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Archive for the ‘finance’ Category

After a TechCrunch article writer by Sarah Lacy posted August 22, 2011

A few months ago Sarah Lacy, a TechCrunch.com writerwas giving a talk in her hometown of Memphis, TN, and someone asked what the city could do to ignite more entrepreneurship among inner city kids. Her immediate answer was to teach coding– even basic app building skills– along with English and Math in every public school. She was surprised that her brother– an engineer who worked for many years in Silicon Valley before relocating to the Midwest– didn’t necessarily agree.

The thing is that while this is a first level issue of who gets the jobs needed in coding – foreign or domestic coders, it occurred to me that we are in the 30th year or so of serious code writing and it has had some unanticipated consequences.  The changes in the world that have been brought about by the Internet and technology have changed what is done by people.  Now, more and more what is done is done by software applied to different technologies.  The world of TechCrunch and other quasi-geek clusters are alive and well due to the prevalence of algorithms.  They are the workers in a mired of different ways today.

They paint the cars, cut the steel, do the book binding, print the content, answer the phone and a zillion other things that we all used to do.  In a cumulative way the jobs that were are now being done by technology just like was the case when ol’ Ned Lud (see emphatic published accounts for the most favorite spelling…) brought to mythical status between 1779 and 1812 that changes in British textile practices were coming to a screeching halt.

No, I am not being Luddite here.  I am simply pointing out that, when all the talking heads whine and moan about this political union or that political union not producing jobs for the reconstitution of the economy, they should take note; the jobs in the past that went away aren’t coming back.   Many of them aren’t coming back due to being  long overdue to be absorbed before the downturn and no one – or not many, took notice.

Instead of asking for someone else to provide jobs, it is time to create jobs based on that uncomfortable situation that we find ourselves in every 70-90 years.  Change has overtaken the status quo.  Now we need to create jobs that machines can’t do – yet.  That is, jobs involving organizing communities, infrastructure, law, education and human-care… for children, for families in transition, for elders and for soldiers who are brought back and deposited on the steps of America.  They were taught how to do what was necessary to what they had to do to survive.  Nowhere is the training they get any better for that purpose.  Now however, they have done that under duress, for double tours, etc. etc. etc.  To be spit out by those that trained them as worn out and disposable civilians with defects without the slightest bit of care on how to survive reestablish domestic values, is despicable.  Software and algorithms can’t pull that off.  We can if we stop waiting for someone else to do something we favor or don’t find dogmatically repugnant.

HP’s decision to go big and purchase the U.K.’s Autonomy Corp., and probably other players doesn’t seem so ridiculous under a ‘software good – hardware sad’ scenario, does it.

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from Ron Williams…

In the October 29, 2010, edition of the Wall Street Journal (The Potential Pitfalls of the Winning Big) reporter Gerald F. Seib wrote, “In an interview with National Journal out this week, Senate Republican leader Mitch McConnell was asked what his party’s main political job will be after next week’s election. He gave a surprisingly stark answer: “The single most important thing we want to achieve is for President Obama to be a one-term president.”

At a time when the country is fighting a major war, facing a severe economic recession that rivals the Great Depression, and having the largest federal deficits in the country’s history, it is telling to see that the focus of the Republican Party is not to address any of the great problems facing this country.  Rather, their focus is on politics as usual.

And the fact that the American public is about to give them the same Party and laid the groundwork for most of these problems seems to me say that we are a country of amnesiacs.  When President Bill Clinton left office we had budget surpluses, we were not at war with anyone, and the economy had not collapsed.

Then we had eight years of Republican governance.

The Republicans had control of the Executive Branch and both houses of Congress.  What did that get us?  The answer is two foreign wars, the budget deficits, and the beginnings of the great recession.  All were precipitated on the policies of the Bush administration and a Republican Congress.  The Republican governance approach was underfunded budget cuts for the very wealthy and deregulation of just about every industry. Now, it seems that both they, and apparently a significant portion of the American populace, have forgotten what a disaster Republican governance games this country and are prepared to allow the return of those same disastrous policies.

