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May 14, 2002

The Web, Arabs, and The Trust Equation

Dave Winer, whose weblog software I use and who knows a thing or two about online community, is less impressed with Tom Friedman's column of this past weekend than I am. He says:



Now with all due respect, they shouldn't believe everything they read in the NY Times either.


Well, that's certainly true enough. The thing is, Dave, what the Net helps do is put random content on the same footing as The Times. This is what terrifies Big Media, which has invested bazillions of dollars into establishing a trust equation with readers. Here's what I wrote about that, nearly six years ago to the day (what -- you thought this was a new issue?), in NetGuide:



The camcorder approach to information has its place, and is where a lot of the excitement about the net comes from. Always be asking yourself about what you're reading and why it was put out there. And remember that good information always has a price.


What Friedman, Winer, and I are talking about is a subtle and complex issue. This is my full column, from the August 1996 issue of NetGuide, and I've seen no reason in the intervening years to change my mind.


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September 9, 2002

Eyewitness Account of 9/11

Many of you know that I watched the second plane hit the South Tower. I wrote this piece for the following day's Fort Worth Star-Telegram, which ran it with minor changes. There's a word or two I'd change, but I'm letting it stand as an example of deadline writing.


 


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April 6, 2004

The Record Industry, Lie? Y'Think?

Confusing correlation for causality, the record industry has long blamed file sharing networks like Napster and Kazaa for a drop in music sales. At last, an independent study says that whatever has caused the woes of the music business -- like, for instance, that lots of contemporary music sucks, or that bands can't build a following when they're not allowed to release new music for years at a time -- the problem isn't file sharing.

Lot of good that does Napster, of course.

The study shows that people who download music for free were probably not going to be buying it anyway. Why? Most of them can't afford it, not at $18 a CD.

"Downloads have an effect on sales which is statistically indistinguishable from zero, despite rather precise estimates," write its authors, Felix Oberholzer-Gee of the Harvard Business School and Koleman S. Strumpf of the University of North Carolina at Chapel Hill....

"Say I offer you a free flight to Florida," [Oberholzer-Gee] asks. "How likely is it that you will go to Florida? It is very likely, because the price is free." If there were no free ticket, that trip to Florida would be much less likely, he said. Similarly, free music might draw all kinds of people, but "it doesn't mean that these people would buy CD's at $18," he said.

Two questions for further study:


  • What's happened to the record industry's profitability since so many list prices were cut from $18 to $12 last year? Has the loss in revenue been replaced by an adequate increase in volume?

  • Do free MP3s really act as promotions for paid music the way many artists, like Janis Ian, suggest? Is there any evidence that downloaders buy more music than non-downloaders when they do get in a position to afford it?



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  • April 4, 2006

    The Opposite of Open Government

    NYTimes piece this morning (by Michael Cooper) about how New York State spends millions of dollars on pork-barrel spending but doesn't actually itemize it anywhere. (Free subscription required.) Turns out that the state budget includes one line -- $200 million for "Community Projects Fund-007" -- that the governor and legislative leaders can disburse without fear of discovery or veto.

    Whether or not this leads to abuse, I suppose, depends on your definition of "abuse." But the feeling seems pretty universal that it's a pretty sketchy practice:

    "It's bad government, because the grants are not based on any known criteria," said Edmund J. McMahon, the executive director of the Empire Center. "There are no performance guidelines, there is no application process, and at the end, we don't even know if the money was spent on what it was supposed to be spent."

    <snip>

    Mr. McMahon noted that while members of Congress are debating whether their process for funneling money to pet projects, known as earmarking, is open enough, the federal government at least requires disclosure of each project in Congressional reports that accompany legislation. In Albany, by contrast, the member items are kept secret. The Empire Center's lists, released by the state, do not say exactly what the money is for or even which official requested it.

    A couple of groups have managed to tease out where the money -- borrowed money, by the way -- has gone. 

    April 13, 2006

    Fun City II

    Good to know that a little water hasn't dampened New Orleans's taste for bizarre politics. First comes my friend Jason Perlow running into Mayor Ray Nagin waiting tables. (Check out the rest of his excellent food blog, too.

    Then comes Kimberly Williamson Butler, the clerk of the criminal court and a N.O. resident since just 1999, who announced her candidacy on the steps of the courthouse after surrendering for ignoring a string of court orders. Oh, yes -- it appears that her campaign Web site has a pic of the candidate superimposed not on an actual New Orleans scene, but on Disneyland's New Orleans Square.

    It would be all the more entertaining if the election weren't so critical for the city's future.

     

    January 15, 2008

    Blown up in Iraq

    From the Middle Eastern Times:

    I was blown up last Tuesday. Luckily I can write about it. Many others who've shared the experience can't. They're dead, or their bodies and brains are so messed up by shrapnel or concussion they can't remember the details.

    It takes a special kind of person to be a war correspondent. I know three: Jon Landay of McClatchy, Marie Colvin of The Times of London, and Robert W. Worth of the NYTimes. I'm glad I know them -- and proud to have worked with the first two early in my career -- but I'm even gladder I'm not one of them.

