Monthly Archives: June 2008

AP News Boycott is the News

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There is a huge story brewing that covers the intersection of mainstream news and blogging. Associated Press (AP) decided to crack down on what they felt were copyright violations by blogs quoting AP stories. Spoof site “The Drudge Retort” is under legal fire from AP, and this has prompted action by other blogs that coudld become one of the most interesting developments in the history of blogging and news. AP has backed off somewhat from its initial reaction and is now offering guidelines for blogs using their stories, but this is too little too late in the eyes of many prominent bloggers.

The world’s top tech blog, TechCrunch, has called for support of the boycott of AP stories – telling bloggers to stop linking to AP stories until they change the new policy and stop threatening to sue blogs.

Here’s a somewhat different perspective from Jeff Jarvis who probably did more to get the ball rolling on this than anybody.   His concerns seem to be more that AP is hypocritical and opportunistic about copyright and linking.  I do like Jeff’s idea that the key metric for compliance with good practices in blogging and journalism should be a *link* to the original material along with reasonable other attribution.

Although the story is interesting from the perspective of the changing interpretations of fair use and copyright legalities, this also represents what I think is the first large scale test of the influence of blogging on mainstream news outlets. If the boycott catches on the effect on AP will be very interesting to watch, and probably costly enough for AP in terms of stunting traffic and incoming links that they will revise the policy very quickly. The big winner here will probably be Reuters which will see a huge swell in links from high authority blogs. This has the potential to have a very positive long term affect for Reuters, especially with respect to Google rankings for very valuable technology news terms but also for the Reuters site in general.

It will also be interesting to watch how AP covers the story of its own decisions. I need to read up more before forming an opinion on this but I’m guessing AP’s guidelines are not all that excessive or unreasonable, rather AP is just missing the point that the benefits to AP from new media news and blogs far outweigh the challenges they will face from copyright violations.

As usual the blogging community is quick to attack attackers without giving enough thought to their reasonable concerns about flagrant copyright violations with no attribution to original authors or sources. It would be nice if in conjunction with the AP story boycott bloggers would work *twice as hard* to give MORE attribution to original sources. I’ve found myself in disagreement about this with other blogs but I continue to think the solution is to make it standard form to provide a link to original material you reference in your blog. This was standard practice in the early days, but as links became the key currency of the web people stopped using them as much, and started using them more strategically.

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The huge wait over approval for the Sirius XM Satellite radio merger is almost over as FCC staff has recommended approval of this action making approval very likely.

In my view the merger will have a positive effect on the profitability of the combined companies because it will effectively increase the reach of the advertising offerings dramatically while eliminating upper and some mid-level management positions.   Unlike small terrestrial stations (which are quickly falling under national networks anyway), satellite radio is very capital intensive but relatively labor NONintensive.  e.g once established the satellite network can scale to millions more subscribers without a lot of extra labor or infrastructure costs.    The XM Sirius merger is the logical extension of those technological and labor efficiencies in a market where technology forces are a lot more determinative than normal market forces.

To the extent the merger helps the combined company by increasing their share of the radio advertising market it is likely to have some negative impact on terrestrial radio stations, though I think most of this damage has already been done.  Also, I see the key negative pressure on radio advertising as coming from the growth in online advertising and the merger is unlikely to have much affect on the online advertising market.

Following are notes from the XM / Sirius press release describing the advantages of this merger.

PR info is in italics, [my comments are bolded and bracketed]:

The combination creates a nationwide audio entertainment provider with combined 2006 revenues of approximately $1.5 billion based on analysts’ consensus estimates. Today the companies have approximately 14 million combined subscribers. Together, SIRIUS and XM will create a stronger platform for future innovation within the audio entertainment industry [skeptical – this is a profit move not an innovative one] and will provide significant benefits to all constituencies, including:

* Greater Programming and Content Choices — The combined company is
committed to consumer choice, including offering consumers the ability
to pick and choose the channels and content they want on a more a la
carte basis. The combined company will also provide consumers with a
broader selection of content, including a wide range of commercial-free
music channels, exclusive and non-exclusive sports coverage, news,
talk, and entertainment programming. Together, XM and SIRIUS will be
able to improve on products such as real-time traffic and rear-seat
video and introduce new ones such as advanced data services including
enhanced traffic, weather and infotainment offerings. [theoretically reasonable statements, though I’m skeptical they’ll work hard to innovate, choosing instead to reap the increased profits from the merger efficiencies]

* Accelerated Technological Innovation — The merger will enable the
combined company to develop and introduce a wider range of lower cost,
easy-to-use, and multi-functional devices through efficiencies in chip
set and radio design and procurement. Such innovation is essential to
remaining competitive in the consumer electronics-driven world of audio
entertainment. [Again in theory true, but the radios are already subsidized so I see prices stable or higher after merger.  Innovation will happen as necessary to maintain market]

* Benefits to OEM and Retail Partners — The combined company will offer
automakers and retailers the opportunity to provide a broader content
offering to their customers. Consumer electronics retailers, including
Best Buy, Circuit City, RadioShack, Wal-Mart and others, will benefit
from enhanced product offerings that should allow satellite radio to
compete more effectively. [Auto space – lots of potential as drivers expect more amenities and are willing to pay for them and these partnerships are a very natural win-win for autos and XM Radio.   Retail – skeptical of more than current levels of subscriber increases via this market.]