I fear for this country. Example, the governor of New Jersey has just canceled the Tunnel Project, and has ended a project needed for the future transportation needs of the Northeast region.  During the Great Depression it was just the sort of New Deal Projects that helped jumpstart this country out of the Great Depression.  Republican politicians these days cancel these projects.  We see Republican and Tea Party candidates stand their time sending racist and sexist e-mails around the country with others focus on anti-masturbation campaigns and witchcraft issues.

We see a Republican Party which has as one of its favorites ex-governor Sarah Palin, a politician who has yet to complete the term for any office she has been elected.  I’m amazed to think that anyone would support a politician who resigns from office midterm to pursue other financial interests and then expect you to support their election to the next higher office.  It is one thing to leave an office to run for a higher office, it is something else to quit an office to be a commentator on Fox News.  And Tea Party members want this woman to be our next president?

I despair for this country.  Democrats have had control of the Executive Branch and both houses of Congress for the last two years.  President Obama was elected on a campaign promise of putting forward major social and economic changes.  Instead of using that control in both houses and the Executive Branch to make good on these promises, President Obama and the leaders in the House and the Senate spent two years dickering with Republican Senate and House members (who was declared goal was to block every single legislative program with the express purpose of capturing more seats in the midterm elections.) And that is exactly what has happened.  Democrats have not had the guts to push their own agenda.  I believe they deserve to lose.  If you don’t have the courage of your convictions, then perhaps you use should not lead.

I believe the 2008 and 2010 election cycles are based on the electorate crying out for leadership. I think most of us feel the country has been headed in the wrong direction for the last ten years and wanted a change. They asked for that with the election of President Obama.  He has failed to deliver.  For example, the health care bill did not go far enough.  He did not cause runaway health-care costs to be reduced for the average Of American.  He spent too much time dickering with the healthcare industry (the folks who are causing the cost run-up in the first place) and with Republicans (again those people whose only goal in life is to recapture the presidency).

It is the same thing with re-regulation and control of the financial industries. The regulations being put in place today are being written by the same group of Ivy League financiers that gave us the problem in the first place. The regulations do not go far enough in controlling this industry. The American public knows it and is angry.

Last year, there was an uproar when the same bankers who caused the financial meltdown were being awarded large bonuses. In answer to this outcry, the Ivy League financiers trotted out the argument that the bonuses had to be paid because of “contractual obligations”. The problem is that we all knew that the Ivy League financiers knew about these large contractual bonuses when they were negotiating the bailout of these major banks.

During this bailout, detailed contracts were being renegotiated and new terms set in place. These individual contracts, with their large salaries and their scheduled large bonuses, could have and should have been renegotiated at that time. If an individual refused to accept these renegotiated terms, then their employment could have and should have been terminated. With economy as tough as it was unsure that they would have accepted those terms.

Further, with all of the layoffs in the financial industry, it goes without saying that finding well-qualified individuals to fill the spots of those who quit would not be hard to come by. This is what happens to the steelworker, on a file clerk or even the PhD executive. In this economy, there’s always someone willing to take the job in a lower, more reasonable, salary and to forgo bonuses. If this wasn’t, so it seemed like politics as usual. And this is going to cost the Democrats in the election.

It is activity like this that is fueling the anger on the Right, and that the lack of enthusiasm on the Left.

I would not despair if the Republican Party had more to offer than tax cuts for the wealthy and the slashing of any program that supports the elderly, poor or the disabled and a return to the deregulation of any and all industry. These programs have proven to be disastrous and there’s no reason to believe that going back to them would do anything other than bring on more of the same.

I would not despair if the Democratic Party could find its way clear to have the courage of its beliefs and fight for their policies as hard as the Republicans fight for theirs.   But it seems as if the Democrats won’t, so I despair.

[Ron Williams is a frequent quest writer on this site.  He is a former attorney and a current Texan living in a free country with changing contingencies.]