    But if you're going to cover the war in Iraq, and Lord knows we need good coverage, this is a hell of a way to do it.

    January 28, 2009

    Is a fresh start in the White House such a good idea?

    OK, now that I've got your attention...

    At 12:01pm on January 20, the whitehouse.gov Web site got turned over to the Obama administration. The old site was swept away into the loving care of the National Archives, along with the rest of the Bush/Cheney documents -- with the possible exception of the torture docs that I suspect VP Cheney threw his back out moving a few days earlier.

    After every inauguration, White House operations start afresh. This is why the W-less keyboard meme from 2000 was so powerful; it was, in fact, possible -- even if it isn't true. But all files, all computers, all phone programming -- all of it -- gets zero-ed out at noon on January 20th. That may be one reason that the White House has been having such terrible trouble with e-mail this week.

    But even though an inauguration is a transfer of power, it isn't The Great American Reboot. Government continues. People continue to need services. It's not like a new company taking over vacant office space. It's more like getting a new CEO. The new boss may eventually want his own equipment in there -- and some it may be open source -- but it's wasteful and bad IT practice to crash an upgrade on your way in the door.

    March 5, 2009

    GOP is Rushing toward disaster

    Excellent analysis -- by the NYTimes Timothy Egan-- of the damage Rush Limbaugh is doing to the Republican Party. (Kudos, too, to the home page editors at the Times for putting a link to it at the top of the page for so long today.)

    Polling has found Limbaugh, a self-described prescription-drug addict who sees America from a private jet, to be nearly as unpopular as Rev. Jeremiah Wright, who damned America in the way that Limbaugh has now damned the nation’s newly elected leader. But Republicans just can’t quit him. So even poor Michael Steele, the nominal head of the Republican Party who dared to criticize him, had to grovel and crawl back to the feet of Limbaugh.

    Where Democrats have gotten smarter is in their ability to push the whacko fringe off-stage when they start getting too much attention. That's going to be a problem with Limbaugh, whose livelihood and lifeblood is tied into getting as big an audience is possible. Rev. Wright will be able to feed his family if he doesn't have a mass audience; not so Limbaugh. That will make Rush exceptionally difficult to shut up, even if he were willing to in the name of party unity. Which he isn't.

    Which is a pity. What this country needs is principled dialog and problem-solving, not demagoguery. The more Limbaugh drives the Republican agenda and dialog, the less likely bipartisanship becomes, which weakens the nation at a time when it requires the best effort from all available smart people.

    May 23, 2011

    Wuz LinkedIn Robbed?

    There's a provocative column by Joe Nocera in today's NYTimes about LinkedIn's IPO last week. Nocera thinks that the investment banks Morgan Stanley and Merrill Lynch -- which LinkedIn hired to take it public -- essentially stole hundreds of millions of dollars that should have gone to LinkedIn's treasury.

    Here's how it works. The investment banks gauge demand for the shares, which are sold by the company's treasury, and set what they believe is a fair-market price. Proceeds of those initial sales go to the company. In LinkedIn's case, Morgan and Merrill set a price for the shares three times, the last and highest being $45. LinkedIn took in $352 million for 7.5 million shares. The investment banks get 7 percent of that.

    But once the shares are out, they can be -- and are -- traded freely. On its first day, LinkedIn traded as high as $122 per share, closing at $94.25, more than twice the initial price. LinkedIn got none of that money.

    Who did? The people to whom Morgan and Merrill sold the initial shares. That's usually their best customers, people with connections, or other BFFs. A 100 percent gain in one day is a nice day's work.

    Nocera says it's a scam. It's the investment banks' job to know what the market sentiment is, he says, and it's their fiduciary duty to price the coming-out shares as close to what they think the market will pay. And at the end of the day (literally), the market was apparently willing to pay $90. LinkedIn should have collected not $352 million but $700 million, Nocera argues. And their investment banks should have been paid $49 million, not a mere $25 million or so.

    Why would the banks leave $25 million on the table by underpricing? After all, taking a company public is hard work. Maybe they traded some of their own stock and gained more than that. Maybe they were willing to chalk up the $25 million as a cost of doing business to appeal to their best customers. Promotional expense, you know.

    Is this something that should be -- or can be -- fixed? I'm not so sure. I don't know that it's an investment bank's responsibility to take into account a market gone nuts. Maybe a best effort is all that's truly called for. though how you'd judge that is a mystery for smarter minds than mine. I know I don't want the SEC putting its thumb on the IPO scale.

    Maybe a Dutch auction, which is how Google went public, is the right anwer. (The Street hated it, but it doesn't seem to have hurt Google's prospects any.) Maybe there should be a rule that a percentage of all first-day sales -- say, 7 percent, same as the banks' take -- be funneled back to the company issuing the shares. It might make for a more orderly coming out, or it might just move the madness to Day 2.

    This may just be one of those things that Just Isn't Fair. One thing Nocera's inarguably correct about: it looks like hell at a time when the financial business ought not to be resorting to Old Tricks of the Internet Bubble.

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