* Enhanced Financial Performance — This transaction will enhance the
long-term financial success of satellite radio by allowing the combined
company to better manage its costs through sales and marketing and
subscriber acquisition efficiencies, satellite fleet synergies, combined
R&D and other benefits from economies of scale. Wall Street equity
analysts have published estimates of the present value of cost synergies
ranging from $3 billion to $7 billion. [Absolutely yes, though my gut doubts the 7 billion number without having done any financial research.  If this 7 billion efficiency is realistic this appears to be a good stock buy as it could catapult the bottom line of the combined companies, which now have a combined market cap of only about 7 billion]

* More Competitive Audio Entertainment Provider — The combination of an
enhanced programming lineup with improved technology, distribution and
financials will better position satellite radio to compete for
consumers’ attention and entertainment dollars against a host of
products and services in the highly competitive and rapidly evolving
audio entertainment marketplace. In addition to existing competition
from free “over-the-air” AM and FM radio as well as iPods and mobile
phone streaming, satellite radio will face new challenges from the rapid
growth of HD Radio, Internet radio and next generation wireless
technologies. [Maybe, but I think for at least the first few years the focus will be on more efficient delivery of the existing niche networking, news, shock and political talk shows, and other existing products.   I do not see XM and Sirius as major content innovators.   Rather they have been innovative in the distribution space.]

Summary:

Look for the merger to be approved, to bring cost efficiencies, and to breath life into the stock of the combined company.     Do not expect significant other impacts in the radio or other sectors.   Merger = more of the same, more cost-effectively delivered by the combined company.

WSJ Reports

Lomborg on Zakaria GPS: Painfully Correct Thinking

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More kudos to Zakaria’s GPS on CNN for bringing key global thinkers to the news table.

Today GPS featured Bjorn Lomborg, a figure who is controversial for the very simple reason that he has challenged sacred cows with common sense. When the sacred cow includes global warming alarmism even many otherwise clear thinking scientists have attacked Lomborg, generally on personal grounds rather than on the statistical high ground squarely occupied by Lomborg and the Copenhagen Consensus.

Bjorn Lomborg’s economically optimal approaches to finding solutions for global development, poverty reduction, global health, and more are thoughtful and rational. So rational and thoughtful that it’s always painful to hear his critics disparage him as a “global warming denier” (he is NOT even a GW skeptic as Zakaria very unfairly branded him during the introduction).

Lomborg’s main point is simple: We should seek the most effective solutions to global problems, which means seeking the most effective spending approaches given our current understanding of the problems.

I am very confident that history will show that the approaches taken by the Copenhagen Consensus were a sort of early “best practices” for Global problem solving, one of the first efforts to powerfully integrate science and economics in a rational rather than political or emotional way towards the vision of a better world.

New York Times to Jerry Yang: Take a Hike

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The New York Times seems to agree with critics who suggest Yahoo’s board was not acting in the interest of shareholders as it fought off Microsoft offers for the company, including a final offer that in my view will prove to be somethng of an on-the-table smoking gun in this matter since Yahoo rejected a deal that would have allowed them to improve their own search monetizing routines rather than simply outsource them to Google.

The fact that Jerry Yang and David Filo, and the Yahoo board have a huge paper loss should give everybody pause to wonder about whether they may be rightt.  Perhaps keeping Yahoo pristine for a few years, unsullied by Microsoft’s cash and worldview, will lead to much higher stock prices?

…. or perhaps optimism and MS hostility has trumped common sense.

Disclosed:  Long on YHOO

Why O’Reilly’s wrong about Arrington being wrong about Yahoo being wrong about Microsoft

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What did the normally very insightful Tim O’Reilly and Fred Wilson have for lunch, some free hallucinogenic deserts over at Google?

Both are criticizing Mike Arrington for stating the obvious – Yahoo’s not acting in the best interest of shareholders or Yahoo or anybody except Google, who clearly is the big winner in Yahoo’s squandered megadeal with Microsoft.