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By Ron Williams – citizen, contributor and patriot – 9-22-10

[Ron Williams is a retired attorney living in The Woodlands, TX and a welcome guest contributor to Social Mode]

It took a tough, smart candidate to win the Democratic nomination and the win the election for President.  It then takes a tough, smart President to govern the United States.  Candidate Obama was that tough and smart candidate.  While I believe that President Obama is being smart, I do not think he is being tough.  By this I mean, playing hardball with those who are opposed to his presidency and to his policies

For the last two years, political opponents of President Obama have consciously spread deliberate innuendo and outright lies in order to oppose the political agenda of the President Obama and the Democratic Party.  These opponents have used every tool at their disposal in their attempt to discredit the Democratic Congressional Majority and President Obama.  Over the last two years, we have seen the Democratic Majority and President Obama may tepid responses to these loud, angry and forceful attacks from the Right Wing of the Conservative Republican Party.

It is true that President Obama promised to have a less confrontational and more collaborative approach to governing this country.  He spoke of plans to reach out to the Republican Congressional Minority to work together and forming legislative solutions to the serious problems facing this country.  And I believe we have seen him struggle mightily to honor that commitment.  It seems however, that the Republican Party adopted a legislative strategy that was to simply oppose each and every solution proposed by the Administration to address the serious problems facing this nation, regardless of the actual real world impacts of this strategy on the welfare of the average American.  The strategy was combined with a constant attack on the Administration’s proposals, even when they were mirror images of programs opposed by the conservatives themselves just a few years ago.

Democrats in both the Administration and in Congress did negotiate with the Republicans in good faith on these legislative initiatives.  The result was legislation ripe with loopholes that have allowed the same large corporations and big businesses that caused our current economic situation ,to continue “business as usual” operation.  So, we have people who in large part operated in cahoots with the bad actors in the business world to create the mess we are in, doing everything in their power to keep those who are in charge now from doing anything serious to fix the problems.  And on top of that they continue to attack the folks who are trying to fix the problems.  The audaciousness of the Republican Party and the right wing Conservatives is breathtaking.

But their strategy has worked.  Poll numbers for the Democratic Party and the President have been going down dramatically for the last year, while the Republican Party poll numbers have gone up slightly. Republican Party has been apparently rewarded for since the doing nothing but saying, “NO.”

This lowered public support for the President and his programs have had the effect of making it more difficult for the President to aggressively address the problems facing this Nation.  The actions of the Republican Party therefore may actually be seen as unpatriotic and unAmerica, because they are not working to solve America’s problems they may be actually working to prevent the problems from being solved.  It would be another thing if the Republicans presented alternative programs to address the nation’s ills.  But instead they have simply become the party of “NO.”  With the exception of Congressman Paul cap Ryan of Wisconsin, the Republican Party is not offering any serious solutions to the nation’s current economic woes.  More should be expected of them.

However, I am addressing the actual state of affairs in suggesting that President Obama in the cab Democratic Party aggressively respond to what the Republicans are actually doing, and vociferously point out that they are not working for the good of the country but instead are simply working as hard as they can in order to get themselves reelected.  Further, if past behavior is any indicator of future behavior, should they recapture leadership of either the House or the Senate, we can expect legislation directed solely toward the benefit of high paid lobbyists and the companies they represent in that once again got us into the mess in the first place.  In most instances, this representation works to the detriment of the average American citizen.

President Obama should point this out at every reasonable occasion using a high tone, but still affirmative language.  The President’s surrogates however, should be much more blunt and on point.  Additionally, the Democratic Party should be running ads in every competitive district pointing out the simple fact that despite Republican opposition, significant legislation has been passed.  The voting record of each individual Representative or Senator should be highlighted along with their ties to big business and their lobbyists.  These points should be hammered home aggressively and repeatedly.

Additionally, I recommend that research be done on all of these pundits and commentators who have made it a point of deliberately distributing false and misleading facts about the President.  Every time one of them issues a lie, that lie should be immediately corrected, the media notified that this particular commentator has issued a lie, pointing out how many other times he or she has done so.  I see no reason why people who deliberately publish misleading information to be given a free pass when their falsehood is brought to light.

