the government's most successful programs.

Stories about the travails of students who find themselves hopelessly in debt obscure a truly stunning fact: The amount that students can borrow in federally subsidized loans has remained almost unchanged for more than 15 years.

In 1993, the total that an undergraduate could borrow over four years in federally subsidized loans from the Stafford loan program was $17, 125. Since then it has risen to $19,000—a total of about 11 percent. Often in stories about college costs, you see numbers “adjusted for inflation.” So just to get this clear: Right now, most undergrads can borrow all of $1,875 more in subsidized loans over their four years of college. Period.

How much has the cost of college gone up since then? In the 1993-1994 academic year, according to the College Board, the average tuition at a four-year private college at the time was $11,007. It is now $26,273. Four-year public colleges? Same story: up from $2,535 to $7,020. You can do the precise math yourself, but here's the bottom line: The money that students have available from subsidized loans has stayed almost constant, while the cost of college has risen more than 150 percent.

We can add in another $2,000 a year for some unsubsidized loans (which start accruing interest when students are still in school) that became available to most undergraduate students in 2008, but that doesn't seriously change the picture. The bottom line remains that as college costs have skyrocketed, the money available to most students to pay for them has not come close to keeping pace. And the effects of this are evident in rising college-dropout rates, as students find that after starting they simply don't have the money to finish. (If you're interested, you can see just how big a factor finances are in college dropout rates in this original and well-constructed study of dropout rates.)

So what happened to give “student loans” such a bad name? Two things. The first is that public debate about student loans has focused on the profits that lenders have gained from participating in the federal program. Stafford loans guarantee that lenders get back 97 percent of their money if students default, and that they essentially have built-in profits.

The system dates to the beginnings of the loan program, when they were made through a specially chartered corporation, Sallie Mae. Sallie Mae is now SLM Corp., a fully private company. It's still the dominant student loan lender, and together with others (Citi is the second biggest, though well behind Sallie) enjoys the fruits of a system in which the government takes all the risk and offers guaranteed returns. Efforts to change this have long been stymied by Sallie Mae's Washington allies, including House Minority leader John Boehner, who has long had a particularly close relationship with the company and has been a top recipient of its campaign cash. Those guaranteed profits are a target of Obama's education plan, which would eliminate the role of Sallie and other private companies and have the government make loans directly, something it already does for about 30 percent of subsidized loans.

The second thing that has made Americans suspicious of student loans, though, is worse. Its private student loans, made at much higher interest rates than the government-guaranteed Stafford loans. Despite not having government guarantees, these loans have special status: Even a bankruptcy doesn't eliminate the debt.

Despite all the talk about lenders' excess profits on government loans, private loans are potentially much more profitable. Take Sallie Mae. Though it was created to make government-guaranteed loans, Sallie Mae has branched out into higher interest rate private loans as well. The rate on those runs about 5 percentage points higher than on federally guaranteed loans—in 2006 it averaged 11.9 percent, though in 2008 (the last year for which complete data is available) it was down to about 9 percent.

In 2008—financial statements for 2009 will be filed soon—Sallie Mae collected about $2.75 billion in interest on these private loans, substantially more than the $2.16 billion in interest it got on Stafford and other federally guaranteed loans that Sallie originated, even though its portfolio of private loans is less than half as big. (Sallie Mae and other lenders also have a big business in consolidating and refinancing loans—that's not counted in these numbers. You can see the full financial details here.)

That's not even the whole story. One key way that lenders look at loans is the “spread” between what money costs them to borrow and what they can get lending it out. For government guaranteed loans, it's less than 1 percent. For private loans, it's about 5 percent—meaning that, dollar for dollar, private loans potentially can be as much as five times as profitable.

The very existence of this private loan market is the result of the government failing to raise the limits on guaranteed loans. Private loans reached a high of 23 percent of the student-loan market in 2008. The number has fallen since the credit markets seized up but will probably go up again. These, not federally guaranteed loans, are the ones implicated in the worst stories of student debt. It's not just undergraduate programs but graduate and especially professional schools where this has become a huge issue. That's why the American Bar Association, worried that excessive private loan debt is keeping students out of public-interest fields, has pushed for an increase in the (professional school) subsidized-loan limits.

Yes, this might sound a little backwards. But one of the solutions to student loan debt is ... yes, more student loan debt. At lower, government-subsidized rates. One legitimate concern about this—expressed in this discussion from the New America Foundation—is that for-profit and trade schools will just raise their tuition levels to take advantage of this.

The answer to this is easy and obvious to anyone who has even the slightest familiarity with the nightmarish business practices of for-profit schools: It's to force them out of the program. That could be done either by limiting it to nonprofits (that's pretty much every real, non-diploma-mill college) or by tightening standards on the repayment rates schools need to achieve, which will also effectively knock out the diploma mills. On this, too, House Republicans have a long record of opposing change; the rights of “proprietary schools,” the euphemism for “for-profit” preferred by the industry—was a particular pet issue of current House Republican leader Boehner when he chaired the House Education Committee. If you've been keeping count, you might want to add the abuse of government-subsidized loans by these kinds of schools as a third strike against the student loan program.

In the current reality, though, even the simplest change to the guaranteed loan program—the plan to switch to direct lending from the federal government—may be difficult to push through Congress. Keeping marginal for-profit schools out isn't something that's even on the table. Most important, though, what's happened with federal student-loan program is that it has been severely damaged by the perception that there is a crisis in student debt, a perception that's the result largely of lenders charging excessive rates on private loans.

So here is the irony: As states cut back on their funding for higher education, the federal government, if the Obama plan passes, steps into the breach to make up for the shortfall with new grants. Those grants are substantial, and they should in fact cover a big group of folks—though there are likely to be some in the middle whose income is too high for Pell grants but also not high enough to take advantage of new federal tax credits.

The tax credit in particular is a remarkably roundabout way of solving the problems of states without money for their colleges and students without the money to pay for the higher tuitions this entails. In a Tea Party world of public anger over taxes and government, the new education plan adds another middle-class entitlement—though one couched as a tax cut—to shore up the student financial-aid system. A new entitlement made necessary in large part because of the damage done to the student-loan system by the private enterprises of which the Tea Partiers and their Congressional allies often seem to think so highly.

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Sun, 07 Feb 2010 23:14:06 +0000