Convergences

NYT Gets Ready to Jump . . .

. . . into the paid business. The FT (paid subscription required) says the NYT is "preparing the ground" to charge $30/$60 year for access to its website.

The news biz must go this way. The big problem for many papers is their primary content comes from the wire services, and this is so widely available that no one will pay. The NYT generates enough unique product to make it work. But even for a brand like the NYT, it will not be easy to resist the pressure from the information-wants-to-be-free crowd.

I am happy to see this because perhaps it will give the paying customers more clout. After reading it for years, I gave up the NYT a decade ago for philosophical reasons -- every story I read in an area about which I knew something was slanted in an anti-free market, pro-statist direction. So I assumed that areas about which I am ignorant received the same treatment, and I decided to cease being systematically misled.

Free Association about Chrome OS

Last week, Google announced its new netbook Web-focused operating system -- Chrome OS, to match its browser. The OS will be open source, a variation on Linux, so Google will be able to tap into the strength of that community from the get-go, and of course free ride on the  work supported by IBM, HP, and the other tech companies who fund Linux.

There is a lot of cross-talk in the press and web about how this is or is not a deadly or minor threat to Microsoft's core Windows business, done with or without deliberate malice by Google, and how it is a disruptive or minor innovation that can be extended up the value chain (unless it is not), and how Microsoft must be very worried or perhaps highly amused.

The day before, I was at Google's DC office to hear Chris Anderson talk about his new book Free: The Future of a Radical Price. One point he made is that there is a big psychological distance between "free" and even a trivial cost and that the business models of the future must cater to this. This does indeed seem to be a pre-occupation of the tech world, which thus assumes that Google's free OS should sweep the board, except of course for the power of those Microsoft people who seem to cheat by charging for their products.

The Arcane Mystery of Things Everyone Does

At George Mason University a while back, I was treated to a preview of some economic research; this time, a paper studying whether or not consumers read the fine print. "Does Anyone Read the Fine Print? A Test of the Informed Minority Hypothesis Using Clickstream Data." (At the moment, the SSRN link appears to be down). Authored by Yannis Bakos, Florencia Marotta-Wurgler, and David Trossen. The conclusion: in online software sales, no one does. Barely anyone. Less than one percent.

Well, of course not. Do you? (I skim them, personally, but most of that is me wearing my legal scholar curiousity hat, not me as a consumer. I read contracts with moving companies rather more carefully, as a consumer. Otherwise, not really.) 

Industrial Policy - Intellectual Property Division

Just ordered: Blaxill & Eckardt, The Invisible Edge: Taking Your Strategy to the Next Level Using Intellectual Property (Portfolio, March 2009).

The Press Release on the book says:

America`s vast storehouse of IP reserves form the backbone of the country`s global competitiveness - the U.S.`s "Invisible Edge." They may be overlooked and undervalued by both business people and policymakers, but they are the fuel that powers the economy in good times and helps it bounce back from bad times.
. . . .
But America is on the Verge of Squandering its IP Lead by Repeating Past Mistakes

Back in the 1960s and 1970s, in the name of "competition," regulators at the FTC forced some of America`s leading companies to open their patent portfolios to the world. According to Blaxill and Eckardt: "The result was a flood of goods from foreign companies - made with American know-how that was obtained essentially for free."
 . . . .
They recommend a national "innovation policy" that includes:

* Protecting the U.S.patent system and the renewable strategic reserves that it generates.
* Sustaining America`s terms of trade and defending the pricing of America`s invisible assets through regulation and legislation.
* Adapting the USPTO to the needs of the modern patent development process.
* Building talent locally through quality science and engineering education.
* Providing incentives for inventive talent to live and work in the U.S.
* Making science and engineering financially rewarding careers.
* Supporting returns on invisible asset investments.

It looks like an interesting read. A White Paper on patent reform that may encapsulate the main points of the book is here.

Anti-Industrial Policy

H.R. 2743, the Automobile Dealer Economic Rights Restoration Act of 2009, has 230 co-sponsors. The CRS summary:

 Prohibits an automobile manufacturer (manufacturer) in which the federal government has an ownership interest, or which receives loans from the federal government, from depriving an automobile dealer (dealer) of its economic rights. Requires the manufacturer to honor those rights as they existed for Chrysler LLC and General Motors Corporation dealers prior to the commencement of the bankruptcy cases of each corporation, including dealer rights to recourse under state law.

Requires the appropriate manufacturer to restore the franchise agreement between the dealers and Chrysler LLC or General Motors that was in effect prior to the commencement of their respective bankruptcy cases, and to take assignment of such agreements.

One of the companies' problems is an antiquated dealer network, long protected by state laws, that siphons money from both consumers and manufacturers.

The information revolution, the Internet, and the rise of overnight delivery have created a desperate need to re-structure, something that would readily occur by private contract absent the meddling of governments. So Congress is announcing that wherever the power of the Federal Government extends, no such industrial restructuring will occur.

Perhaps Congress did not read GE CEO Jeff Immelt's column yesterday on the importance of our industrial base. It certainly has not read my piece on the coming crack-up of the Special Interest State.