Until President Obama and the Democratic Party begin to aggressively counterattack the current tactics being used by the Republican Party and its right wing conservative (Tea Party) constituents the undecided moderate voters will continue to get a distorted and inaccurate picture of what has been accomplished and which party has the best chance of saving this country.

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You may have seen it on news shows…

Athletic Clubs with cardio programs where members jump up and down as if using a jump rope but don’t really have a rope to jump.  Why?  The club doesn’t want people to feel bad if they can’t jump rope like others in the class… …or feel bad if they mess up in front of people not messing up.

How about the no tryouts, no exercise, no activities pep clubs that provide a uniform, trophy at the end of the season and certificate saying they are, “PEP FANtastic!”   Really, this is no joke and it is not a knock-off of the ABC TV show “The Middle” where daughter Sue is the easy-to-recognize enabled student with no clue how to compete… and she is not taught how by parents or teachers or the church or synagogues, or her horoscope.

So, should schools do the about the same thing in math, history, chemistry, business, accounting and insurance as the athletic club does for its members?   How about a prize for attempting to clean up the oil spill in the gulf or attempting put a man on the moon!  “What?”, you say, “That wouldn’t make sense???!!!”  Of course it doesn’t make sense!  But that’s what is being done in education due to myopicos like Alfie Kohn.  Ya, the one and only who writes as an education ‘expert’ for The Huffington Post blog….

Competition is what is.  It starts with the struggle out of the birth canal. For many it ends with seeing who can live the longest with the most toys, or experiences, or charities, or wives, or single malt Scotches. We learn to eat, to live, to work and to mate and there is a competitive component in every second of it.  Those that don’t compete never learn skills that they can use in life later on to provide for their families, communities and the world.  And then we wonder why we are with competitive academics in the world, or why there are more and more 3rd world foreign-borns in colleges and universities, engineering schools, MBA programs, Ph.D. programs, medical schools, etc.  [No, that is not bigotry; it is that they get it!] The answer is competition.  They are serious about it and we (whoever that means) aren’t serious about it.

Perhaps it is a vestige of our ‘Man-is-superior-to-all-the-rest-of-the-animals; we don’t compete like they do!’ shtick. How’s that workin these days.  Are we winning any competitive wars you’ve noticed?

In fact, we’re frequently going in the opposite direction due to the early years being filled with the ‘help’ being offered from the very beginning.  Businesses from McDonald’s to McDonald-Douglas spend billions every year teaching their employees how to compete at different levels.  University of Phoenix makes a living for a lot of investors in grades for profit involving students companies send them who can’t compete; write, read, organize, manage or lead.  If we were doing such a great job they would be out of business.

Community Colleges have many students that don’t know how to compete.  They haven’t competed up to the point of college and now competing for jobs is almost foreign to them, not because of the jobs, but because they didn’t get the subtle or the explicate competitive approaches or experiences that are learned early on.  The ‘help’ provided is to not let them come into contact with any consequences.

What is ‘entitlement’?  It is what adults do to their children and what students learn that ensures that they do not have to compete to get what they want; they do not have to attend to what works and that they can get the same credit for ‘trying’ as for succeeding.   They say it is for the children but it isn’t; its for them, the parents.

FFPS and similar organization institutionalize the entitlement.  Learning to ride a bike you can get hurt.  Get hurt??? No, we’ll cover you in Velcro pads so if your training wheels don’t protect you and you fall, you’ll not have to connect with any unpleasant consequences.  Bad nightmares; bad marriages, bad jobs, bad DUI???  Shameful; you shouldn’t have to suffer.  We’ll get you in a program where you are given the drug propranolol to eradicate the experience, or dampen the bad history or events.   The louder the communities yell about the child, student, or young adult, the more and more it becomes about everything else but those groups.

For the things valued in life, there is way too many ‘self-referential’ content today and it is working to our dis-service, from families to the halls of Congress.   That being said, for every virtue listed to reduce competitive activities, there is an equal and larger set that most of us see as a product of competition.

For the things valued in life, there is way too many ‘self-referential’ content today and it is working to our dis-service, from families to the halls of Congress.   That being said, for every ‘virtue’ listed to reduce competitive activities, there is an equal and larger set of virtues that are a product of competition.