Fred very correctly notes that Yahoo’s has faced leadership challenges for a long time, but he says he likes the one option that keeps the current Yahoo board intact and very much on track for much more of the same company crushing behavior. Yes, a clean house is needed and that is certainly less likely to happen *now*.

It seems to me there are two issues and they have it wrong on both counts where Arrington’s got it right.

First, Yahoo’s Google move proved that in terms of shareholder obligations it should have sold to MS. Yahoo cannot reasonably make a case that they will come out of the monetization hole using core values while immediately outsourcing their most potentially lucrative biz to Google. Sure this will make more than Yahoo alone, but nothing like what the MS deal would have offered Yahoo in terms of ad cash plus money to develop the search biz. MS offered a shot at glory. Yahoo took Google’s money so they could keep sitting back and watching the really big search money pass them by.

Is Fred saying there is a Googley path back to $34+ per share? Even if yes, it is nonsense to think it’ll happen fast enough to justify turning down MS’s offer of $34 and their subsequent offer of $35 for 1 in 6 of Yahoo’s outstanding shares.

Second, this just gives Google even more of a near monopoly on monetization. As Mike suggests competiton is lacking and needed in the search space. This is a big step in the wrong direction.

Disclosure: Long on YHOO

Disney and World Peace

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Millions of kids in America and around the world are big Disney fans.   So am I.

In fact I think that Disney may be doing more than *any other entity* to bring harmony and peace to the diverse and complex cultural landscape.   Although they avoid some of the complex and probably unsolvable problems like wahabism vs western culture, they really do a great job promoting racial understanding and cultural understanding via the diversity in the programming .  Simply *modelling cooperation and understanding* to a global audience is powerful,and when you add the huge appeal of Disney music and production values it works on more levels.  More powerful are shows like the upcoming special filmed in India where fun trumps conflict.

Is Disney’s a childish vision of global harmony?    Perhaps, but maybe that is the most effective path of all.

Yahoo adds an 8 billion dollar insult to the Microsoft Merger Madness

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Yahoo’s not just turning down an internet king’s ransom for a Microsoft merger, but they even rejected a partial buyout from Microsoft that would have given them 35 per share for several of MY SHARES and also woud have added a cool billion or so to the bottom line in an MS advertising deal.

Kara Swisher has more details, and is looking great with a hip new hairdoo!

My guess is that rejecting this modifed Microsoft Merger offer will put a nail in the Yahoo board’s coffin. They had a case – albeit a weak one – that Yahoo unfettered with MS could have dug themselves out of a hole, but this makes it even more crystal clear that they weren’t even willing to do *anything* with Microsoft. I think that would suggest a level of corporate indifference to shareholders that is going to leave a lot of folks….well…..ticked.

Disclosure: long on YHOO

Meteors and You

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Thanks to Glenn for this story suggesting a new study making a possible connection between early life and meteors.  

I’ve always been comfortable with the idea that life as we know it could emerge in slow and steady steps from the primordial soup that certainly existed on the millions of years ago, but it does not seem unreasonable to suggest that meteor material may have played a role as well, back when it was more common to have stuff raining down on the earth before our atmosphere formed which (thankfully) burns up most of that sh** before it crashes into the planet and ruins our sunny days.

Yahoo Google Agree to Thwart Microsoft and Icahn

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The Yahoo Microsoft Merger saga continues as Yahoo and Google have signed an advertising pact in the face of mounting new pressure on Yahoo to sell to Microsoft.     Carl Icahn, corporate mega-investor, has purchased a large stake in Yahoo and was preparing to force changes on the Yahoo board that have led to a Microsoft takeover.   Today’s announcement appears to leave the Microsoft deal in the lurch, though I’m not clear yet why Icahn can’t fight a proxy battle to get control of the company and then back out of the agreement.    Based on today’s news that is not part of his plan, though anything is possible in the rapid fire take no Microsoft prisoners battle where the Yahoo board appears more interested in thwarting Microsoft than doing good for Yahoo’s shareholders who today saw a drop of 10% in shares as another potential Microsoft deal crumbled.    Last year Yahoo rejected $40 per share, and a few months back they rejected $34.   One does not have to have much imagination to wonder how long it’ll be before they are rejecting $25.

An interesting investment question right now is whether Yahoo is priced low or high given all the new information.  If, for example, a new board will come in within a year or so it’s very possible that MS will make another aquistion offer well above current prices.  A new board would probably view this favorably.   If true Yahoo’s a good buy now.   However if the stubborness will continue for years it’s not at all clear that Yahoo can dig itself out of the profit and morale busting hole it’s been digging for several years while Google was eating Yahoo’s lunch and serving it back – free – to Google investors and employees. 

Disclosure:  I have Yahoo.   Which means I have 90% of the value I had this morning.