Behind the Green Dam

Behind the Green Dam, a comment on the rise and fall of the recent Chinese proposal on Internet porn (and maybe politics), has been posted by The American.

That Ole Time Religion: Manufacturing

GE CEO Jeff Immelt has a column in today's FT: "Over the past few decades, many in business and government bet that the US could transform itself from an innovative, export-orientated ­powerhouse to an economy based on services and consumption." This was theological error, and now "We must make a serious national commitment to improve our manufacturing infrastructure and increase exports."

Watching this gives one whiplash: First, because GE was a leader in the trend, ruthlessly re-inventing itself as a finance company, and, second, only yesterday the WSJ said that GE wanted to sell its appliance and lighting businesses but was stuck with them.

Well, the prodigal son and all that, so Immelt makes a good point. The idea that the US can do the thinking and collect most of the money while Asians do the work is not now and never was realistic. Hollow out the US manufacturing base and over the not-too-long term, the thinking will go overseas as well. An electronics manufacturer in Asia can integrate into design more effectively than a US design firm can develop manufacturing capacity, and if design is where the money is, it will happen.

On the down side, part of the GE story is that the company is up to its eyeballs in the green energy and health care industries, which are toxic mixtures of crony capitalism and venture socialism. So it would be nice to see GE decide that it has had enough of toxic assets and bubbles and get even more fundamentalist by embracing the religion of free markets, which represents a much more effective approach to both these issues than the track we are on.

The Special Interest State: The Marks are Noticing

In April, The Coming of the Fourth American Republic bemoaned the rise of the Special Interest State, and argued that this particular manifestation of democracy is not sustainable. A related piece suggested that China should learn from our mistakes.

Roger Selbert of the Growth Strategies Group, writing in newgeography, applies this lesson to the California crisis, and notes that the voters seem to be catching on:

A new poll by the Public Policy Institute of California asks voters, “Would you say the state government is pretty much run by a few big interests looking out for themselves, or is it run for the benefit of all the people?” Among likely voters, 76% say special interests dominate the state government which, only a few decades ago, was once touted as having one of the best, most forward-thinking governments on the planet!

Howie Carr characterizes Massachusetts as a "bust-out" a la The Sopranos or Goodfellas -- strip the assets and leave a shell.

Indiscreet

In the remake of the classic movie Indiscreet,  Leslie-Anne Down accidentally appears in front of Robert Wagner with her face covered by a particularly bizarre mudpack. She says (from memory): “Can you just forget you ever saw me this way?”  To which he responds: “I seriously doubt it.”

So it is with the latest escapade of the Washington Post. The paper sent invitations to lobbyists to bring their CEOs to a private soiree at the home of Post publisher Katherine Weymouth, at which they would not only “interact with key Obama Administration and Congressional leaders” but “build crucial relationships with Washington Post news executives.” The cost: $25,000 for one; a cool quarter of a mil for a series.

One of the lobbyist recipients questioned the ethics and blew the whistle, whereupon everyone involved backed away, tossing the blame on a top marketing guy (who will soon be either unemployed or very well paid indeed). From media commentator Howard Kurtz:

Executive Editor Marcus Brauchli said he was "appalled" by the plan. "It suggests that access to Washington Post journalists was available for purchase," Brauchli said. The proposal "promises we would suspend our usual skeptical questioning because it appears to offer, in exchange for sponsorships, the good name of The Washington Post."

For WaPo phobes, this brings to mind the classic doggerel: 

You cannot hope to bribe or twist thank God! The British journalist.

But seeing what the man will do unbribed, there's no occasion to.

-- Humbert Wolfe

The bright side is that seldom has the Post afforded so much pure pleasure to conservatives.  I am among them, since it confirms my thesis that DC has turned so completely into a special interest state that it is tone deaf to its own corruption; how else could anyone in a newspaper think that this was within bounds?

And then there is something I once heard on sentencing day in federal court. The judge asked the defendant if he was sorry for his crime, and the answer was: “Oh yes, your honor; ever since I got caught I can’t sleep a wink.”

UPDATE: Editor & Publisher links to numerous reactions, including a funny video spoof.

Here is the flyier. Image from the Washington Examiner.

Openly Sore

Rough Type summarizes a psychological study of Israeli Wikipedeans:

Forget altruism. Misanthropy and egotism are the fuel of online social production. That's the conclusion suggested by a new study of the character traits of the contributors to Wikipedia. A team of Israeli research psychologists gave personality tests to 69 Wikipedians and 70 non-Wikipedians. They discovered that, as New Scientist puts it, Wikipedians are generally "grumpy," "disagreeable," and "closed to new ideas."

In their report on the results of the study, the scholars paint a picture of Wikipedians as social maladapts who "feel more comfortable expressing themselves on the net than they do off-line" and who score poorly on measures of "agreeableness and openness." Noting that the findings seem in conflict with public perceptions, the researchers suggest that "the prosocial behavior apparent in Wikipedia is primarily connected to egocentric motives ... which are not associated with high levels of agreeableness."

This should be good for a pretty good flame war.