  • self-composure

  • self-reliance

  • self-control

  • self-assured

  • self-analysis

  • self-abnegation

  • self-development

  • self-evolved

  • self-enriched

  • self-judgment

  • self-mastery

  • self-reflection

  • self-restraint

  • self-trust

Here is just one option provided by the FFPS web site…

FFPS [Fun, Fair, Positive Soccer]

…to provide every youth soccer player with a positive experience. They saw the main problem as parents who put too much pressure on the kids to perform and the programs that emphasized winning as the main focus. They developed a system so the kids could play and enjoy the sport without demands from adults to win or perform. They modified the rules and designed a process of 5 aside rules, equal play with a unique equal substitution system, balanced teams, and parent training to ensure that it would be fair. The parents would behave and be positive so it would be really “Made For Kids”.

We wouldn’t want the kids to actually perform as in ‘do’ something…. Why not just take the nets and goalie away and have the kids run up and down the field….  I know that might look more like baby sitting but then again, no one would have to explain why the other team had more goals than your team did.  Don’t drink the Cool Aide…

Geeze!

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To start, the goal is not to be an ‘elite’ athlete…

Fourth in a 5-Part Series for http://www.SocialMode.com

(1)   Sports, like businesses or social movements have goals and costs.

(2)   The best way to advance is through the “Do”.

(3)    Focus on long-term benefits as well as short-term gains

(4)   It is not ‘automaticity’ per se that leads to high proficiency.

“Automaticity” is the perception that someone is in the ‘flow”; they make what they are involved in look automatic.

Competitors train to do stuff right; winners train so they can’t do it wrong.

In business and in sport the level of skill at which automaticity is attained is constantly changing.  When the rate of that change slows too much, in sport and in business, things start to get dicey.

Most people never develop beyond their hobby levels of expertise because that is the level at which they are able to do things ‘automatically’. We’ve all seen those people in business.  We’ve also seen them in different sports. Their comfort level is large and ever present.

For club golfers, swimmers or competitive tennis players, their levels of expertise for ‘doing stuff right’ in their sport are sub-par, as it were.  To truly excel, there is always some part [life, sport, relationships] that is not automatic yet that needs attention.

When you raise the bar in each component area, you’ll move from an automatic state (large comfort zone) to a non-automatic state (‘zero’ comfort zone).  Some can’t hack the loss of comfort.  Others find it’s OK to have small comfort zones because you are betting they are only temporary.

It becomes a balancing act between  that automaticity important in the “now” is the elite level to be reached you were working toward.   One elite athlete I know said to me,

“The day I take the elevator rather than walk up ten floors is the day I’ll have decided to give up being World Champion.”

So most of us settle short of an elite status (business /sport); for club performance, for less, for sub-par.   Thus, we rationalize not reaching our highest potentials in one area when we come to value our current level, or “other” events or circumstances. That too is OK because you know what you are doing. That is life.

When we settle in business, others may identify it as ‘lost opportunity costs” and that may not be OK.  But know that the number of mountains to climb – literally and figuratively – are enormous and, clearly, some are more fun to climb than others.

You get to decide.

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CNN has a very unnerving report about some crazy loophole, government meets private sector dealings.

First, doctors as PR people:

Internal company documents show that Pfizer and Pharmacia (which Pfizer later bought) used a multimillion-dollar medical education budget to pay hundreds of doctors as speakers and consultants to tout Bextra.

Pfizer said in court that “the company’s intent was pure”: to foster a legal exchange of scientific information among doctors.

But an internal marketing plan called for training physicians “to serve as public relations spokespeople.”

According to Lewis Morris, chief counsel to the inspector general at the U.S. Department of Health and Human Services, “They pushed the envelope so far past any reasonable interpretation of the law that it’s simply outrageous.”

Pfizer’s chief compliance officer, Doug Lanker, said that “in a large sales force, successful sales techniques spread quickly,” but that top Pfizer executives were not aware of the “significant mis-promotion issue with Bextra” until federal prosecutors began to show them the evidence.

By April 2005, when Bextra was taken off the market, more than half of its $1.7 billion in profits had come from prescriptions written for uses the FDA had rejected.

Second, fake companies to get through legal issues:

“We have to ask whether by excluding the company [from Medicare and Medicaid], are we harming our patients,” said Lewis Morris of the Department of Health and Human Services.

So Pfizer and the feds cut a deal. Instead of charging Pfizer with a crime, prosecutors would charge a Pfizer subsidiary, Pharmacia & Upjohn Co. Inc.

A couple of thoughts.

If the federal government ever wonders again why the public doesn’t trust them/listen to them the officials need to review this situation.  It’s just crazy that the bailouts of all these financial entities went against major popular opinion and really didn’t end up solving problems (I know, that’s debatable…).   In the aftermath the government came out and said how tough they were going to be with people that abuse taxpayers.   So, now in this case….

“If we prosecute Pfizer, they get excluded,” said Mike Loucks, the federal prosecutor who oversaw the investigation. “A lot of the people who work for the company who haven’t engaged in criminal activity would get hurt.”

Did the punishment fit the crime? Pfizer says yes.

It paid nearly $1.2 billion in a criminal fine for Bextra, the largest fine the federal government has ever collected.

It paid a billion dollars more to settle a batch of civil suits — although it denied wrongdoing — on allegations that it illegally promoted 12 other drugs.

In all, Pfizer lost the equivalent of three months’ profit.

It maintained its ability to do business with the federal government.

The Obama administration should take a stand on this because all the new health care reform is likely to stimulate more of this type of activity – strange dealings with the government.   This situation is exactly why I want either a completely private health care system OR universal one.  This hybrid system is just terrible.  We’ll see more of this as long as their are big government programs that use private companies with profit incentives.   I don’t think it’s bad to profit driven, I just think it’s dangerous when it’s the government handling the relationship, and not the customers.

And maybe the fed prosecutor was right in that a lot of people will get hurt for holding Pfizer accountable… but I just don’t see how that’s a justification for letting them off the hook.   Ends don’t justify the means and all that.

And this is the zinger:

“I worry that the money is so great,” he [Loucks] said, that dealing with the Department of Justice may be “just of a cost of doing business.”

Oh, I’m sure that’s already true.

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Though the argument between Gladwell and Anderson is fun to read and stimulating it completely misses the point of why Anderson is wrong about Free and why the newspaper industry is having trouble.

“Information wants to be free” doesn’t mean free as in beer… it is free as in freedom.  Even putting it in that context that line has nothing to do with what’s going on in media.

The ad model has crumbled for broadcast TV and newspapers and magazines.  It doesn’t mean that advertising globally is over or that charging for content or supporting content via advertising has crumbled.  It is the failure of the cost structures of the troubled media.  Ads simply don’t make the money they used to for these organizations.  Why?  Well, as we’ve discussed many times on this blog and elsewhere, because advertisers really know how to count eyeballs and transactions now.  That puts pricing pressure on campaigns (especially long term deals and premium upfronts).

Why can’t Youtube make money?  Plenty of advertisers put ads on youtube.  No users click or respond to them.  Not enough to cover the $360 million a year bandwidth bill.   It would be pretty easy to actually turn a profit with Youtube.  It would just have to stop being so Youtube-ish – i.e. get rid of the fluff content, make more ambitious ads, etc. etc.  I’m sure that will happen once Google feels like Youtube can’t be significantly touched from easy competition.  I’m sure this will happen soon.

This whole thing about making everything free or whatever.  It’s hogwash.  People pay for stuff they value.  They click on ads that don’t suck and are relevant.  The newspaper industry, as its old model stands, needs to change.  Big deal.  It will.  yes there will be micro publishing and competition from bloggers and all that.  Big deal.

I never really believed in the long tail either.  Every company I’ve seen financials for that bet on the long tail hasn’t made a dime.  If you look on itunes and amazon and shopping sites and news sites it’s still the hits that make the money.  And hits cost money to make. and people value them, so they buy them.  This applies to music, movies, articles, books, celebrities, products…. i’m not saying you can’t make money from the long tail… you can… but that’s like comparing making money from hotdog carts (the long tail of lunch) to running a multi-national chain like mcdonald’s (hits!).  or maybe not. but hopefully you get my point.

I do agree with Gladwell on one point – there are no iron clad laws… except maybe one.. there are no iron clad laws.

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Update 3/29/09: Danny Sullivan correctly pointed out to me that he is a publisher and an advertiser.  I’ll disagree on the idea that he is a “real user”, by which I meant “regular user”, because he is not nor I am.  We study websites, traffic and human behavior – we notice and ignore and react to things very differently than a user just flying by to get the latest news and views.  I do agree with Danny that my argument mostly matches his… thus, I’m only calling out Clemons argument.

Update 3/28/09: Techcrunch keeps stirring this up.  Now Danny Sullivan replies…

The most damaging part of both of their arguments is that neither one is arguing Clemons original argument and rebuttal mostly fail to convince his claims about the death of Internet Advertising.  He’s conclusions don’t match actual data and experience from the perspectives of an advertiser, a publisher nor really a regular user.

These points are not defensible without real data:

Users don’t trust ads
Users don’t want to view ads
Users don’t need ads
Ads cannot be the sole source of funding for the internet
Ad revenue will diminish because of brutal competition brought on by an oversupply of inventory, and it will be replaced in many instances by micropayments and subscription payments for content.
There are numerous other business models that will work on the net, that will be tried, and that will succeed.

In fact, let’s consider some counter examples:

Someone sold 4 million Snuggies based on ads.  Did the people who responded to those ads not trust the ads?  Their behavior shows they did enough to fork over $15 bucks for a blanket with holes in it.  The better statement is some users don’t trust some ads.

Users do want to view ads.  Millions of people love superbowl ads and actually seek them out online and on their TIVOs.  Online only ads that people do want to view include the millions of mini games they play, youtube videos they watch, contests they enter.  A better statement is that some users to want to view some ads, especially when the ads are not engaging, useful or catchy.

Users do need ads.  Search engines and social graphs can only show you information about things that are already popular/reached tipping point.  They cannot show you stuff just coming out of the labs.  Users need ads to learn about new and different products and services.  And the only way to introduce people to new things is put new things alongside already known things.

Ads are not the sole source of funding for the internet. Anyone who is claiming this is what web companies think clearly has not really studied the industry or worked at a web company and/or companies that extensively use the web in their business models.

Ad revenue will continue to grow in the long run.  As long as businesses need to sell more product, more ad revenue will go into the market.  The difference is that the ad spend is spread among more and more entities, so individual businesses will get less ad revenue.

Many other business models already work. and more will be created.  Selling apps, selling computer time, renting server space, selling subscriptions, donor models, barters, licensing, premium access…. I mean, gosh.  I don’t think we lack for business models that work.  The media is simply pointing to the high profile failures of big media companies that haven’t figured out to how to shoehorn it’s model into the internet way of doing things.

Once again we see that pundits rarely represent the real story.  They don’t know the price of milk. Just talking to people in the industry and summarizing the conversation is not enough to predict the end of online advertising.

See below for rest of my original response.

—————

Despite the impressive length,  a recent TechCrunch guest feature on the failure of internet advertising fails to reveal what’s really destroying the ad model online.  Clemons neither states what he claims is actually failing and doesn’t really prove it is. Alas, I will still attempt to refute the possible implications of his claim.

It is not a particularly insightful observation that “The problem is not the medium, the problem is the message, and the fact that it is not trusted, not wanted, and not needed”. Of course people don’t like being distracted with ad messages.  That’s always been the case, that’s why marketers have to pay for ad placement.  Nothing new here.

Advertising itself is not broken nor will ever go away.  As long as companies have products they need to push into market, they have to advertise, regardless of nature of the medium.  Play with the language and state definitions all you want – advertising will always be a part of our lives and media experiences.

What’s wrong with the business models of sites that rely on advertising is the pricing, not the actual idea of advertising.  Spending in terms of dollars is down in all mediums, certainly.  However, the amount of advertising we’re exposed to is likely still growing.   I have a long post on all sorts of data points on this topic here.  The short of it:  marketers have a growing number  advertising impressions out there, everyone know’s how well they perform and thus the pricing is coming way down from the relatively overpriced “older” advertising models in print, radio and tv.  This shrinking pricing model puts pressure on the business from a margin standpoint and so the less efficient businesses fail.

Yes, I generally hate banner, text, billboard ads and neon signs like everyone else. Except when I don’t.  And when I don’t that’s valuable to the company that paid for that placement and it’s valuable to me to be notified of something I might have missed.  We’re just arguing price.

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This is a pretty useful data dump from Google’s CEO

Economic situation pretty dire. Combination of what we’ve seen does not appear to have a bottom. People are using the Internet more. Obviously will affect online ad market because our systems are so tightly tuned. It will eventually be reflected in CPC, CPM. We are not immune to this. We may be better positioned from ad perspective, but ultimately the real pain felt by companies worldwide will sometime translate to our world

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At the delayed morning meeting with an attorney that hates attorneys, we got around to talking about the money… yeah, THAT money.

There is the Stimulus Package I & II, the normal government loads to states, the bailout to some banks (but not the ones with a passion for customer loans), the bailout of the car mfgs which seem, now in retrospect to amount to overspill from a Super Bowl game by comparison. But en masse, we’re talkin’ real money here folks.

Does anyone grasp the numbers anymore? Yeah, yeah, yeah, I know that is slightly rhetorical.

We do need to do some stuff and that is what we are doing but it occurred to me that the numbers are all running together and perhaps even Federal Reserve Chairman Ben Bernanke doesn’t have the necessarily grasp on the meaning of those $$$$ trillions. But, maybe I am wrong. He deals in money. We don’t. For all we know he may be more scared than we are… On the other hand, none of them want to have the collapse of the world’s leading economy on their watch.

During the Obama speech Tuesday night the camera’s panned to Hillary in the front row. It’s as if a little cartoon bubble rose above her head during the 2nd third of the speech and it had in it…

“I’m soooooooooo glad you are standing there right now….”

Oh, there is a new item that came out after the address to both Houses and the Judiciary of the government… another $75.5 billion for the two fronts of the war… which seems to have gone to the, “I don’t know why we’re here now; ask the guys from Halliburton” stage and another $663.7 for 2010 defense spending.

So, where are we? We have a $3.5+ trillion plus budget and we are not sure what that will bring or yield. Talk about a ‘faith-based’ initiative! We need the changes but no one said the right ones would be the first ones.

Here’s the deal. The people in 99.5% of the positions in Washington DC got there by doing some things better than their opponents. They won. They learned from those there how it all works. They copied those methods and those rationales. They were re-elected with the promise to continue to do the job like they’d been doing.  (read: status quo) That also is the case for the bankers, the auto executives, and some of the brokers on Wall Street.  You’ve heard it before and it applies here as an example of what went terribly wrong:

to a carpenter, every problem can be solved with a hammer.”

Now we need some new technologies and greater grasp of other ‘tools’ besides a hammer.

Changing individuals is difficult.  Changing cultures is almost infinitely more complex to pull off. You have to change the contingencies, the consequences of behavior to get different results. Not at all easy. The culture there is strong and ideas of what is right and wrong only die when the people holding them die. Any changes that come quicker are difficult to anchor because no one knows how those will work in that culture.


And, just about the time they get a rhythm and some solutions there will be another election. That is why you have to follow what’s going on.  Short of death you can get rid of those that don’t do right by the country’s standards.  Elections!

One component is to follow the money. Another is to follow your representatives in Washington and your state as they get THE MONEY. Things have got to change. No one wants to pay more taxes but everyone wants something more from the government.

You want a bailout? It will cost your kids. You want cheap money? It will cost a lot more? You want something for nothing? Good luck with that… maybe the tooth fairy will entertain that idea but even she require a tooth.

It’s time… lead, follow or get out of the way.

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